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Rule would allow consumers to sue banks in court – and that’s a good thing

I recently stumbled across some comments that should be of concern to the trial lawyer bar and President Barack Obama. That there is contempt on the Internet for trial lawyers and the president is hardly news. But the comments I read were spitting fire at Obama and liberal lawyers were found on www.regulations.gov, a government-run site where the public can comment on proposed federal regulations.

The proposed regulation that brought out a good number of Americans to rail against plaintiffs’ lawyers and Obama is the Consumer Financial Protection Bureau’s rule that will end the practice of certain financial institutions that use arbitration and “class waiver” clauses as a one-two punch to prevent consumers from participating in class-action lawsuits. The issue is that many banks embed these provisions within the lengthy agreements given to consumers when they open a checking account.

The clauses insulate a bank from a class-action lawsuit prosecuted in a court if the institution — for argument’s sake — charges its customers improper fees that impact each consumer for a few hundred dollars. Instead, the customer must try to go through the private arbitration process against their banking institution in order to receive compensation for the money that wrongfully was taken.

Here are a few of the comments:

— “I am totally against giving dollars away to the big liberal lawyers. Those dollars need to be used for the victims instead. God Bless America”

— “Willful destruction of our laws by Obama for his benifit [sic] and that of the cronys [sic] he buys with our money must stop. He has usurped any chance of justice in favor his interest of keeping power and corupting [sic] and abusing his post. It will not be tolerated. Neither will the sleaze that supports this outrage”

— “I would like to express my wishes to stop President Obama from giving his rubber stamp lawyers more power to gove [sic] the union bosses everything they want”

— “Stop Obama trial lawyer pay raise. And impeach Obama.”

For a rule that seems to favor the average American over Wall Street, it seemed to me Obama was taking a lot of heat. Indeed, the word “impeach” showed up in in a dozen of the regulations.gov posts.

Why would the CFPB class waiver regulation bring about such a reaction? Perhaps the encouragement of FreedomWorks had something to do with it. Complete with a cartoon of lawyers chasing an ambulance, the conservative site encouraged visitors to comment on the regulation in part because “all the financial products covered by this regulation will become more expensive. All this to line the pockets of special interest trial lawyers.” Those clicking through to comment on the regulation were told that, “This regulation makes it easier for liberal trial lawyers to file big class action lawsuits, ensuring that actual victims get less money, while they get richer. And if that’s not bad enough, Obama’s forcing you to pay for it!” (Emphasis theirs.)

First, I would like to point out that consumer-side attorneys are folks who have made the choice to represent individuals when lenders, car dealers and others take advantage of them. It may surprise a few of those commenting that this set of “despicable” trial lawyers is not entirely awash in dollars given straight from the president.

But we “liberal” lawyers and conservative-libertarian leaning folks may have something that unites us: we can all agree the Constitution should be upheld and defended. The document even provides clarity on whether mandatory arbitration of individual cases before an arbitrator who is receiving funds from the defendant really provides the best pathway to liberty. The Bill of Rights includes a right to jury trials in civil matters. The Seventh Amendment provides that “[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.”

Adam Brandon, president and CEO of FreedomWorks, in a post published by The Blaze, placed the Bill of Rights at the forefront of liberty and freedom when he wrote that, “The Magna Carta was a remarkable document. Even all these centuries later, it continues to stand as one of the most important recognitions that people – not just royalty and church leaders – but all people, have rights that must be defended by any government that regards itself as legitimate. In that regard, it stands second only to the Bill of Rights…”

Sounds like someone is a fan of the Bill of Rights. Folks of all political stripes should appreciate that the right to a civil jury trial, as opposed to private arbitration, must be preserved. The American people should re-examine whether we want banks and other large institutions to get away with scuttling our rights to a jury trial and the option to band together as litigants against those institutions that seek to liberate our checking accounts of our hard-earned funds.

Obama and trial lawyers may not be everyone’s favorite but they are aligned with the Seventh Amendment on this matter. On the other hand, those who are arguing against the CFPB’s regulation and in favor of the status quo are doing the bidding of the banking industry.

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