Decoder with Nilay Patel

How companies weaponize the terms of service against you

54 min

This episode of Decoder with Nilay Patel explores the pervasive and often unfair system of forced arbitration, where consumers and employees unknowingly sign away their right to sue companies in court. Guest Brendan Ballou, author of "When Companies Run the Courts," explains how the Supreme Court has expanded a 1925 law to allow companies to force individuals into a private, secretive justice system that overwhelmingly favors corporations. The discussion covers the mechanics of arbitration, the role of justices like Antonin Scalia, and potential solutions, including state-level legislation and mass arbitration as a counter-tactic.

Summarized by Podsumo

🎙️ Ask about this episode

✨ Key Takeaways

1

Forced arbitration is hidden in nearly every terms of service agreement, requiring individuals to give up their right to class-action lawsuits and instead use a private system where the 'judge' is often paid by the company.
2

The Supreme Court, particularly through decisions by Justice Antonin Scalia, has systematically expanded the Federal Arbitration Act of 1925 to cover all consumers and employees, despite it being originally intended for sophisticated business contracts.
3

A key example is a man whose wife died at a Disney World restaurant; Disney tried to force him into arbitration because he had signed up for Disney+, though public pressure eventually made them back down.
4

Consumers win in 89% of small claims court cases but only 20-30% of forced arbitration cases, and the rate drops below 10% when individuals represent themselves without a lawyer.
5

Potential solutions include passing state laws like California's Private Attorney General Act (PAGA) that allow individuals to represent the state to bypass arbitration, or using 'mass arbitration' to overwhelm companies with thousands of individual filings to create financial leverage.

💬 Notable Quotes

"One of the key purposes of forced arbitration is to kill class actions... First arbitration kills this system by requiring people into arbitration and to arbitrate their cases individually. So each person has to bring an individual case and you can immediately imagine for anything other than the most expensive harms that makes pursuing a case completely unaffordable."
"I think the most pro corporate Supreme Court, at least since the 19th century... the Supreme Court rules for the Chamber of Commerce somewhere in the order of 80, 80% of the time or higher."
"When textualism or originalism ran up against by and large ruling for corporate interests, he almost always dropped the textualism and ruled for the corporations."