Business & Real Estate

When business rights trump personhood rights

Some people really are more equal than others. The people I speak of, by law, in the United States are corporations. How can that be, you ask?

First note that other than voting – and let’s face it, lobbying is a more effective gig – breathing and eating, corporations have been granted personhood via legal fiction in the U.S.

So why do I say that they are “more equal”? Let’s think about this. How often do you hear that we need to be “business friendly”? “Business friendly” generally means laws are less restrictive and businesses have fewer hoops to jump through, fostering a good business climate. For those who aren’t business owners, it means more concessions for businesses and fewer for employees. It also means fewer environmental protections for our air and water, and fewer protections for our hard-earned savings and investments. It also could potentially mean less family leave, fewer benefits, longer hours, poorer conditions. Not so long ago, it meant discrimination by gender, race, disability and even allowing child labor.

What does “business friendly” mean to consumers? Safety seals are no longer mandatory? Dodd-Frank gets rolled back? Emissions regulations for vehicles are frozen? Offshore drilling and potentially dangerous pipelines are opened up? Federal lands once protected are now open for exploitation?

I hear daily from people who’ve been cheated in car deals by dealers who are committing a crime – but the cheating is done via paperwork and contract. Police have many other things to do than enforce every bad car deal, so they tell consumers who call to make a report that “it’s a civil matter.” Is it? I guess so.

When someone gets cheated in a contract, one would think that contract law controls the deal. But turn the tables for a moment. Picture yourself going into a car dealership and stealing a $5 lug nut, or shoplifting a baseball cap from Marshall’s. The police would come after you fast and furious with guns drawn. Why are they so much more protective of businesses? Because businesses are more equal.

Protecting consumers

In 1969, when a wave of consumer protection laws began to sprout up across the country, largely the result of consumer advocate Ralph Nader’s work, California passed an “unfair and deceptive practices act,” the Consumer Legal Remedies Act (CLRA). Businesses were worried they could now be sued for no reason with no chance to “fix” the consumer’s complaint.

Business owners were rightfully concerned, as the law contained, unusual at the time, a provision that required the business to pay the reasonable fees of the attorney if the business lost – and the fee-shifting provision was only one-way. So written into the law was a requirement that prior to suing for damages, a consumer had to send a letter to the business and give the business 30 days to make appropriate rectification. This all seems reasonable, especially when we have so many “greedy attorneys” who could otherwise profit from the scheme.

CLRA enables people who have been cheated for smaller amounts of money to sue to enforce their rights, where otherwise, without the fee-shifting provision, they would not be able to do so. The concept was honorable, yet it has morphed over the years. What went from a highly protective consumer statute, with 19 specific unlawful provisions, evolved in favor of business, via court interpretation, to require a consumer to send the demand in a certain fashion, making highly specific claims. Absent jumping through all of the proper hoops, no claim could be brought. Again, it made business more equal than others.

Imagine a robber stealing $1 million from a bank. He sees himself on the evening news and returns the next day to give back all of the money, claiming “no harm, no foul.” Does he walk free? Of course not.

But when a business rips off a consumer, the consumer is required to write a highly specific letter to the bad actor and give that bad actor 30 days to decide whether, now that it knows its hand was caught in the cookie jar, to make appropriate rectification. If the business agrees, it just gives back the money and walks away scot-free, no penalty.

That, among many other reasons, is why I say that some people are more equal than others.

Scott Kaufman is a consumer-protection attorney and founder of California Lemon Lawyers. For more information, call (408) 727-8882 or visit his office at 140 Third St., Los Altos.

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