EP 513- Class Action with Jer Nixon Part Two

Episode Notes

Transcript

Announcer:

Welcome to The. Jury. is Out a podcast for trial attorneys who want to sharpen their skills and better serve their clients. Your co-hosts are John Simon, founder of the Simon Law Firm Tim Cronin personal injury trial attorney at the Simon Law Firm and St. Louis Attorney Erich Vieth.

Tim Cronin:

And thank you for joining us again. We’re going to continue the discussion that we left off last time about class actions. I’m Tim Cronin, and we again have our guest

Jer Nixon :

Jer Nixon.

John Simon:

And I’m John Simon. I guess one of the things for a lot of the privacy issues that are developing that are those situations where I couldn’t see an arbitration clause in a lot of those because you’re really not, if they’re taking your personal information and using it and you didn’t have any agreement with ’em to use it. I mean, is it rare that you’d see some type of prohibition with arbitration? You wouldn’t see an arbitration clause in those cases?

Jer Nixon :

Well, you could if it were a company that you interact with. So if you are on Facebook and you have a Facebook account, you agree

John Simon:

To service. Yeah, no, tell what we agreed to on that. Right?

Jer Nixon :

Yeah. I mean, every time you log on it’ll say, Hey, you agree to the new terms of service, that there could be arbitration issues there. There’ve been news articles about situations like Clearview AI where it’s just facial recognition. You’re not involved. It’s looking at your biometric information and cataloging it. Yeah, you’re not going to have an arbitration agreement there, and I think that’s why you’re seeing a rise in privacy class actions, both because there are more privacy violations these days. Probably two people are becoming more concerned about it. And three, because you don’t have arbitration agreements in audit places,

John Simon:

Let’s not give them any ideas.

Jer Nixon :

They can start, I think the defendants might start flying around the planes with banners behind them at Cardinals games and say, Hey, if you read this and you continue to use our product that you agree to arbitration, and they’ll say, you’re bound by that. Good luck with that

John Simon:

We had a case,

Tim Cronin:

Course even worse now.

John Simon:

We had one of our payday lending cases 10, 15 years ago, and Erich, who is on our podcast, he may have talked about it on the podcast, was deposing the corporate representative. And it was an arbitration clause that we were trying to get around, and it may have been pre the at t case, I think it was. And the corporate rep was an attorney, was a CEO and an attorney and Erich video put the agreement, whatever the document was, the loan agreement in front of him and said, turn to page six and read the first sentence on the page. And it was 183 words or something like that, and he couldn’t get through it. The font was so small he couldn’t read it. And then even when he could read it, he was jumbling things all. And so just like you said, it’s kind of meaningless, especially the online stuff now where you’re buying a cup of coffee or something and they can throw in four or five pages on the receipt of you stipulating and agreeing to everything.

Jer Nixon :

And I think that maybe that’s what we should have led with this whole thing because John Roberts, the justice of the United States Supreme Court himself said he does not read terms and conditions that it’s not realistic. And when we have political debates about productivity growth being too slow and us wanting to be more productive and a more efficient society, if you’re saying that people are bound to these contractual terms, then the only way to really do that is to have people read every contract they sign. And if people read every contract they sign, I’m never leaving my house. I’ve got to read. I got to go home and read contracts. I’m not going to work. I got to read contracts just to update my

Tim Cronin:

Not and then be able to buy anything if I want to preserve my right to file a claim in a court of law.

Jer Nixon :

Yeah, can’t do that. And if you’re using some service that you’ve spent a lot of time using and have,

John Simon:

Buying a phone built up, just buying a phone,

Jer Nixon :

Buying a phone board. But even more extreme is if you buy the phone, you rely on that phone, you have your information organized on that phone and it didn’t at t obviously does have arbitration agreements, but if it didn’t, and then one day you just get hit, Hey, you’ve got to hit this update where you can’t use the phone. You’ve spent all that time using this thing, what are you going to do? And it’s just in so many ways, it’s not realistic

John Simon:

And not to mention the fact that you’re giving up your constitutional right. Correct.

Jer Nixon :

Set the amendment right.

John Simon:

You’re giving up a constitutional right every time you buy a phone or rent something or rent a movie or whatever,

Jer Nixon :

Based on laws that were made and analysis of those laws based on the idea of when you were contracting with your neighbor to buy three sheep from him. This is not in your face constant. Every 30 minutes thousand page consumer contracts back when our laws are based on contract law about me and you as an individually contracting for a thing. And then I believe that sort of standard consumer form contracts started with the mass production of sewing machines. They wanted to be able to sell sewing machines at mass. And that’s where you started to see consumer contracts. And

Tim Cronin:

There is no longer equal bargaining power, not remotely equal bargaining power.

Jer Nixon :

Yeah, there’s none. And especially with it’s on top of everything. And I think this is what’s leading a lot of frustration is that there has been consolidation as well at the same time in our economy where now you’ve got only two options of a company for one thing. And so even if you were able

Tim Cronin:

To, and both of them are half owned by BlackRock,

Jer Nixon :

They’re both owned by a private equity firm, and they both have the same arbitration agreement and class action waiver in it. No. So

John Simon:

What if I started selling name a product, bicycles or something, phones, whatever, widgets. Widgets or let’s say bicycles, and I wanted to put some clauses in there and I put one in for arbitration as we’re all saying that that would be court class action waiver and class action waiver. And the courts, our justice system would defend that and hold everybody to it and protect me. Well, what if I put one right under that, that they’re also giving up their first Amendment rights?

Jer Nixon :

Well, that one would get knocked out and the

John Simon:

Supreme Court, why is that? Maybe the Second Amendment rights. We could throw that in there in my bicycle shop.

Jer Nixon :

Well, I think the,

Tim Cronin:

And yet we’re okay with throwing away your seventh Amendment

John Simon:

Rights. Exactly. I mean, these are constitutional rights that we’re giving away Willy-nilly on 10 15 page contracts with fine print. And our court systems are okay with that. The Supreme Court’s okay with that.

Jer Nixon :

The Supreme Court’s justification was that the distinction here is that there’s a 1920s law called the Federal Arbitration Act that says the courts have to favor arbitration as a way to resolve claims. Because I guess at the time there were a lot of judges that didn’t like arbitration in these.

John Simon:

I think we’ll start doing that. What if we put that in old woman, my bicycle

Tim Cronin:

Shop? The distinction is the political ideology of the court when it is making the decisions. And do they favor businesses, in which case they do not like the Seventh Amendment. It’s entirely determined by the political ideology of the majority of the court.

John Simon:

Yeah. It’s like when Abe Lincoln was asked if he would rather have a jury or a judge try case he said immediately, who’s the judge? Right. But you know what? That’s not a surprise, is it? No. I mean, judges are like juries or jurors. I mean, we’re all human beings. We all have a background, a political lien.

Tim Cronin:

I’m going to start asking to voir dire the judge who’s going to oversee my case. Good. And then move to him her

John Simon:

Do that. In your next case where you’re trying to get around a judge, how do you feel arbitration clause

Tim Cronin:

Caps on damages for them against them.

John Simon:

But you don’t really, if you think about it, there’s no difference. I mean, I’ve been doing this a long time and judges are being asked to decide things that are arguably uncertain. A law is written and it’s uncertain. There is some uncertainty. There is a gray area, and you’re being asked to extend it or interpret it or apply it to a situation where it hasn’t been applied before. And naturally you’re going to be thinking about all the consequences and ramifications of it and who you are is going to have some effect on how you interpret it. I mean, that’s just the way it is. Not only is that the way it works, but that’s the way I would expect it to work. And it’s part of the nature of our system that you have individuals called judges making these decisions and juries making the decisions. But

Jer Nixon :

I mean, yeah, and the thing about the law is not to go full postmodernist, but it is all just made up by people. This is not laws of physics. So they’ve been able to use that to their advantage to drive policy changes under the guise of saying, Hey, this is what the text tells us we should do. Even though when,

John Simon:

Well, we’re, we’re getting to the politicians, not the judges, I’m sorry, whole different judges, more politicians. I would give the judges the benefit of the doubt. The politicians. Yeah, maybe not.

Tim Cronin:

We’re making it sound like class actions are dead. They are not. They’re alive and well, and Jer would like to work on them with you. So Jer, what are some of the trends in class action? I mean, these are realistic barriers that exist for certain types of class actions that had grown in popularity and now there are barriers to them. So what kinds of class action cases are you working on looking for trends you’re seeing?

Jer Nixon :

Yeah, so there were some setbacks, but I will say class actions are alive and well. And the numbers, if you see judgments and settlements over the last couple years, they are big numbers in aggregate. So the class action is alive and well, but maybe the types of cases are changing. Right now I work on a lot of privacy class actions, some consumer cases where we are outside of arbitration agreements and then some antitrust cases and some others. But a recent trend that’s really become a big thing is privacy class actions. One, because people are starting to understand the importance of privacy in ways that it wasn’t really tangible before. I think now with recent developments like chat, GBT and sort of powerful AI becoming available for consumers, what used to be pigeonholed as well, if the government has my private information, they could do some crazy conspiracy thing to paint me some way. Now any person with these sort of powerful computer models could take, if they can aggregate a lot of your private information, very uncomfortable, sort of what they could do with that beyond just stealing your identity and buying stuff or taking your money.

Tim Cronin:

I’m talking about giants that have a tremendous amount of data about our purchasing history or online activity, social media companies, particular online companies that sell, it’s like a retailer

Jer Nixon :

And can see your data of where you were at this time, this day we’ve got a facial scan of him from this spot

Tim Cronin:

And what’s doing my phone’s sitting on the table being listened to.

Jer Nixon :

So yeah, I mean we might need to just follow Edward Snowden, put the phones in the freezer and then have the convo. But we’re talking on a podcast now so we know we’re being recorded.

But recording when companies don’t tell you and monitoring when companies don’t tell you it’s sort of a big deal. It’s a big deal just because our country and the founding documents, there’s the importance of privacy was well known and spoken about and privacy for the reasons we talk about, but also intellectual privacy, being able to read and watch things that may not be totally in line with your views, which is a good thing. We need our views challenged, but you need to be able to do that without being monitored the whole time because there’s no way to do it. We don’t need to mention studies that have been about this, you know, act differently if you’re being monitored. And to develop as a human being, you need to be able to read and learn from a wide variety of sources without that being critiqued at every single moment,

Tim Cronin:

Even from getting exposure to alternative points of view. I mean, there’s algorithms on almost everybody’s social media of every type that are feeding you in an echo chamber. Like, oh, you click on, you tend to lean this way about this type of thing. You click on it and then now I just show you everybody who feels the same way.

Jer Nixon :

And if you’ve got more information on you, more of your data, we can figure out what engages Tim online.

John Simon:

What makes Tim angry and is that all to sell more like Twinkies and Ding Dongs and I mean, is it all just to sell us stuff?

Tim Cronin:

I mean on some social media, it’s just to keep you on it

John Simon:

So their ads get

Tim Cronin:

Paid, so they get paid for ads, they get more for ads,

John Simon:

Right? It’s all just to sell us more stuff that we really don’t need,

Tim Cronin:

And it’s keeping track of what you want and that changes

John Simon:

Gone and everything else.

Jer Nixon :

Well, I was going to say the related thing, and I think privacy and antitrust cases are highly related because you’re seeing a lot of the trends in both. And sometimes they’re related directly because in an antitrust case, we think of typically in the old days, like trust busting, breaking up monopolies, and then more

Tim Cronin:

Recently we need that to start happening again.

Jer Nixon :

Yeah, I think that we have had a bit of a turnaround there. And antitrust is now something that I don’t need to sit here and explain because people know generally what antitrust is talking about. And the same way with a price fixing case about these competitors agree. So you’re paying slightly higher prices for these goods. Well, if the competitors agree on privacy and what we’re doing with people’s data, that data can be currency for these companies. And it’s all sort of part of the same ecosystem online with the sort of consolidation of companies and with private equity firms are also buying companies in certain fields and rolling them up so there’s not competition. And that affects both prices and privacy.

Tim Cronin:

So some people you hear antitrust and you think, well, the Department of Justice has to try to break up or prevent mergers or whatever. But antitrust has lots, I mean, sometimes it’s claims by competitors against their competitors. And then what you’re talking about is class action antitrust. Are there sometimes class action antitrust cases where, what are they called, key TAM cases where you have to get permission from the government to bring it if they’re not going to do it?

Jer Nixon :

So a key TAM case is generally going to be usually, I mean I guess there could be some overlap with antitrust. Often it’s just going to be someone is, a company is stealing from the government in some way,

Tim Cronin:

Like Medicare or Medicaid fraud.

Jer Nixon :

That’s often how it comes into play. And then yes, either the government decides to take the case themselves or they decide not to, and you get permission to go forward to do it.

Tim Cronin:

And then antitrust class actions are like price fixing,

Jer Nixon :

Often price fixing. And what we’ve seen recently where in the 1980s it may have been all of us heads of the companies meet up in proverbial in the smoke field room and we say, Hey, let’s raise our prices. Let’s stop competing with each other so we can all get a couple extra yachts. Now you don’t need that. So now you’ve seen algorithmic price fixing and you’ve seen sharing data about prices with your competitors. And then you don’t need an explicit, hey in person,

Tim Cronin:

Hey, we’re

Jer Nixon :

Going to agree to do this and then we’ll hold each other accountable this way because we can share all that data, we can all agree to use the same algorithm and that will drive the prices up without us having an explicit agreement on prices.

Tim Cronin:

What’s the Matt Damon movie? The Informant? The informant? Is it Arthur Midland Daniels or something like that? Yeah. A DM. Yeah, A-D-M-A-D-M. So now it’s competitors sharing data and using the same algorithms that determine prices, which is in effect the same thing. Yes, as having the smoke-filled room where they go, Hey, we’re not going under $75 a unit.

Jer Nixon :

Yeah. So one big one these days that’s gotten some press and falls into the category that you were talking about earlier of class action. And MDL is an MDL class action about a company that contracts with the multifamily housing. So big apartment buildings in big cities, they will all use this company and they’ll say they’ll sign up with the company and the agreement says, Hey, you can sign up with us to use our pricing information algorithm, but you have to agree to use our prices a certain percent of the time. And so what that company does is it gets all the buildings. So I just moved from Chicago, this was a thing in Chicago. It’ll get all the different owners of the buildings in the area to sign up for their services. And then those you mean

John Simon:

Like cable services? Rental? Rental services? Rental services. Rental services.

Jer Nixon :

So say you’re paying $4,000 for two bedroom place in Chicago. Your building will share that information. They’ll say when your lease starts, when it ends, and there’s other information involved, but those are important data points. And they will use that information and they’ll tell the different buildings both, Hey, this is what you should charge and this is when your leases should come open because they want leases coming open at different times, so there’s not too much supply in the market. And so it raises prices, apartments, and you’ve seen housing prices have been a thing that’s been in the news. What

John Simon:

Are some of the entities that do this? Like Zillow

Jer Nixon :

Or No, so there’s a company RealPage that’s involved. You’ll see real page yield star. If you Google those, this will pop up. And it’s not a consumer facing company. It doesn’t want to do any business with you, so you don’t see it as a, but it’s

John Simon:

Effective consumers in

Jer Nixon :

A credit way. It’s affecting consumers because it’s,

John Simon:

It’s raising

Jer Nixon :

Rental rates pay more for rental across the country. So that’s where the more

John Simon:

And more rental properties also being purchased by private equity,

Jer Nixon :

That too. So the combination of consolidation and not wanting to compete has led to higher prices. And what’s private equity’s goal when they go in? I mean they want to make a spreadsheet, say the thing that they have is worth more money and is bringing in more money. How do you do that? One way is you cheat and price fixing. It’s very effective. It is effective. Private equity has done very well for itself. The leaders of those companies are doing fine, but that’s a place where you’re seeing more cases. I think there are a lot more out there that we don’t know about. I mean, part of the issue in some of the antitrust cases, price fixing cases, is they’re going to involve information that is not publicly known sometimes. So you’re going to need someone to come forward, you’re going to need to be able to get some information. Sometimes a journalist can break the story and then attorneys file cases to hold the company accountable. In some ways, journalists do one side in holding companies and corporations accountable in the public eye. And then class action attorneys can hold them accountable, financially

Tim Cronin:

Accountable,

Jer Nixon :

And hopefully get injunctions to have people stop doing things if the financial penalty isn’t enough to make ’em stop doing it itself. You see in the United States that we have overall high quality products and pretty high consumer trust in what you tell me, I’m buying, I’m buying. We were supposed to be able to believe that at least on some level. And I think that we’ve achieved it more than some parts of the world. I know in a couple places in Africa where there are people that are, there’s not enough food getting produced and there are seeds for sale and it’s like, what’s going on here? And that farmers don’t want to buy the good seeds that are labeled by the company because there’s so much fraud and people saying, Hey, these seeds do this thing. You’re buying these kind of seeds that they can’t even trust what they’re being labeled as. And sometimes you see the ridiculous labeling class action that’ll get headlines, but there are a lot of labeling class actions that maybe not some of the more trivial ones, but good ones. And they do keep things. They are necessary sort of to have a healthy free market economy

Tim Cronin:

So the consumers can trust that what they’re purchasing is really is what they expect to be

Jer Nixon :

Purchasing. And if you say it’s something else, that there’s a mechanism to hold you accountable.

Tim Cronin:

Well, we thank you for joining us for another episode of The. Jury is Out. I’m Tim Cronin.

Jer Nixon :

I’m Jer Nixon.

John Simon:

I’m John Simon. We’ll see you next time.

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