Trump Judge Allows Big Retailer to Evade Arbitration Agreement
“Confirmed Judges, Confirmed Fears” is a blog series documenting the harmful impact of President Trump’s judges on Americans’ rights and liberties. It includes judges nominated in both his first and second terms.
What’s at stake in this case?
A large retailer attempted to avoid arbitration of a dispute about deceptive practices.
What happened in this case?
Ana Bernal and several other consumers bought products online from Kohl’s. The store required online users to agree to resolve disputes through arbitration rather than a court. Contending that Kohl’s had committed false and deceptive marketing practices, the customers initiated arbitration proceedings with the American Arbitration Association (AAA) as provided in their contracts. AAA informed them, however, that Kohls’ had not filed the agreement with it and thus terminated the proceedings.
The consumers filed papers in federal court to compel the arbitration to go forward, but the district court declined, so the case went to the Seventh Circuit. In a 2-1 decision in May, Trump judge Michael Scudder cast the deciding vote in favor of Kohls to dismiss the case. Biden judge Doris Pryor wrote the opinion in Bernal v Kohl’s, which stated that the AAA had the authority to close the arbitration as it did, and that was enough to count as Kohls going through the arbitration process. Biden judge Joshua Kolar dissented.
Why did Judge Kolar dissent?
Judge Kolar explained that, in his view, the parties really “never arbitrated their dispute” as their agreement provided because of Kohl’s “refusal to comply with the AAA rules by filing the arbitration agreement” with the AAA. The record made clear, he went on, that Kohl’s had taken a “conscious step” to “evade” AAA procedures, which Kohl’s had apparently decided it “did not like” as applied to the consumers’ claims in this case, despite its earlier insistence on AAA arbitration. Kohl’s should have been required to file the agreement with AAA so the arbitration could go forward, Kolar wrote. But the majority opinion, Kolar concluded, instead “creates a get-out-of-arbitration-free option for businesses bound to arbitrate under AAA rules,” harming consumers.
Why is this decision harmful?
The ruling made possible by Trump judge Scudder obviously harms Ana Bernal and other consumers seeking relief from Kohl’s. It also sets a bad precedent to allow businesses to evade accountability even when they have agreed to arbitration, particularly in the Seventh Circuit, which includes Wisconsin, Illinois and Indiana. In addition, the ruling illustrates the importance of our federal courts to health, welfare and justice and the significance of having fair-minded judges on the federal bench.