Courts

Fitbit Faces Possible Contempt Charge For Admitting What Everyone Already Knows

Mandatory arbitration clauses are designed to gut consumer rights. Apparently, that's news to the court.

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It can tell you how quickly you’ll give up your claim against the company!

Fitbit, and its lawyers from MoFo, have worked themselves into a tight spot with U.S. District Judge James Donato who, unsurprisingly, isn’t a fan of companies admitting that they’re trying to screw their customers out of due process.

In a recent hearing, Fitbit’s attorneys performed an astounding display of rhetorical seppuku by repeatedly arguing that the fees required to initiate an arbitration — mandatory under their agreement with consumers — run upwards of $750 meaning it just wouldn’t make sense for anyone with a smaller claim to pursue an action. It was an “emperor has no clothes” moment for the anti-class action cause in its efforts to keep companies from ever facing the consequences of numerous small transgressions, except in this case the emperor was working the day shift at the Bada Bing while the townspeople wanted to believe he was in church.

Judge Donato simply couldn’t believe a company would bank on high fees to keep consumers from pressing their claims, remarking that Fitbit’s behavior “appears to be an absolutely unacceptable level of gamesmanship” and potentially “a form of civil contempt.”

Fitbit’s “gamesmanship” goes even further than just hoping no one would pony up $750 to get redress over a cheap heartrate monitor. The company is battling a customer named Kate McLellan, who joined a class action against Fitbit as part of a group represented by Leiff Cabraser. After Judge Donato ruled — in true Lewis Carroll fashion — that the mandatory arbitration clause leaves the question of the enforceability of the arbitration clause solely to the arbitrator, McLellan went ahead and filed that demand for arbitration to determine the enforceability of the forced arbitration clause. Fitbit offered her a little more than 17 times the value of her claim to drop the matter and when she refused they took matters into their own hands, writing AAA and telling them that the matter was over, regardless of what McLellan may think.

Since the courts really don’t work that way (at least not since the Supreme Court laid down Campbell-Ewald), McLellan’s treatment at Fitbit’s hands became the focal point of Leiff Cabraser’s latest motion in the class action.

The business community’s war on the class action device isn’t new. It’s dressed up in all sorts of quasi-economic mumbo jumbo, but fundamentally it’s about robbing individual consumers — and as importantly the consuming public at large — of private redress for corporate malfeasance. Judge Posner railed that “the realistic alternative to a class action is not 17 million individual suits, but zero individual suits,” and while he meant that no individual would pursue a costly formal litigation for a small claim, the logic carries over to the world of arbitration.

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Because while the anti-class action spin machine touts arbitration’s “efficiency” and “cost-effectiveness,” they gloss over the fact that this is really only true for companies. Arbitration can and does resolve business disputes at a fraction of the cost of a full-scale litigation. For consumers seeking a fair shake from corporations, arbitration is a costly, confusing, and business-favoring nightmare. But atomization is the name of the game, because as long as individuals are prevented from coming together, there’s really nothing a company can do that it can’t sweep under the rug.

Or, as Fitbit admitted — though they’ve since backtracked, telling Alison Frankel of Reuters that they “never intended to close off any avenues for consumers” — by pricing complainants out of the system.

But, really, it seems as though Fitbit’s taking more heat for its candor than for its behavior. Did anyone seriously not understand the purpose of a mandatory arbitration agreement? Asymmetrical arbitration agreements, whether they’re buried in arcane service agreements or crafted for an abusive boss, are all about silencing complaints. That they’ve become so de rigueur that attorneys casually admit that they’re keeping people from filing otherwise warranted actions and go so far as to suggest only a crazy person might challenge that logic just shows how pervasive the Lochner Monster has gotten.

But maybe, like the case of the emperor’s stripper pole, it’s just going to take the judicial system a little longer to see what’s so obvious to the rest of us out here.

Fitbit lawyers reveal ‘ugly truth’ about arbitration, judge threatens contempt [Reuters]

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HeadshotJoe Patrice is an editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news.

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