Welcome news came recently when the Consumer Finance Protection Bureau (CFPB) announced that it was undertaking a careful review of the use and effects of Forced Arbitration Clauses (FACs) in consumer contracts. I will be submitting at least one case study of outrageous abuse and hope that my client and I will have the opportunity to testify before the committee.

Arbitration is about the worst thing to happen to the civil justice system. Imagine, outsourcing the justice system to the corporations, the same corporations that benefit from the system.

The system is inherently biased. The several arbitration services compete fiercely to be included in the big corporations boilerplate contracts. Do you think a service that does not tip in favor of the corporations will be included any corporation’s contracts? Of course not.

Do you think a corporation will make its selection based on the frequency by which that service finds in favor of the consumer and how much is awarded? The obvious answer is yes.

Corporations look for and demand every advantage possible. That’s an inherent feature of the market system. It’s a good thing generally. But it’s also why we need a civil justice system where true judges and juries of our peers decide cases.

It should be noted that it was just a few short years ago that the National Arbitration Forum, one of the biggest,

I have a case where the Court Ordered the dispute be resolved in accordance with the FAC. We initiated an arbitration with the American Arbitration Association (AAA). The defendants ignored several warnings to pay their share of the fees. AAA gave them new deadlines. The defendants did not pay. AAA dismissed the arbitration and told the defendants that they would not re-open it or administer anymore arbitrations for them. AAA even instructed the defendants to remove AAA from their FACs.

That should have been the end of the arbitration. Plaintiff should have been permitted to go back to Court. That’s what you’d think would happen.

The only problem was that the defendants were Peruzzi Auto Group, one of the biggest dealership groups in the Philadelphia area, and JPMorgan Chase Bank, one of biggest banks in the world.

By their own admission, the counsel for the defendants contacted AAA privately, what’s called ex parte, meaning I was not advised of the communications contemporaneously and given an opportunity to participate and respond. Ex parte communications are highly frowned upon. Notice and the opportunity to respond are fundamental and indispensable aspects of true due process.

At least one of the defense counsel worked her way up the chain of command and spoke to the boss of the administrator who had dismissed the arbitration. By this counsel’s own admission, the AAA boss advised her how to try to get around the dismissal – and around AAA’s self-imposed moratorium on forced consumer arbitrations (which will be the subject of a later blog). Does that sound like the actions of “neutral” arbitration service?

All you need to know about FACs is that arbitrators don’t have to follow the law and they don’t even have to give you a reason for their decisions. Does that sound that due process to you. Or does that sound like a clear recipe for corporate dominance?

A great new article/blog reported on a great new study that showed just how corrupt the arbitration system has become. As usual the powerful business interests are speaking out of both sides of their mouth.

Liz Kramer reports on a new study that shows that while the powerful business interested continue to promote arbitration, against consumers, as a good thing that is fair and inexpensive, these same powerful business interests avoid arbitration in disputes amongst themselves.

I believe the article/blog appeared in Litigation vs. Arbitration. You can see the full article/blog by pointing your browser here: http://arbitrationnation.com/dissonance-between-scotus-and-business-on-arbitration/

This new report comes on the heels of my own growing personal experience with arbitration. I have litigated one case in force arbitration – arbitration forced by courts and contract provisions buried in the fine print of many if not most consumer contracts. I expect to litigate many more in the future.

I am only familiar at this point with one arbitration service, the American Arbitration Association, known as AAA for short. I have found the system inherently corrupt. It should trouble you to know that AAA’s rules do not require their arbitrators to follow the law – and it should not surprise you to learn that they don not.

I am in the opening stages of trying to expose the inherent corruption of the system now. I intend to update you in this space regarding my experiences along the way.

Back to the article. Ms. Kramer reports on a new survey that found that Fortune 1,000 corporations are significantly less likely to arbitrate contract disputes today than they were in 1997. In the 1997 study, 85% of companies reported using arbitration in commercial contract disputes at least once during the prior three years. In 2011, however, only 60 percent of companies so reported.

What was even more telling than the bald statistics was the reasons given by the businesses for avoiding arbitration – the same system them promote as fair for their disputes with consumers.

The most common reasons given by survey respondents (general counsel and senior corporate lawyers) for not using arbitration included: the difficulty of appeal, the perception that arbitrators tend to compromise, the concern that arbitrators may not follow the law, a lack of confidence in neutrals, and high costs of arbitration.

Ms. Kramer, I think, makes a good point of comparing the reality with the fake conservative legal analysis presently emanating out of the US Supreme Court on the subject. She says that she finds it interesting that “Supreme Court is strictly enforcing arbitration agreements at the same time that corporate counsel are growing less enchanted with arbitration.”

Banks are Liable for Act of Repo Agents

When speaking outside Court, and among themselves, banks admit that they are liable under the law for the misconduct of their repo agents. Its such a shame that they speak out of the other sides of their mouths, and deny exactly that same legal principle. Its even more of a shame that too many judges buy it.

An article in the April 10, 2012 edition of Bankers Online lays it all out. The article, entitled, Breach of the Peace – Are Punitive Damages Possible, can be seen in its entirety by pointing your browser here:

http://www.bankersonline.com/lending/breach.html

The article acknowledges secured creditors can repossess collateral upon default, without prior notice, and without a Court Order, “so long as it can be accomplished without a breach of the peace” (emphasis in the original).

The article also acknowledges that a breach of peace covers a great many actions and circumstances, and is not just restricted to physical attacks by a repo agent.

The common belief is that a breach of the peace only occurs if there is some sort of confrontation, usually involving physical interaction, such as a heated argument between the party attempting the repossession and debtor. The current case law does not limit a breach of the peace to only such situations. The trend established by recent court cases is that self-help repossessions are not favored by the courts and the list of actions that have been determined to be a breach of the peace has been expanded.

Lastly, the article acknowledged that the trend is for banks to held liable for the actions of their repo agents. Courts are finding that the duty to effectuate repossessions without a breach of the peace is non-delegable.

The article focused on such a case, Williamson v. Fowler Toyota, Inc., 956 P.2d 859 (Okla. 1998), [as] illustrative of how a court may, however, hold the lender liable for the actions of the third-party contractor. And that the liability may extend “for not only actual damages but also punitive damages” (emphasis in original).

The issue of the case was whether a creditor was liable for trespass and the resulting damage caused by an independent contractor employed by the creditor to repossess secured collateral, an automobile. The creditor, Fowler Toyota, hired a man to repossess the vehicle when the buyer defaulted. At the time of the repossession, the vehicle was located in a secured car lot at Williamson Auto where it was being repaired. The vehicle was located by the repo man who cut a chain to a locked gate and removed the vehicle. Prior to the repossession Williamson was not aware of the claim of Fowler and neither Fowler nor the repo man contacted Williamson regarding the matter. The vehicle was delivered to Fowler and the method of repossession was disclosed. Fowler made no attempt to contact Williamson and sold the vehicle. Fowler also told the repo man not to trespass to repossess vehicles in the future and continued to utilize his services. Williamson estimated his losses at $15.00 for the lock and chain and $30.00 (one hour) of billable time. He sued Fowler and was awarded $45.00 in actual damages and $15,000.00 in punitive damages by the Trial Court. The Court of Civil Appeals reversed the trial court but the state Supreme Court affirmed the original Trial Court judgment.

Many, many Courts have recognized and held that underlying the breach of peace concept is the reality that repossession are inherently volatile and dangerous events. Accordingly, at the possibility or hint of a confrontation, the repo agent must retreat. So, if the car owner says no, stop, go away, the repo agent must go away.

This is absolutely as it should be. This is exactly how the professional, well-trained and supervised repo agents act. If the law were otherwise, then it would encourage repo agents to try to bully or overcome objection by force, which naturally would lead to many, many more physical confrontations, injuries and deaths – not only of or to car owners, but to repo agents, family members, and bystanders. Bullets and car chases don’t stop at the property line!

The past two days I had the privilege to attend an important and eye-opening conference presented by the Pennsylvania Association of Automotive Trades (PCTG) and The Coalition for Collision Repair Excellence (CCRE). The subject of the conference was to share information to combat unfair insurance practices that are suffocating the industry and putting everyone at risk.

I was aware of these issues, and have even commented on them in this space in the past. Nevertheless, it was still chilling to hear so many hard-working, good blue and white collar men and women, small and medium sized business owners and job creators, from all across the nation, in many different accents, tell the same horror stories.

These were by and large, and possibly strictly, independent collision repair shop owners and professionals. They are not members of any insurance companies’ Direct Repair Program (DRP) or subsidiary or captive repair shop chain.

The insurance companies are doing everything possible to put them out of business. The insurance companies are doing everything possible to force repair shops generally, and their DRP and captive shops, in particular, to do cheap, incomplete and improper repairs with substandard parts.

IF YOU VALUE YOUR AND YOUR FAMILY’S SAFETY, STAY AWAY FROM DRP OR CAPTIVE SHOPS!

I can give you some idea of the scale of the problem. I have been litigating motor vehicle sales fraud cases for more than a decade. The majority of those cases involve claims that the dealer did not disclose a new or used vehicle’s collision and/or damage history. In the majority of these cases, there were incomplete or improper repairs and/or with substandard parts – even junkyard parts.

It is not unusual for the repair shop to have recorded and been paid for a critical repair, even the replacement of a critical structural part, without actually performing the repair or replacement. I am preparing to file just such a case against a local high-end dealer – WHO THEN SOLD THE VEHICLE AS CERTIFIED.

If your vehicle has been in a collision or damaged, your first call should not be to your carrier. Your first call should be to an independent repair shop. You can find one in your area by going to the CCRE Website (http://www.theccre.com/). You can find all of the information that you need right on the Website.

You need to take control or authorize the independent repair shop handle the process. It’s as easy as it is necessary for the safety and security of you and your family.

I will give you some more specifics in future columns. Be safe!

The March 15, 2012 Edition of the American Banker includes the second in its three-part series exposing J.P. Morgan Chase Bank and its outrageous collections operations. The article, entitled How a Whistleblower Halted JPMorgan Chase’s Card Collections, can be read in its entirety by pointing your browser here:http://www.americanbanker.com/issues/177_52/jpmorgan-chase-credit-card-collections-1047573-1.html?zkPrintable=1&nopagination=1

The article reports on the latest in the government’s investigation of JPMCB’s collection operations, which splashed across the news in the past year, because the of the brave stand of a single whistleblower. Sadly for the whistleblower, Linda Almonte, and as is common with corporate wrongdoing, no good deed goes unpunished.

No sooner did Linda Almonte show up for work on November 30, 2009 than was she escorted out the door by security at JPMorgan Chase’s Credit Card Litigation Support Group in San Antonio. A midlevel Chase executive who oversaw business process execution employees, Almonte says she was fired after just six months on the job for challenging her superiors about the accuracy of the bank’s credit card records.

Staffers were warned not to communicate with Almonte, who, ironically, was a quality control worker who spent 14 years at Chase.

As the article reports, Almonte’s departure was a “prelude to a series of events that serve as a cautionary tale for the banking industry.” Almonte eventually filed a whistleblower suit. She has accused JPMCB of a range of misconduct petrated repeatedly over three years:

failure to reconcile the inconsistent past-due balances generated by the bank’s computer systems; pressure from management to collect delinquent debts even in the absence of complete or accurate records;

and robosigning of affidavits (without regard to their truth or falsity) that brings into question the legal integrity of Chase’s claims against tens of thousands of consumers.

As reported in the article, JPMCB has not denied Almonte’s accusations. Indeed, many are backed by internal bank documents and current and former employees. As a consequence, JPMCB has ceased operations in a collections unit that had previously generated billions of dollars in ill-gotten annual revenues.

JPMCB released a statement saying: “Following issues raised with mortgage documents, we conducted an internal review across the firm and found other procedural issues. We immediately alerted our regulators and worked to address them.” With its delinquent credit card customers, Chase added that in the “overwhelming majority of cases” its internal review indicated it had collected the correct amounts.

In yet another chapter of corporate greed, of greed exalted over any sense of justice or fairness, Almonte has charged that Chase fired her for resisting its efforts to sell faulty credit card debts.

God bless Almonte! She proved more courageous and persistent than JPMCB obviously expected. She reported the misconduct to the regulators, including the SEC, FTC, and the Office of the Comptroller of the Currency, which oversees nationally chartered banks, including Chase.

Almonte’s attorney, Bruse Loyd of Jones, Gillaspia & Loyd, L.L.P, successfully opposed Chase’s attempts to get her case dismissed in court. But by then Almonte reportedly has been rendered nearly broke and living with her family in a motel. She’s been blackballed evidently in banking industry. The industry evidently is not interested in brave, honest employees.

JPMorgan Chase’s annual report, filed with the SEC last month, made no reference to its 11-month litigation hiatus or any impact on earnings.

If you or someone you know has suffered at the hand of JP Morgan Chase, or some other bank or debt collector, then you should contact a qualified attorney right away. Nothing will change, until we join together and fight back.

A new study found that doctors hold the common perception poor people sue doctors more frequently. The study also found that “socioeconomically disadvantaged patients, in fact, tend to sue physicians less often.”

This is no surprise to me. I have found that people in the lower socially economic classed either are too busy or emotionally overwhelmed to confront what they perceive as the all powerful elite, and/or have become accustomed to the unfairness in our society and have rationalized it as just another fact of life in order to avoid driving themselves crazy.

The authors of the study, I think, placed the blame exactly where it belongs. “[T]his myth may exist because of subconscious prejudices or stereotypes that affect thinking and decision making without doctors being aware of it - a phenomenon known as unconscious bias. In other words, “blame the victim, blame the poor.”

This bias runs strong throughout our society and the judicial system. Blame the unions for their pensions, but ignore the bloated and useless ranks of executive management and their inflated and unearned salaries and scandalous bonuses. It’s like blaming the engine crew of the Titanic.

Unfortunately, this is not just a curiosity or academic. It has real-world implications on the care and treatment the poor receive. “This mindset has potential negative effects on the doctor-patient relationship, including some physicians’ reluctance to treat poor patients, or treat such patients differently from other patient groups in medical care terms.”

No one chooses to be poor. No one deserves to be poor. No one deserves the injustice of being harmed by someone else’s misconduct. If you or a loved one have been harmed by a physician or anyone, you should seek out the guidance of a legal professional as soon as possible. Your rights are important. Your well-being is important.

The study is published online in Springer’s journal, Clinical Orthopaedics and Related Research.

I recently came across a Consumer Reports article that backs up what I have been trying to educate the consumer public about for many years now: “Don’t Rely on Used-Car-History Reports.”

The article reviews several specific examples of consumers who relied on one of the vehicle history report services only to find out just how unreliable they are. For example, a homemaker from San Jose, Calif., bought a 2007 Toyota Camry. She relied on the “clean” Carfax history report that the dealership provided as proof that the vehicle was accident free. She later discovered that the vehicle had been in a major accident and needed $4,000 in repairs. She hired a lawyer to try to get her money back from the dealership.

Unfortunately, used-car purchasers are increasingly relying on vehicle-history reports to make sure that they’re not buying someone else’s problem. Many dealerships are offering free history reports these days. Dealers use the vehicle history reports to overcome any reservations. But are dealers not telling you.

What dealers don’t tell you, but almost universally tell me when I’ve got them under oath at a deposition or at trial is that it is well-known in the industry that the vehicle history reports are notoriously incomplete. They admit that if any of their salespeople were to say that a vehicle has not been in any accidents or does not have any problems, because it has a “clean” report, that that in-and-of-itself would be a deceptive and misleading statement.

Vehicle history reports probably catch somewhere around 15%-20% of the accident or odometer roll-backs. Even where the reports do catch these negative events, there is a long delay – so the report may be “clean” for months or years after a vehicle has been wrecked.

That is why I teach people that it is a BIG RED FLAG when a dealer makes any statement about a vehicle’s history or condition by referencing a vehicle history report. What they should be referencing is their own careful inspection.

Rather than offering you a free vehicle history report, dealers should be offering you free copies of their inspection and service records, including, most importantly their mechanic’s handwritten notes – note just the invoice of the actual repairs performed. You want the handwritten notes to see what the mechanic found, not just what the Used Car Manager approved to be repaired.

Back to the Consumer Reports article. Consumer Reports tested the vehicle history reports. Consumer reports ordered reports for dozens of vehicles advertised on such Web sites as eBay Motors and erepairables.com. The ads included photos showing smashed or missing body panels or other accident-related damage, along with vehicle identification numbers. Many reports returned “clean” results, sometimes from all five services: Carfax (www.carfax.com), AutoCheck (www.autocheck.com), the free VINCheck from the National Insurance Crime Bureau (www.nicb.org), and two services providing information from the federal government’s National Motor Vehicle Title Information Systems database (www.nmvtis.gov).

We are not talking about missing minor fender-benders. You really have to read the article. It includes shockingly smashed vehicles with “clean” reports.

In fact, Consumer Reports “found that the reports were most likely to be incorrect for vehicles that had serious damage but for various reasons were not declared a total loss.”

Consumer Reports states that “clean-title wrecks, especially those with clear history reports, are popular at auctions because buyers can repair the vehicles and then resell them to unsuspecting consumers.”

To see the entire report point your browser here: http://www.consumerreports.org/cro/cars/used-cars/reliability/reality-check-how-useful-are-used-car-history-reports/overview/index.htm

If this has happened to you, call an attorney. If you want to know how to protect yourself during a vehicle purchase, review several of my earlier blogs and cruise my Website.

The January 26, 2012 edition of the Navajo Times reported on a situation that is becoming all too common and a consumer who decided that she was not going to take it any more.

The article reports on a class-action law suit filed against Credit Acceptance Corp., a Michigan-based finance company, that is alleged to be electronically disabling vehicles on the a Navajo reservation when the owners fall behind on their payments, in violation of Navajo law.

The lead plaintiff alleges that she missed a vehicle loan payment and then found herself stuck five hours from home in the vehicle the lender had disabled by remote control.

According to the report and law suit, the issue is whether these devices can be used while a vehicle is on the reservation. Evidently, consumer protections are stronger under Navajo Nation law. Navajo law requires that the lender get approval from a tribal court or get a voluntary release signed by the buyer before repossessing a vehicle.

I have had to deal with this sort of situation involving Philadelphia area dealers and finance companies who require customers to agree to the installation of GPS, vehicle starter interruption or remote shut-off systems as a condition of the sale. All of these systems facilitate repossession.

You can see the full article by pointing your browser here: http://www.navajotimes.com/news/2012/0112/012612loan.php

If this has happened to you, I’d like to hear about it.

A recent article reveals that physicians often are not open or honest with their patients. The full article can be found by pointing your browser here: http://content.healthaffairs.org/content/31/2/383.abstract

The article points out that the “Charter on Medical Professionalism,” endorsed by more than 100 professional groups worldwide and the US Accreditation Council for Graduate Medical Education, requires physicians to be open and honest with patients. I’m quite sure that most of us would expect nothing less.

However, according to the article, data from a 2009 survey of 1,891 practicing physicians nationwide showed that approximately one-third of physicians did not completely agree with disclosing serious medical errors to patients, almost one-fifth did not completely agree that physicians should never tell a patient something untrue, and nearly two-fifths did not completely agree that they should disclose their financial relationships with drug and device companies to patients. Just over one-tenth said they had told patients something untrue in the previous year.

The authors of the article stated that the findings raised concerns that some patients might not receive complete and accurate information from their physicians, and doubts about whether patient-centered care is broadly possible without more widespread physician endorsement of the core communication principles of openness and honesty with patients.

If you believe you or someone close to you has been harmed by a physician, then you should contact an attorney right away. It is important to prosecute negligence cases to stop it from happening again and stop others from being harmed.

Two repo-men stand accused of grand theft larceny for helping themselves to an expensive car part when repossessing another car. The Sun Herald in Southern Mississippi reported on the charge in its January 30, 2012 edition. The investigating officers tracked down the repossessed vehicle and found the missing car part inside of it. The officers identified the repo-men and then arrested them. The full report can be seen by pointing your browser here:

http://www.sunherald.com/2012/01/29/3719424/tow-truck-operators-accused-of.html

I get frequent calls about the theft of property from or in connection with repossessions. In PA, as in most jurisdictions, repossessors must maintain personal property for at thirty (30) days following repossession. They must provide a written notice providing information about how you can retrieve your property.

If you think a repossessor has stolen your property, or will not return it, then you should contact the police and an attorney right away.