Recent Equifax Breach Prompts Criticism of Arbitration Provisions (Updated)

The credit monitoring firm, Equifax, recently suffered a massive data breach, resulting in the exposure of the personal information of approximately 143 million Americans. This personal information includes names, Social Security numbers, birth dates, and addresses.

Equifax, realizing how terrible this is, has tried to respond by offering free credit report monitoring services to its customers for a year. But this isn't going over very well, as it appears that Equifax may be attempting to get people to waive their class-action rights and agree to binding arbitration provisions by signing up for the credit-monitoring service. From the Wall Street Journal:

The fine print in the Equifax agreement concerning the monitoring services said that consumers who take part waive the ability to bring or participate in a class-action suit, a class arbitration or other similar legal actions. That seemed to suggest that consumers would be bound to an individual arbitration process with the company, which some argue is a more difficult place for consumer to get larger rewards for their problems.

The Washington Post has similar reporting here, and a report from MarketWatch is here.

The Terms of Service that contain the "fine print" can be found here. Here is the relevant provision:

Binding Arbitration. Any Claim (as defined below) raised by either You or Equifax against the other shall be subject to mandatory, binding arbitration. As used in this arbitration provision, the term "Claim" or "Claims" means any claim, dispute, or controversy between You and Us relating in any way to Your relationship with Equifax, including but not limited to any Claim arising from or relating to this Agreement, the Products or this Site, or any information You receive from Us, whether based on contract, statute, common law, regulation, ordinance, tort, or any other legal or equitable theory, regardless of what remedy is sought. This arbitration obligation extends to claims You may assert against Equifax’s parents, subsidiaries, affiliates, successors, assigns, employees, and agents. The term "Claim" shall have the broadest possible construction, except that it does not include any claim, dispute or controversy in which You contend that EIS violated the FCRA. Any claim, dispute, or controversy in which You contend that EIS violated the FCRA is not subject to this provision and shall not be resolved by arbitration.

The key in this paragraph is the definition of "Claim," which is sufficiently broad to cover damages arising from the data breach (as these damages presumably arise from one's relationship with Equifax).

Equifax may claim that the Terms of Service linked to above do not apply to customers who enroll in the "TrustedID Premier" program that Equifax is offering after the breach. That program is linked to from this page (with a URL of www.equifaxsecurity2017.com). The Terms of Service associated with the TrustedID program are here, and while they also contain a pretty stringent-sounding arbitration provision, it does not contain the same, extremely broad "Claim" definition. [NOTE: See update below].

But the Terms of Service that I initially quoted should still apply to those who enroll in the TrustedID service because those Terms are extremely broad in their potential application:

THIS PRODUCT AGREEMENT AND TERMS OF USE ("AGREEMENT") CONTAINS THE TERMS AND CONDITIONS UPON WHICH YOU MAY PURCHASE AND USE OUR PRODUCTS THROUGH THE WWW.EQUIFAX.COM, WWW.IDENTITYPROTECTION.COM AND WWW.IDPROTECTION.COM WEBSITES AND ALL OTHER WEBSITES OWNED AND OPERATED BY EQUIFAX AND ITS AFFILIATES ("SITE"). YOU MUST ACCEPT THE TERMS OF THIS AGREEMENT, INCLUDING THE ARBITRATION AGREEMENT CONTAINED IN SECTION 4 BELOW, BEFORE YOU WILL BE PERMITTED TO REGISTER FOR AND PURCHASE ANY PRODUCT FROM THIS SITE. BY REGISTERING ON THIS SITE AND SUBMITTING YOUR ORDER, YOU ARE ACKNOWLEDGING ELECTRONIC RECEIPT OF, AND YOUR AGREEMENT TO BE BOUND BY, THIS AGREEMENT. YOU ALSO AGREE TO BE BOUND BY THIS AGREEMENT BY USING OR PAYING FOR OUR PRODUCTS OR TAKING OTHER ACTIONS THAT INDICATE ACCEPTANCE OF THIS AGREEMENT.

Sorry for all the capital letters. I strongly suspect that attorneys who draft terms of service agreements are secretly angry people, and sometimes the rage manifests itself in the work product.

In case you cannot read the paragraph above, it applies the terms in the Agreement to all websites owned and operated by Equifax and its Affiliates.

In response to critics pointing out how Equifax appears to be systematically herding potential Plaintiffs' into agreeing to binding arbitration, Equifax has set up this "Progress Update" page where it tries to put out the new fire that it has caused:

2). NO WAIVER OF RIGHTS FOR THIS CYBER SECURITY INCIDENT

In response to consumer inquiries, we have made it clear that the arbitration clause and class action waiver included in the Equifax and TrustedID Premier terms of use does not apply to this cybersecurity incident.

Have they though?

Let's go back to the Terms of Service -- specifically, to the relevant portion of the integration clause near the end:

ENTIRE AGREEMENT BETWEEN US. This Agreement constitutes the entire agreement between You and Us regarding the Products and information contained on or acquired through this Site or provided by Us, including through other linked third party Internet sites.

This appears to exclude Equifax's damage control statements, which appear on a separate page and are not included in the terms of the Agreement. All Equifax would need to do would be to point to this clause and argue that its statements elsewhere about the arbitration agreement not applying are of no legal relevance.

In short, commentators who are criticizing Equifax's response seem to have a pretty good point. Signing up for Equifax's free (for a year) credit report monitoring service may result in a waiver of rights that the average consumer would not expect, and likely would not agree to if it were put into plain English.

All of this may end up being moot, however, as signing up for the credit monitoring service requires customers to give Equifax the last six digits of their Social Security numbers. Perhaps those willing to entrust Equifax with this information following a breach of this magnitude are willing to agree to just about anything, including a waiver of the right to trial and right to join in a class action.

[UPDATE: 9/11/2017]

I have revised the post above to add the link to the TrustedID Program Terms of Use, which I had not linked to in the original post. Additionally, at the time I wrote the initial post, the TrustedID Program's Terms of Use included an arbitration provision, albeit one that was less all-encompassing than the provision in Equifax's general Terms of Service Agreement. The TrustedID Program's Terms of Use have now been updated and no arbitration provision appears in these terms at all. The TrustedID Agreement contains integration clause near the end of the Agreement, which states, in pertinent part:

ENTIRE AGREEMENT BETWEEN US. This Agreement constitutes the entire agreement between You and Us regarding the Products and information contained on or acquired through this website or provided by Us, including through other linked third party Internet sites.

This may have the effect of fulfilling Equifax's promise that their arbitration provisions do not apply to the recent breach. Users affected by the breach could visit the webpage for the TrustedID Program without ever accessing Equifax's general website (say, by linking to the TrustedID page from the link in the post above). And while the broad terms of Equifax's general Terms of Use still apply, Equifax would probably have a harder time arguing in court that customers are bound to the general Terms of Use if those customers could have enrolled in the TrustedID Program without ever visiting (or being prompted to visit) a page containing or linking to Equifax's general Terms of Use.

In short, users looking to enroll in the TrustedID Program now have a much stronger argument that they have not agreed to arbitration and may still pursue claims in court, either as individuals or through a class action. Of course, I just checked the TrustedID page and it is still seeking the last six digits of my Social Security Number ... so users still must decide whether entrusting Equifax with this information following the breach is a prudent action to take.

North Carolina Court of Appeals Rejects Constitutional Challenge to Alienation of Affections and Criminal Conversation Causes of Action

From the Washington Post:

A jilted husband’s lawsuit against a doctor accused of stealing his wife’s love can proceed after a North Carolina appeals court ruled Tuesday that the husband can continue suing the spouse’s lover, seeking damages.

The state Court of Appeals decision resurrects a lawsuit that a trial judge had thrown out in Forsyth County, whose seat is Winston-Salem. The judge ruled that state law violates a person’s constitutional free speech and free expression rights to engage in intimate sexual activity and expression with other consenting adults.

North Carolina is one of only about a half-dozen states that still allow lawsuits accusing a cheating spouse’s lover of alienation of affection and criminal conversation.

The Court of Appeals' opinion is here. From the introduction to the opinion:

This case concerns two common law causes of action—alienation of affection and criminal conversation—that permit litigants to sue the lovers of their unfaithful spouses. These laws were born out of misogyny and in modern times are often used as tools for enterprising divorce lawyers seeking leverage over the other side.

Defendant Derek Williams contends that these aging common law torts are facially unconstitutional because they violate individuals’ First and Fourteenth Amendment rights to engage in intimate sexual activity, speech, and expression with other consenting adults.

As explained below, we reject this facial constitutional challenge. Claims for alienation of affection and criminal conversation are designed to prevent and remedy personal injury, and to protect the promise of monogamy that accompanies most marriage commitments. This sets these common law claims apart from the discriminatory sodomy law at issue in Lawrence v. Texas, 539 U.S. 558 (2003), which was not supported by any legitimate state interest and instead stemmed from moral disapproval and bigotry. Similarly, these laws (in most applications) seek to prevent personal and societal harms without regard to the content of the intimate expression that occurs in the extra-marital relationship. Thus, under United States v. O’Brien, 391 U.S. 367 (1968), these torts are constitutional despite the possibility that their use burdens forms of protected speech and expression.

I have not had a chance to look through the opinion, but will do so in a later post. For now, the media outlets covering the case have failed to link to the full opinion, so hopefully anyone else who wants to write about it will see this post and link to the opinion like I did.

This case is particularly notable because a North Carolina Superior Court judge struck down an alienation of affection lawsuit in 2014 arguing that there was no rational basis for the law and noting that the law chilled protected speech. My post breaking down that decision and examining North Carolina's law is here.

From a quick glance at the Court of Appeals opinion, it looks like there is some fairly in-depth discussion of the law's First Amendment implications, which I will be interested in reading in light of my prior criticism of the law. Additionally, the fact that this is a facial challenge to the law may not foreclose future challenges -- although having an appellate decision on record upholding the law may deter lower courts from upholding such challenges. I will discuss this in more depth in a future post.

A Survey of State Laws Against Glue Sniffing and Driving Under the Influence of Glue

After writing yesterday's post on this story about a man arrested in Cedar Rapids, Iowa for allegedly driving while sniffing fumes from an aerosol can, I decided to do a little more research into glue sniffing laws in other states. As I noted in yesterday's post, Cedar Rapids' ordinance does not apply to any substances other than glue or cement, so any non-adhesive, aerosolized substances that people may inhale to get high are not covered by the ordinance. Additionally, I was unable to find any provisions in Iowa law regarding driving under the influence (operating while intoxicated) that clearly applied to driving while under the influence of inhaled glue or other aerosolized substances.

Cedar Rapids' ordinance banning glue sniffing states:

62.29 - GLUE SNIFFING.

(a) As used in this section the term model glue shall mean any glue or cement containing toluene, acetone, or other solvent or chemical having the property of releasing toxic vapors.   

(b) No person shall, for the purpose of causing a condition of intoxication, euphoria, excitement, exhilaration, stupefaction, or dulling of the senses or nervous system, smell or inhale the fumes from any model glue; provided, however, that this section shall not apply to the inhalation of any anesthesia for medical or dental purposes.                           

(c) No person shall possess, buy, sell, transfer possession, or receive possession of any model glue for the illegal purposes set forth in subsection (b) hereof.

While I concluded that Cedar Rapids' ordinance did not apply to the conduct described in the article, there are other, more expansive, state laws on glue sniffing that Cedar Rapids may want to imitate if it wants to broadly ban the huffing of fumes from glues and aerosols.

Driving Under the Influence of Glue?

I like to check in on what's happening in my old home state of Iowa, and in doing so today I was drawn to this KCRG story on an (allegedly) very stupid and irresponsible driver:

A Cedar Rapids man was charged with Driving Left of Center and Glue Sniffing.

An officer was traveling westbound in the 4500 block of 1st Avenue East around 5 p.m. on August 29 when they saw a car driven by James Knight, 58, traveling in the left lane veer into the right lane.

The car crossed the dotted line and the driver corrected it, but then crossed the solid yellow line dividing the westbound lanes with the center turn lane.

The officer saw the driver holding a canister and suspected Knight may be huffing. He followed the car and when it stopped, the officer got out of his squad car and approached Knight's car.

The driver appeared to be passed out or had blacked out. When the officer knocked on the window, the driver appeared startled and the car began to roll forward.

The officer told the driver to put the car in park but the driver didn’t seem to understand and appeared to be in some intoxicated state.

The vehicle rolled forward and hit another parked car.

The officer was able to put the car in park. Knight was holding an aerosol can and denied huffing the gases out of the can.

When the story's headline contains "glue sniffing," it's difficult not to click.

Knight's reported behavior is more dangerous than driving over the center line, so it is understandable that the authorities wanted to charge him with something more than simply driving over the center line. Knight probably cannot be charged with driving under the influence (or operating while under the influence, to use Iowa's language) as this statute (Iowa Code 321J.2) is limited to those under the influence of alcohol or drugs. "Drug," is conveniently undefined under Iowa's OWI laws. Unless there is an extremely expansive definition of "drug" elsewhere in the Iowa Code that applies, the language of the OWI statute appears to foreclose charging Knight with this offense, which is most likely why Knight was not charged with OWI.

But does Knight's conduct constitute "glue sniffing?"

To answer this, we need the text of the Cedar Rapids City Ordinance that bans glue sniffing. You can find it here, and the complete text of the ordinance is as follows:

62.29 - GLUE SNIFFING.

(a) As used in this section the term model glue shall mean any glue or cement containing toluene, acetone, or other solvent or chemical having the property of releasing toxic vapors.   

(b) No person shall, for the purpose of causing a condition of intoxication, euphoria, excitement, exhilaration, stupefaction, or dulling of the senses or nervous system, smell or inhale the fumes from any model glue; provided, however, that this section shall not apply to the inhalation of any anesthesia for medical or dental purposes.                           

(c) No person shall possess, buy, sell, transfer possession, or receive possession of any model glue for the illegal purposes set forth in subsection (b) hereof.

Knight was reportedly in possession of an "aerosol can," and was presumably suspected of huffing gasses out of the can. People can get high from huffing or sniffing fumes from aerosol cans, as noted by the National Institute on Drug Abuse. But while the end result of sniffing these fumes may be similar to the result of sniffing glue, King's alleged conduct does not appear to fall under the scope of the glue sniffing ordinance.

Based on the language of the ordinance, it does not seem to apply to instances where a person sniffs fumes from an aerosol can to get high. The ordinance defines "model glue" as "any glue or cement containing toluene, acetone, or other solvent or chemical having the property of releasing toxic vapors." This definition is irritating, since it essentially uses the word "glue" to define "glue." While a number of chemicals are named, and while the catch-all at the end of the definition includes other toxic vapors, these chemicals are restricted to chemicals contained in "glue or cement." While I am not an expert on what is going on inside of an aerosol can, Wikipedia informs me that the cans contain small particles or liquids that are dispersed with a propellant, which creates the pressure that forces the particles/liquid out of the can as a spray. This sounds like quite the opposite of glue or cement, which have high viscosity.

It's possible one might attempt to apply the "or other solvent or chemical having the property of releasing toxic vapors" portion of the model glue definition to an aerosol can. But this reading is not correct, since this catch-all provision is part of a list that modifies the terms "glue" or "cement." The most subtle revision to the statute that could support such an interpretation would be to separate the named chemicals from the catch-all -- for example: "the term model glue shall mean any glue or cement containing toluene or acetone, or other solvent or chemical having the property of releasing toxic vapors." If this is what the ordinance said, Knight's conduct could potentially fall under it. As written, however, sniffing or huffing from an aerosol can does not fall under the language of Cedar Rapids' glue-sniffing ordinance.

[UPDATE - 8/30/2017]

A friend surprised me with a sudden outpouring of his proclaimed knowledge and enthusiasm for glue and its diverse potential forms. He informed me that glue does not necessarily have high viscosity, and that rubber cement, for example, could become fluid enough to be aerosolized if enough of a solvent were added to it. Indeed, here is a "Multipurpose Adhesive Aerosol" that I found with some quick Googling! I suppose that the law could be interpreted to apply to aerosolized adhesives, as glue can be defined by its function of binding objects together, although it most commonly refers to a substance that absorbs water and becomes a viscous solution with strong adhesive properties. Perhaps the courts will one day address these pressing questions regarding the true definition of glue.

Of course, it is doubtful that Knight was sniffing aeresolized glue, unless he somehow even less intelligent than initially thought. Such a practice would carry the risk of gluing his nose shut while attempting to get high, an outcome that would not only be inconvenient and painful, but that would also prevent Knight from continuing to sniff the aerosol. I suspect that if Knight indeed was using an aeresolized substance to get high, it was likely a substance other than the aeresolized adhesive that I linked to above.

The Arpaio Pardon: Awful, But Not Unconstitutional

"Pardoning Joe Arpaio Would Be a Constitutional Crisis" proclaims the headline of this article by Bob Bauer in Foreign Policy. The text of the article is less extreme, with no mention or definition of a constitutional "crisis." Yet Bauer's argument is in line with most of the criticism published in the last week arguing that President Trump's recent pardon of Sheriff Joe Arpaio would likely support a case for impeachment against Trump. Bauer writes:

[W]hile the president may well get away with the specific act of pardoning Arpaio, this action will not be without effect on future calls for impeachment. Unlike a pardon of himself, family members, or aides in the Russia matter, pardoning Arpaio would probably not result in the immediate demand for an impeachment inquiry. If, however, impeachment pressure increases, or a formal impeachment inquiry is launched on the basis of Russian “collusion,” obstruction, or on other grounds, an Arpaio pardon in the background will be highly damaging to the President’s position. It will immeasurably strengthen the hand of those arguing that Donald Trump does not have the requisite respect for the rule of law, or an understanding of the meaning of his constitutional oath, to be entrusted with the presidency.

(Bauer's article was published on August 25, 2017, prior to Trump's pardon of Arpaio). In the August 24, 2017 edition of the New York Times, Martin Redish argues that Trump's pardon of Arpaio would be unconstitutional because it violates the due process clause of the Fifth Amendment -- a theory that Redish admits is "novel" and unsupported by any Supreme Court opinions.

Other commentators call for Trump's impeachment as a result of the pardon. Noah Feldman claims that Trump's pardon of Arpaio is "so exceptional -- and so bad" because it involves the charge of criminal contempt of court. Explaining the background for Arpaio's conviction, Feldman writes:

Specifically, Arpaio was convicted this July by Judge Susan Bolton of willfully and intentionally violating an order issued to him in 2011 by a different federal judge, G. Murray Snow.

The order arose out of a civil suit against Arpaio brought by the American Civil Liberties Union, accusing him of violating the law by detaining undocumented immigrants simply for lacking legal status.

Snow issued a preliminary injunction that ordered Arpaio to stop running so-called saturation patrols -- police sweeps that essentially stopped people who looked Latino and detained those who were deemed undocumented. The basic idea was that the profiling, warrantless stops and detention were unconstitutional.

Yet despite the federal court’s order, Arpaio kept running the unlawful patrols for at least 18 months, and publicly acknowledged as much.

Arpaio was subsequently convicted of criminal contempt of court as a result. Feldman argues that Trump's pardon of Arpaio reflects "express presidential contempt for the Constitution," and "undermine[s] the rule of law itself" because it effectively pardons the willing violation of constitutional rights. Feldman's critique grows more abstract, as he argues that a pardon would "threaten the very structure on which [Trump's] right to pardon is based," and that "the president is breaking the basic structure of the legal order" by blocking the authority of the courts to tell law enforcement what the law is. Frank Bowman advances a similarly-toned argument, lamenting that the pardon is an impeachable offense because it is "a direct attack on the constitutional powers of the judiciary as a coordinate branch of government."

While I agree with these commentators that Trump's pardon of Arpaio is a bad thing, I am less inclined to argue that it undermines the "rule of law" or that it creates any constitutional crisis. I certainly do not think that it violates the Constitution.

On the constitutionality front, Ex Parte Grossman is a difficult obstacle for any would-be claim of unconstitutionality. There, the Supreme Court upheld a pardon of a conviction for criminal contempt of court, noting that the hypothetical impact of abusive pardoning of criminal contempt does not warrant "reading criminal contempts out of the pardon clause." Considering the hypothetical of even broader abuse, the Court noted:

If it be said that the President, by successive pardons of constantly recurring contempts in particular litigation, might deprive a court of power to enforce its orders in a recalcitrant neighborhood, it is enough to observe that such a course is so improbable as to furnish but little basis for argument. Exceptional cases like this, if to be imagined at all, would suggest a resort to impeachment rather than to a narrow and strained construction of the general powers of the President.

It is important to consider Grossman's broader lesson, particularly for critics like Bowman who argue that Trump's pardon is an attack on the constitutional powers of the judiciary. Any pardon undoes a judicial ruling -- it is a direct check that the executive branch of government has on the judiciary. Trump, in pardoning a conviction of criminal contempt stemming from constitutional rights violations, has simply laid out this conflict in what may be its rawest possible form. While it is "emphatically the province and duty of the judicial department to say what the law is," the Constitution explicitly grants the President the ability to override whatever the courts might say, and does not place any procedural constraints on the pardon power (such as a requirement that the Department of Justice review a petition for a pardon) or restrict the power to instances that are apolitical. Accordingly, Trump's pardon is an instance where the executive's check on the judiciary is extremely apparent, but this does not warrant cries of a "constitutional crisis" or a threat to "the very structure on which the right to pardon is based."

That being said, I believe that Trump's pardon of Arpaio is a disturbing endorsement of race-based enforcement of laws, and helps out a former Sheriff who has done many, many terrible things. And critics should still point out all of the problems with Trump's pardon, and should emphasize that Trump has just endorsed a brutal and senseless approach to law enforcement.

And you may notice that my argument above does not dismiss the possibility of impeachment. I don't. And I won't. Because as the too-often ignored case of Nixon v. United States tells us, the basis for impeachment is a political question, meaning that impeachment effectively means whatever Congress decides, and the courts will not review or challenge the determination. Interestingly, the Court would likely say the same of any challenge to Trump's use of the pardon power. Trump can pardon whatever the heck he wants, but on the flip side, he can be impeached for whatever the heck Congress wants.

At base, this system may seem imprecise and the implications of pardons and impeachments may be profound. But it is ultimately how the system was designed. Trump's recent pardon is not a crisis, but is instead an example of the system in operation, albeit an operation performed for an awful reason. It is not a system that is in crisis.

Wells Fargo Turns to Arbitration Clauses to Neutralize False Account Lawsuits

The New York Times reports that Wells Fargo has been using arbitration clauses in its contracts with customers to defeat claims that the bank set up false accounts for customers:

Ms. Zeleny, a lawyer who lives outside Salt Lake City and opened a Wells Fargo account when she started a new law practice, said it would be impossible for her to agree to arbitrate her dispute over an account that she had never signed up for in the first place.

The bank’s counterargument: The arbitration clauses included in the legitimate contracts customers signed to open bank accounts also cover disputes related to the false ones set up in their names.

Some judges have agreed with this argument, but some lawmakers and others consider it outrageous.

“Wells Fargo’s customers never intended to sign away their right to fight back against fraud and deceit,” said Senator Sherrod Brown, an Ohio Democrat, who introduced a bill last week that would prevent Wells from forcing arbitration in the sham account cases.

Yet even as the bank reels in the court of public opinion, Wells Fargo has been winning its legal battles to kill off lawsuits. Judges have ruled that Wells Fargo customers must go to arbitration over the fraudulent accounts.

In dismissing one large case seeking class-action status in California, a federal judge ruled last year that it was not “wholly groundless” that customers could be forced to arbitrate over accounts they had never agreed to. That case is now being settled, according to legal filings.

An earlier report, also in the New York Times, details Wells Fargo's efforts to compel arbitration in a Federal District Court in Utah:

Wells Fargo has asked a Federal District Court to order dozens of customers who are suing the bank over the opening of unauthorized accounts to resolve their disputes in private arbitrations instead of court, according to legal documents. 

The motion, filed in the United States District Court in Utah on Wednesday, is in response to the first-class action lawsuit filed against Wells since it agreed to pay $185 million in penalties and $5 million to customers for opening up to 2 million deposit and credit-card accounts in their names without their permission. 

. . .

Mandatory arbitration rules inserted into account-opening agreements prohibit customers from joining class actions or suing Wells Fargo. Instead, the agreements require individual, closed-door arbitration. 

Mandating arbitration when signing up for financial products has become standard practice after a Supreme Court decision in 2011 validated the practice. But customer advocates say it improperly denies customers the legal protections of court proceedings, such as the right to appeal, and helps to conceal corporate misconduct from the public and regulators because the related documents and hearings are not made public.

Folks in the media seem to have an unfortunate aversion to linking to actual documents, but I did some searching and you can find Wells Fargo's Motion to Compel Arbitration in the Utah case here. You're welcome, dear reader.

Wells Fargo's position in this motion is that the Plaintiffs admit that they set up at least one account with Wells Fargo voluntarily. In doing so, they voluntarily entered into agreements that their disputes with Wells Fargo would be settled through binding arbitration.

Here is one example of such a set of facts that Wells Fargo sets forth in its motion:

On July 9, 2010, Sbeen Ajmal, a California resident and at the time a Wells Fargo employee, opened a team member checking account (x5671) and a consumer savings account (x6215). Ajmal signed the Consumer Account Application for the two accounts as the primary joint owner on July 9, 2010; Mohammad Nazir was listed as a secondary joint owner. (Declaration of Karen Nelson (“Nelson Decl.”) ¶ 26, Ex. 3-A at 3.) In signing this application, Ajmal confirmed the following: “I have received a copy of the applicable account agreement and privacy brochure and agree to be bound by them… . I also agree to the terms of the dispute resolution program described in the account agreement.” (Id.; see also id. ¶ 26 & Ex. 1-G (March 2010 Consumer Account Agreement).) Ajmal further agreed that “disputes will be decided before one or more neutral persons in an arbitration proceeding and not by a jury trial or a trial before a judge.” (Id. ¶ 26, Ex. 3-A at 3.) Ajmal actively used her team member checking account (x5671), and had her paychecks directly deposited into the account. (Id. ¶ 27, Ex. 3-B.)

Another example references a customer who received a welcome letter stating that if his account remained open past a certain date, it would be governed by terms in the "Consumer Disclosure brochure." Among the terms in the brochure was an agreement that any "dispute" arising between the customer and Wells Fargo would be settled through arbitration. As for the definition of "dispute," the contract provided this definition:

[A]ny unresolved disagreement between you and the Bank that relates in any way to account[**] [emphasis added] or services described in this brochure [including] any claim that arises out of or is related to these accounts, services or related agreements. It includes claims based on broken promises or contracts, torts (injuries caused by negligent or intentional conduct), or other wrongful actions. It also includes statutory, common law and equitable claims. A dispute also includes any disagreement about the meaning of this Arbitration Agreement, and whether a disagreement is a ‘dispute’ subject to binding arbitration as provided for in this Arbitration Agreement.

[**NOTE: The quoted portion in the motion says "account," although it makes more sense if read as either "accounts" or "the account." Each alternative reading, however, significantly changes the potential scope of the arbitration agreement, as described in more detail below.]

Wells Fargo's argument is that the arbitration agreement in the accounts that the Plaintiffs admit to entering voluntarily apply to the dispute arising from Wells Fargo's alleged creation of additional accounts for those Plaintiffs without those Plaintiffs' permission. The Plaintiffs will likely argue that the scope of each arbitration agreement was limited to the account that was voluntarily created, and not to any accounts created without permission.

Wells Fargo's argument has merit because the arbitration provisions cited in its motion are generally quite broad. The bank can argue that once the customers created a contractual relationship with Wells Fargo, they agreed that future actions of Wells Fargo relating to the accounts or services fell under the arbitration provision in that contract. This argument is strongest under the terms of the contract described in the first quoted paragraph above.

But under the terms described in the second quoted paragraph above, Wells Fargo's argument might face more of an uphill battle. There, the "disputes" covered by the arbitration provision may be limited to the customer's account -- or to Wells Fargo accounts in general, depending on whether the term "account" is read as "the account," or "accounts." Based on the remainder of the quote and its context, it looks like the intended word was "accounts," which would strengthen Wells Fargo's position, but the quote as stated is ultimately unclear. If the Court reads the agreement giving rise to the account to extend only to Wells Fargo's actions in providing services under that particular account, the Plaintiffs will have a stronger argument, at least to the extent that the Consumer Disclosure brochure is the only applicable agreement.

The New York Times references some critics and lawmakers who are angry with Wells Fargo's strategy, but from a pragmatic point of view the bank would be foolish not to use these agreements. Arbitration agreements are supported by favorable Supreme Court case law, and because they can thwart Plaintiffs' litigation efforts early in the process. Whether anger by consumers and legislators over Wells Fargo's arbitration maneuvers is enough to prompt changes in the law governing arbitration clauses remains to be seen.

Fish, the Fourth Amendment, and the Scope of Consent

It's always a pleasant surprise to see legal disputes that involve fish for nonsensical reasons, particularly fish-related disputes that may be heard by the United States Supreme Court. Cases involving salmon are of particular interest (see, e.g. here and here). 

I was therefore thrilled to see this report by James Gill of the New Orleans Advocate on the case of Jacson Moore, who thought he could successfully smuggle marijuana inside of frozen salmon. Moore thought wrong:

Baton Rouge police were staking out the UPS depot in Port Allen in 2012 when they noticed a package from Oakland, California, which is evidently the source of many illegal drug shipments. The package was addressed to Moore, who has a police record that would heighten suspicions that drugs were inside. 

The police department, of course, has sniffer dogs that could have settled the issue, but K-9 was not called in. Neither was a search warrant applied for. The cops just kept tabs.
Moore retrieved the package from his doorstep, re-emerging a little later with a Styrofoam container he put in the trunk of his car. He then drove off on an erratic path that indicated he was “heat checking” — trying to make sure the cops weren't on his tail. But they were, and, after 15 zigzagging minutes, he was pulled over. 

A rule of thumb might be that an offender with contraband in his car is best advised not to consent to a search, but Moore did so after being told that the police who stopped him were investigating an armed robbery. He evidently figured that nobody seeking the fruits of a heist would look twice at a few frozen members of the finny tribe. 

When the cops did, he said the fish were a present from his aunt. Officers cut them open and found the dope. Moore also gave them permission to search his apartment, where they found more cannabis and a gun.

Moore argued that the search was unconstitutional, and while the trial court agreed, its decision was overturned on appeal. The Louisiana Supreme Court declined to hear the case although Justice Crichton and Justice Weimar dissented. Joe Gyan Jr. of The Advocate reports that Moore is now trying to appeal to the United States Supreme Court:

In a legal brief filed at the Supreme Court, Messina claims the officers did not have probable cause to believe contraband was in the car, and he says Moore's consent to search the car was not freely and voluntarily given because officers lied about investigating a robbery. 

Messina acknowledges that officers can use deception during interrogations, but he stresses that such interrogations must be preceded by police informing the suspect of certain constitutional rights, such as the right to remain silent. 

"There is a distinction between misleading a defendant once he has relinquished a Constitutional right versus misleading a defendant in order to cause him to relinquish a Constitutional right," he argues in the Supreme Court documents.

There had better be a bit more to Messina's argument, since police can lie in order to gain consent for searches or entry onto property. No less a Fourth Amendment stickler than Justice Warren held that officers can lie about their identity to gain access to property in order to find evidence of drugs.

This is not to say that officers' ability to deceive is unlimited, nor is it to say that Moore does not have a decent Fourth Amendment argument. Indeed, the officers' lie about what they were searching for (evidence of an armed robbery), and the scope of their ultimate search raises significant constitutional concerns. But this case is not so much one of deceit as it is a test of the scope of consent in the Fourth Amendment context.

Police officers can ask for consent to search a suspect's home, vehicle, or person. If officers obtain consent to conduct a search, incriminating evidence that they discover can be admitted at trial. There are limits to the consent exception to Fourth Amendment protection. For one, the consent must be voluntary. Additionally, officers cannot exceed the scope of the authority they are granted by the subject's consent. As Justice Stevens wrote in Walter v. United States:

When an official search is properly authorized—whether by consent or by the issuance of a valid warrant—the scope of the search is limited by the terms of its authorization. Consent to search a garage would not implicitly authorize a search of an adjoining house; a warrant to search for a stolen refrigerator would not authorize the opening of desk drawers.

Moore consenting to a search of his vehicle puts him in a tough position, as the Court held in Florida v. Jimeno that giving officers consent to search a vehicle permits officers to search containers within the body of the car. A search of the trunk is a bit more complicated, though. From the Jimeno decision:

The facts of this case are therefore different from those in State v. Wells, supra, on which the Supreme Court of Florida relied in affirming the supression order in this case. There the Supreme Court of Florida held that consent to search the trunk of a car did not include authorization to pry open a locked briefcase found inside the trunk. It is very likely unreasonable to think that a suspect, by consenting to the search of his trunk, has agreed to the breaking open of a locked briefcase within the trunk, but it is otherwise with respect to a closed paper bag.

So under Fourth Amendment law officers can search a closed paper bag in a trunk, but (as the Court noted in some very strong dicta) not a locked briefcase in the trunk. What about the interior of vacuum sealed salmon that are inside a Styrofoam container in the trunk of a car?

The fish in Moore's case are far more analogous to a closed, locked container than a closed paper bag. Officers had to open a Styrofoam container, cut through vacuum sealed wrapping, and open up the fish before they found the drugs. Moore therefore has a strong argument that the officers went beyond the scope permitted by his consent to a search of the vehicle when they searched the fish in the trunk.

Moore's argument is strengthened by the fact that the officers said that they were looking for evidence of an armed robbery when they obtained Moore's consent. In granting the officers consent to search his vehicle for evidence of an armed robbery, Moore likely did not expect that officers would extend their search to the interiors of vacuum sealed fish in the trunk of his car, and has a strong argument that the officers' search went beyond the scope of the consent he granted.

Based on the facts that have been reported, the ideal outcome would be for the United States Supreme Court to grant certiorari and reverse the Louisiana Court of Appeals' decision. Based on the percentage of cases that the Supreme Court agrees to hear, however, I think that such an outcome is unlikely. Accordingly, Moore is most likely out of luck.

As a final note, while this post may be a bit last-minute for law students this semester, this case is a fantastic basis for a criminal procedure exam. Students studying for exams now (and next semester) should take note of this case and the many issues it raises. There may just be a few professors out there who think that this story would make a solid issue-spotter.