Romney, Obama, Consumer Law & the Supreme Court

Posted October 5, 2012 in Consumer Law by


Voters can gain some wisdom as to how President Barack Obama’s second term or Mitt Romney’s first could affect consumer law by looking at what type of U.S. Supreme Court justice each would appoint to any upcoming vacancies.

Four of the sitting Supreme Court justices are more than 70 years old, and three will be over 80 by the time the next presidential term ends in January 2017. Currently, the court has five justices considered conservative, and four considered liberal.

With so many rulings split by a 5-4 decision, the matter of which judges retire and who is appointed to replace them — Obama would be expected to appoint liberal leaning judges, Romney, conservative — could have reverberations on consumer law that resonate for decades.

Ian Millhiser, an attorney and senior constitutional policy analyst for the Center for American Progress Action Fund, took at peek at where the Supremes could take consumer law in upcoming years and shared some  insights on a few pivotal issues:

Forced Arbitration: Forced or binding arbitration is a clause companies insert in a contract that consumers must sign before doing business that requires them to give up their right to a jury trial in the event of a dispute with the company. Instead, they agree to arbitration, where the venue, rules and arbitrator are all handpicked by the company.

Ian Millhiser

The clause is common in contracts for things such as cell phones, credit cards and nursing homes. “Consumers don’t really have a choice about whether or not they sign these contracts,” Millhiser says. “You either agree to it or just not have a cell phone.”

The legality of forced arbitration comes from the 1925 Federal Arbitration Act; however the law was designed for business-to-business transactions, specifically excludes labor agreements and makes no mention of class action suits. Nevertheless, under Chief Justice John Roberts the court has used the law to justify decisions upholding forced arbitration that binds labor contracts and eliminates the right to class actions.

“If you were to see one of the five conservatives replaced [by President Obama], you could have a massive shift in the law back to where it should be, where companies cannot force people into these agreements,” says Millhiser.

Preemption: “Preemption is when the Constitution says that federal law is the supreme law of the land,” Millhiser explains. “That means Congress has the power to say certain state laws can’t be enforced.” For example, if Congress passed a law saying that everybody must eat broccoli, and Texas passed a measure outlawing broccoli, the federal government could block the Texas law because it creates a conflict with the federal one.

Currently, corporate interests groups are pushing for an expansion of preemption powers to prevent states from enacting consumer protection laws. The lobbyists argue entities like drug companies, tobacco companies and other businesses, which have certain immunities from federal lawsuits, should also enjoy them on the state level. For example, the court found in 2011 that generic drugs, which cannot be sued in federal court for inadequate labeling, can also not be sued in state courts.

“In recent years they’ve lost more than they’ve won,” Millhiser says. “But some of them have been very close. If you saw a more conservative court, you would see much more corporate immunity to state laws intended to protect consumers.”

Campaign Finance: Campaign finance laws aren’t consumer issues per say — but they have the power to affect consumer law. The unlimited corporate spending permitted by the Roberts Court allows special interest groups to weigh in heavily on local elections and effectively buy judges who will rule in their favor on consumer cases.

“Many of these battles are being funded by corporate interest groups for wealthy individuals who have a stake in seeing a Supreme Court or state supreme court that won’t enforce consumer protection laws,” says Millhiser. “Campaign finance is intimately tied to consumer protection in those states where the judges are elected. If well-monied interest groups are able to decide who the judges are, they are able to change the outcome of how the law is enforced.”

Again, more conservative judges appointed to the court would effectively make corporate campaign spending permanent, whereas another justice on the liberal side would be more likely to help reign it in.

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