How the Roberts Court Helped Out Wells Fargo

“I applaud how these hard-working salesmen met their quotas!”

If you were wondering why I listed AT&T v. Concepcion as one of the very worst Roberts Court decisions, here you go:

The bank has sought to kill lawsuits that its customers have filed over the creation of as many as two million sham accounts by moving the cases into private arbitration — a secretive legal process that often favors corporations.

Lawyers for the bank’s customers say the legal motions are an attempt to limit the bank’s accountability for the widespread fraud and deny its customers their day in open court.

Under intense pressure to meet sales goals, Wells employees used customers’ personal information to create unauthorized banking and credit card accounts in a far-reaching scandal that has rattled the San Francisco bank to its core, forcing the retirement of its longtime leader, John G. Stumpf, and enraging regulators and politicians of all stripes.

The bank’s arbitration push in recent weeks is fanning those flames anew.

“It is ridiculous,” said Jennifer Zeleny, who is suing Wells Fargo in federal court in Utah, along with about 80 other customers, over unauthorized accounts. “This is an issue of identity theft — my identity was used so employees could meet sales goals. This is something that needs to be litigated in a public forum.”

In arbitration, consumers often find the odds are stacked against them. The arbitration clauses prevent consumers from banding together to file a lawsuit as a class, forcing them instead to hash out their disputes one by one and blunting one of most powerful tools that Americans have in challenging harmful and deceitful practices by big companies.

Strict judicial rules limiting conflicts of interest also do not apply in arbitration, enabling some companies to steer cases to friendly arbitrators, according to a 2015 investigation by The New York Times.

Arbitration is also conducted outside public view, and the decisions are nearly impossible to overturn.

Ms. Zeleny, a lawyer who lives outside Salt Lake City and opened a Wells Fargo account when she started a new law practice, said it would be impossible for her to agree to arbitrate her dispute over an account that she had never signed up for in the first place.

The bank’s counterargument: The arbitration clauses included in the legitimate contracts customers signed to open bank accounts also cover disputes related to the false ones set up in their names.

Some judges have agreed with this argument, but some lawmakers and others consider it outrageous.

“Wells Fargo’s customers never intended to sign away their right to fight back against fraud and deceit,” said Senator Sherrod Brown, an Ohio Democrat, who introduced a bill last week that would prevent Wells from forcing arbitration in the sham account cases.

Yet even as the bank reels in the court of public opinion, Wells Fargo has been winning its legal battles to kill off lawsuits. Judges have ruled that Wells Fargo customers must go to arbitration over the fraudulent accounts.

In dismissing one large case seeking class-action status in California, a federal judge ruled last year that it was not “wholly groundless” that customers could be forced to arbitrate over accounts they had never agreed to. That case is now being settled, according to legal filings.

Some of these victims, admittedly, probably would have been kept out of federal court and/or denied class action arbitration claims no matter what. But California used to have regulations that limited forced arbitration clauses. Alas, the Roberts Court ruled that these regulations were preempted by federal law, even though they were clearly not preempted by federal law. In conclusion, the Roberts Court is all about ethics in gaming journalism federalism. So Wells Fargo will probably find that defrauding their customers won’t work out that badly for them in the end.

There are so many things the next unified Democratic government (if any) needs to do, but federal restrictions on forced arbitration contracts is something that should be on the radar. The extreme deference given to forced arbitration agreements is essentially a corporate license to steal, leaving consumers with rights but an effectively worthless remedy in many cases.