I’m finally getting around to listening to the House Financial Services Committee’s hearing March 9, 2023 on the CFPB. One of the witnesses at the hearing was Devin Watkins, an attorney at the conservative Competitive Enterprise Institute. Mr. Watkins’ testimony includes the following:
The Seventh Amendment of the U.S. Constitution mandates that “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” * * * Legal remedies, such as fines, fees, or any monetary damages above $20, must be determined by a jury.
* * *
The Declaration of Independence cited one cause of American independence: the English government “depriving us in many cases, of the benefits of Trial by Jury.” James Madison asserted, “Trial by jury in civil cases is as essential to secure the liberty of the people as any one of the pre-existent rights of nature.” John Adams recognized that “Representative government and trial by jury are the heart and lungs of liberty.” The 1776 Virginia Declaration of Rights and the Massachusetts Constitution required the civil jury trial to be “held sacred.”
Now Mr. Watkins was objecting to the CFPB’s practice of holding hearings before ALJs, who don’t conduct jury trials, and imposing penalties and damages on the respondents. But the argument applies also to arbitration, in which consumers are ordered to pay damages and penalties (e.g., late fees, penalty interest rates), without jury determinations.
No doubt the industry would respond by claiming that arbitration is consensual. But of course, as our study demonstrated, consumers don’t really consent to arbitration because they don’t know what they are agreeing to. Less than 9% of our respondents recognized that the contract they were shown included an arbitration clause that would bar their access to court. As for jury trials specifically, fewer than one in five of the respondents realized that they would give up the right to a jury trial by agreeing to the contract.
In any event, I am delighted that the CEI supports jury trials in consumer cases and I look forward to their expressing that opinion in battles over arbitration clauses.