The Tyranny of Contract

The Supreme Court today issued another opinion (American Express v. Italian Colors Restaurant) making it harder to sue in federal court after you've "agreed" to arbitration and "agreed" to waive any authority to pursue a class action. This kind of case—strengthening arbitration clauses and weakening class action privileges—is what people point to as exemplifying the "pro-business" bias of the Roberts Court. I've pushed back on that argument before, but today I want to push back a little the other way.

Specifically, I want to push back on the idea that these decisions are admirable as vindicating the "liberty of contract." A good example of that argument is made by graysilverback-blawger Walter Olson, who hails today's decision as "a victory for freedom of contract."

I do not think today's decision and the others like it are a victory for any kind of freedom or liberty of contract. I think they are better understood as furthering a pernicious tyranny of contract. No one—and I mean no one—negotiates a credit card or cell phone or cable television contract. This is true for consumers and it is true for small businesspeople. These are take-it-or-leave it arrangements, so the only option is to vote with your feet and sign on with a competitor. But it is no surprise that all the options impose these same onerous terms and waivers because in the final analysis no consumer or small businessperson will ever choose a credit card or cell phone based on finely printed dispute-resolution procedures. We choose on price and features, full stop. Anyone sophisticated enough to understand the effect of these provisions is sophisticated enough to know there is no choice but to accept them.

That is not to say that the Supreme Court's decisions in these cases are necessarily wrong to enforce these provisions. I am suspicious of the "effective vindication" doctrine that was at issue in today's case because it is a judicially crafted exception to rather clear federal legislation. And the objectives the plaintiffs' bar seek to vindicate can be achieved the old fashioned way: through legislation.*

So these decisions can be defended in terms of judicial modesty, and as consistent applications of basic interpretative principles. But it goes way too far, I think, to celebrate them as a triumph for freedom. The existence of these contracts is best understood as a market failure. They have the effect—undisputed in today's opinion—of making it cost prohibitive for people to prove violations of their statutory rights. It may well be wise of the Supreme Court to say, "this is not our problem." (Or, as Justice Kagan put it, "too darn bad.") But let's not pretend that individual freedom was actually increased as a result.

UPDATE: Walter Olson points out on Twitter that "grayback" is apparently an obscure insult, which was not my intent. I meant "silverback," which is to say that Mr. Olson is like a gorilla and that is not at all offensive. In seriousness, I was ineffectively just referencing the fact that he's been blogging about the law longer than just about anyone.


*FOOTNOTE: The chances of such legislation getting passed are undeniable small, for much the same reason that the companies are able to impose these terms in the first place. The companies each have billions on the line, and the consumers have literally pocket change at stake. So there are public choice problems. But another way of looking at this is just that Congress is "pro-business" too.

“When you’re behind the wheel, there’s no such thing as a small distraction.”

Says Chuck Husak, an ad man, in this New York Times article about the tolls of distracted driving.

But if there as no such thing as a small distraction, then that means there is no such thing as a big distraction either.  All distractions are equal.

Of course, everyone knows that that there in fact is such a thing as a small distraction behind the wheel.  For example:

• My ear itches.
• "The Long and Winding Road" comes on the radio, forcing me to change the station.
• The sun is in my eyes.
• Etc.

Conclusion:  all distractions are not equal.  Some are big, some are small.

The question is whether talking on a cell phone, or texting, is a big or small distraction.  Mr. Husak wants to convince us that both are big distractions by denying that there is even such a thing as a small distraction.  As my itchy ear proves, that is false.  When people use that kind of easily disprovable rhetoric, it gets my defenses up.  It puts me in contrarian mode.

I blogged about distracted driving the other day, in the context of the happy news that the traffic fatality rate reached an all-time low in 2010.  I asked whether cell phones and texting-while-driving can really be such a menace when it is getting so much safer to drive.

Now this latest article in the New York Times cites the National Safety Council as estimating that 28% of all car crashes are caused by cell phones or texting.  But, interestingly, the accident rate has already decreased by almost 35% in the cell phone era (since 1990).  (Note that we are talking about crashes here, not fatalities -- so increased seat belt use is irrelevant.)  The NSC thinks there would be an additional 28% decrease if the cell phone had never been invented.  That would mean fewer than half the crashes per mile in 2006 than occurred in 1990 (see Table 2-17 at link).  Is that credible?  Do we really believe that, except for the invention of the cell phone, it would be more than twice as safe to drive now than it was just 20 years ago?

I don't buy it. 

Here's my theory.  Driving is very boring, and people are capable of paying only so much attention to it.  Cell phones aren't the source of our distraction; they are its object.  If not for cell phones, people would be distracted by other things, or would just end up daydreaming.  In fact, maybe cell phones keep the roads safe by keeping people from daydreaming -- or by distracting them enough to keep them awake!

Distracted driving -- or mountains out of molehills?

2010 was another record year.  I guess they're all record years in one way or another.  Sort of like how, according to my daughter: "You are my best ... my best dad."  I've got that going for me.

But 2010 was a record year in a good way:  it was safest year ever to be driving a car.  Total traffic fatalities were 32,788 -- the lowest raw number since 1949.  Per mile, there is no comparison:  in 1949 there were over 7 deaths per 100 million miles traveled; in 2010 there was just over 1.

So we've come a long way.  But I have a question:  how can we be making such improvements in road safety at the same time we are facing the growing menace of cell phone use and texting while driving?  We have all read about how talking on a cell phone -- even hands-free -- is the equivalent to driving with a BAC of .08 ("the legal limit").  And we have all sat at a stop light and watched driver after driver motor by while talking on a cell phone.  And yet ... the objective stats show that it gets safer and safer to drive.

Much safer.  Accident rates and traffic deaths are not just on a steep long-term decline -- they're on a steep short-term decline.  In 1994, the number fatalities per 100 million miles driven was 1.73.  In 2010 the number was 1.09.  By my lawyer-math, that's a 37% decline in just 17 years -- 17 years that happen to coincide with the invention and mass proliferation of cell phones.  And it's not just fatalities and injuries that are going down -- overall crashes are way down too.  According to this government publication (see Table 2-17, page 153) "crashes" per 100 million miles driven fell 28% -- from 276 in 1994 to 198 in 2006 (latest data available). In raw numbers, crashes fell from about 6.5 million in 1994 to just under 6 million in 2006, despite many more miles driven.  (This data also includes motorcycles, cyclists, and pedestrians, I think.) 

Surely cars and roads are getting safer.  But if cell phones and texting were really such a menace, I would expect that the safety numbers would just tread water.  Instead, we continue to get safer and safer on the road, even as the crisis of "distracted driving" spreads like a cancer across the land.      

I just bought an iPhone yesterday.  Literally yesterday -- that's how far behind the times I am.  I don't have a texting plan.  I actually pull over to talk on the cell phone (sometimes).  So this isn't a personal thing.  It's a contrarian thing.  I wonder if the concern over "distracted driving" isn't just hysteria.  And even if distracted driving is a problem, I wonder if it's a problem we can handle.  After all, cell phone use in a car is productive.  The very fact that we have tolerated losing tens of thousands of lives on the roadways every year for decades shows that we are willing to trade human life for increased efficiency and productivity.  The only question is how much productivity and efficiency we need to justify this loss of life.  Ultimately, even if cell phone use in cars makes driving more dangerous, maybe we can afford the risk, since driving while using them is still safer than driving has ever been before.