By Paula Z. Segal
When you buy a computer or any other complicated piece of consumer electronics, you also receive a bundle of infinitesimally small print type, that many of us all too often skip reading. Some of that small print is written specifically to protect the companies from you: a future, frustrated version of you, who might decide to sue the company for selling a defective product.
Kristin Cariedo bought a new Dell laptop for $1300. Catherine Candler paid $1700 for hers. Neither computer worked the way it was supposed to. Ms. Cariedo and Ms. Candler wanted to sue Dell to get their money back but the fine print that accompanied their laptops said that by simply buying and keeping the computers, Ms. Cariedo and Ms. Candler and all other consumers buying Dells laptops waived their right to ever sue Dell. Dell had written an “agreement” that said that any disputes between consumers and Dell were to be settled through arbitration by a private arbitrator that Dell had selected (the National Arbitration Forum); Dell also said that no class actions were permitted, meaning that consumers could not get together to bring Dell to court for selling defective products. The “agreement” that Ms. Cariedo and Ms. Candler had entered into with Dell when they bought their computers was designed to keep them out of court.
The National Arbitration Forum (NAF), the arbitrator that Dell chose, turned out to not be a neutral arbitrator; rather, it turned out to be intimately tied to the country’s largest debt collection firms, which profit directly from deciding cases against consumers. A House of Representatives investigation report on NAF documented its abuses, and lawsuits have been filed against NAF nationwide. The Center for Responsible Lending issued a report calling NAF’s neutrality into question in May 2009, and finding that NAF decisions tend to favor companies – like Dell – that give them business. In the midst of all this controversy, NAF stopped accepting consumer arbitrations in July 2009.
On October 26, 2009, the highest court in Washington State, where Ms. Cariedo and Ms. Candler brought their case against Dell, ruled that the mandatory arbitration agreement written into the fine print of their computer purchase agreements could not be enforced because NAF, the arbitrator, was not available. The court refused to appoint a different arbitrator.
The Washington court also said that the provision prohibiting class action lawsuits could not be enforced. Class actions are important because they allow individual consumers to use their collective resources to hire experts to testify at trial. In consumer cases, where the amount at stake is usually the price of the purchased item, the expense added by hiring an expert makes the lawsuit unreasonable to fund. When the expense is shared by many consumers of similarly defective products, the lawsuit becomes possible.
Paula Z. Segal is a second year student at City University of New York School of Law and a Haywood Burns Fellow in Civil and Human Rights. Before law school, she taught English to Speakers of Other Languages and continues to develop materials for ESOL instructors to connect language and life skills. She is also working with the New York Civil Liberties Union to reduce the school to prison pipeline and coordinates the CUNY Street Law Team, which brings the law to New York City high school students and community groups. For more on the school to prison pipeline, go to http://www.nyclu.org/issues/