Margaret Jane Radin’s latest work, Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law and a companion article and book chapter interrogate how now-ubiquitous fine print buried deep in consumer contracts affects the rights of ordinary Americans. This boilerplate can take many forms. It includes “extravagant exculpatory clauses,” choice-of-law provisions, and waivers of consequential damages. Frequently, and perhaps most importantly, it also includes agreements to arbitrate—and, in so doing, entails consent to eliminate the background protections we take for granted, including juries, reasonable filing fees, rights of appeal, rules of evidence, the ability to join with similarly aggrieved individuals, and stare decisis. Radin finds this fine print deeply troubling. She argues that, considered in tandem, these contractual terms make certain remedies for transgressions practically unavailable and thereby undermine individual autonomy, degrade democratic principles, and, ultimately, subvert the rule of law.
Because Radin is a contracts scholar—and her recent work is, on the face of it, about contract law—it would be easy for those of us who traffic in tort to miss the scholarship’s significance. That would be a mistake.
It would be a mistake, most notably, because the shifts that animate Boilerplate are taking place squarely on our turf. This is seen most clearly in compelled arbitration. NPR reports that arbitration agreements are now “common throughout the health care industry—in hospitals, surgery centers and doctors’ offices.” According to the New York Times, hundreds of cases involving elder abuse, neglect, and wrongful death have ended up in arbitration, where the clauses have been “consistently upheld.” And, many remember how, in 2014, General Mills tried to get its consumers to agree to route even garden-variety product liability claims to binding arbitration (with consent obtained whenever a customer downloaded online coupons or “liked” the company on Facebook), though that effort was ultimately abandoned in the face of widespread criticism. True, arbitration agreements will never overtake all of tort because certain parties who come into accidental contact with one another won’t have preexisting relationships. But, if allowed to continue on the current track, arbitral contracts do threaten to gobble up a large swath of the tort law ecosystem.
Further, though some have argued that forced arbitrations don’t alter legal rights, but merely simplify the procedures by which those same rights are vindicated, recent studies cast doubt on that claim. Arbitration clauses do not merely relocate the playing field, these studies suggest; they slant the field on which the ballgame is played. A Public Citizen study of arbitration proceedings in California found that businesses won nearly 94 percent of cases. The federal Consumer Financial Protection Bureau (CFPB) recently concluded that financial corporations prevailed in 93 percent of claims they asserted against consumers in arbitration, whereas consumers prevailed in only a tiny fraction of the claims they lodged against financial institutions. And, a recent study of 25,000 arbitrations conducted by the New York Times, found that roughly two-thirds of consumers contesting credit card fees failed in their arbitration attempts.
So, too, the very existence of an arbitration clause appears to dissuade plaintiffs from taking remedial action. According to an investigation by the New York Times, between 2010 and 2014, only 505 consumers—nationwide—went to arbitration over a dispute of $2,500 or less. The same review found that Verizon, which has more than 125 million subscribers, faced sixty-five consumer arbitrations in those five years; Time Warner Cable, with 15 million customers, faced seven; and Sprint, which boasts 57 million subscribers, faced six. Now, as far as I know, there are no data on how many tort victims abandon their injury claims in the face of arbitration agreements. But, the above information indicates that, when it comes to claim initiation, arbitration clauses can act as a powerful deterrent.
Radin’s recent work brings overdue attention to this problem of rights deletion in general and compelled arbitration in particular, and tort scholars ought to read it on that basis alone. But it goes beyond that, in that Radin’s work also adds a provocative new chapter to the long story of the intermingled but uneasy relationship between contract and tort.
Of course, contract law and tort law have never been totally separate or discrete. Many situations (including claims involving legal malpractice, medical malpractice, and products liability), fall on what Radin calls the “shifting, malleable, fuzzy line” between the two causes of action. Yet, it is tort law 101 that, ever since MacPherson v. Buick, decided by Justice Cardozo exactly one century ago, tort has bested contract in the competing doctrines’ long struggle.1 In the words of Professor Gregory Keating: “Tort law has triumphed over contract . . . and tort law—not contract . . .—generally determines the duties that people owe to each other with respect to the reasonably foreseeable risks of physical harm that their acts and activities create.”
Yet, what Radin points to is a quiet counterrevolution. In this new world, contracts may not formally redefine “the duties that people owe to each other.” But particularly forced arbitration agreements, drafted by sophisticated parties and agreed to by rushed and distracted individuals, may just as well, for they dramatically alter the practical consequences that flow from the sophisticated party’s breach.2 A bedrock tenet of tort law, in other words, is now in some doubt.
Radin’s suggestion of a path forward similarly blurs doctrinal divides. For here, Radin suggests that the solution to our current trouble won’t be found within contract. Instead, for the worst corporate offenders, it is tort law that holds the key.
Specifically, Radin calls for judges to evaluate contractual provisions along three dimensions: (1) the nature of the right that’s been truncated, (2) the quality of consent ostensibly obtained, and (3) the extent of social dissemination of the boilerplate scheme. Then, if the court finds that a firm has engaged in a mass deletion of market-inalienable rights with inadequate consent, not only must the court reverse the deletion.3 The court also ought to allow affected individuals to assert a new cause of action against the corporate entity. Similar to defamation and intentional infliction of emotional distress, this new cause of action is to be called the “intentional deprivation of basic legal rights” and come with sizable penalties.
Thus, there is a fascinating feedback loop: The current problem with (some of) tort law lies in contract law; it lies in the fine print that is eroding individuals’ legal protections. And, in Radin’s telling, the solution to the problem with contract law can be found, with a dash of ingenuity, in common law tort.
- MacPherson v. Buick Motor Co., 217 N.Y. 382, 390 (1916) (“We have put aside the notion that the duty to safeguard life and limb, when the consequences of negligence may be foreseen, grows out of contract and nothing else. We have put the source of the obligation where it ought to be. We have put its source in the law.”).
- In addition to being “rushed and distracted,” of course, individuals who waive rights for legal redress tend to be laboring under well-known cognitive biases, including optimism bias (i.e., “that bad thing surely won’t happen to me”) and myopia bias (individuals’ tendency to overweigh the short term relative to the long term).
- Market inalienable rights, Radin explains, include certain political rights, such as the right to redress grievances, and human rights, including freedoms of speech and privacy.