Like Comcast, Google Fiber now forces customers into arbitration | Hacker News Reader

Like Comcast, Google Fiber now forces customers into arbitration

arstechnica.com

42 pointsinfinotize70 comments

Arbitration clauses are allowed because in contracts the tradition is that the parties are allowed to create private rules that will govern their future transaction. You can also nominate the venue and laws that will apply to the contract, even if you don't arbitrate.

The reasoning is that the contract is a bargained document between the parties, and if a party does not like the contract, they are not forced to enter it.

If what you get in return for the contract is not sufficient to join the contract, then you don't execute it.

This is efficient so long as the bargaining power in the market is not highly asymmetrical. The US market is not ideal, but I'm not entirely certain arbitration provisions are a bad idea, regardless.

One reason arbitration provisions might be good, is because its a way for companies to opt out of the hunting territory of the trial lawyers association. The lawyers are another powerful group that has created many kinds of nuisance lawsuits that act as a private tax on corporations in the US. If the private tax is unavoidable, the cost is passed on as a price increase to consumers.

The lack of arbitration clause could manifest itself as increased cost of goods in the current climate, because of the huge cost of nuisance class actions, etc.

Just a perspective.

The problem with this perspective is that it doesnt match reality.

Consumers have not been taught how to properly negotiate and enter contracts, and companies creating the arbitration clauses almost always have the power to push back on changes until the consumer relents.

I wash shocked when I ordered a test Dell Ubuntu machine, took the time to read the EULA/TOS, and was appaled at their terms, which included waiving of constitutional right to a jury!

The real problem, the dark discussion we need to be having, is about the inequality of access to redress of greivance via the law. We live in a society that has created a system in which you must have money to pursue legal recourse, and in a world of increasing inequality, the fact is the port and middle class are increasingly railroaded by arbitration clauses and similar legalese understood by only the people who wrote it.

I'm not advocating for restriction of private terms of contract, but corporations are abusing their power in the equation to the detriment of the people, so lets not lose sight of the reality, as opposed to the theoritical situation lobbyists would have us believe.

As a proposed solution, I think contract law should be taught in highschool as core cirriculum. I have even recently added a section in my documentation for sysadmins to address the reading of eulas/tos, and signing of contracts.

In most cases, consumers have zero ability to negotiate contracts. You can't negotiate a EULA. You either accept it, or find a different product. And if some piece of software is vital to something or other else you need with no alternative, you don't even have much of a choice on whether or not to accept it.

And it's not as if the courts are blind to this fact, there are protections when there is a power imbalance and the contract is take it or leave it, but I doubt any of these protections will extend to private arbitrators.

First of all, remember that, just because it's in a contract, that doesn't mean it's enforceable. Plenty of contracts have legally nonenforceable clauses (or clauses which are questionably enforceable), which is why almost every contract also has a clause that says, 'if any part of this contract is deemed unenforceable or invalid, the remainder shall remain in effect'.

There are also other reasons that a clause might be legally enforceable in the general case, but still struck down in a particular suit given the context of the specific contract in question.

> We live in a society that has created a system in which you must have money to pursue legal recourse

Depends on what you mean by 'legal recourse'. You're welcome to, for example, go to small-claims court and have both sides represent themselves[0]. That's as close to free as you can get.

The problem is that legal recourse for large matters must cost money. You wouldn't want to go to trial for a large civil suit without a lawyer, because there's too much at stake for you to risk it by representing yourself. But lawyers cost money, because they have the opportunity costs of their own time to worry about.

And it's not like you can't get decent representation for free. You can get a lawyer on contingency, which basically means that you have to convince them that your case is solid enough that you're likely to win. In that case, you don't have to pay much (or anything) up-front.

[0] In some states, you cannot have a lawyer represent you in small-claims court - both sides must represent themselves.

I agree that GP's perspective doesn't match reality, but for a different reason. The reality is, I think, that consumers do not care what is in the EULAs they sign. And this isn't just due to ignorance, lack of resources, lack of bargaining power, or any of those things. (Note, that I'm not saying these issues don't exist--just that they aren't the actual reasons why most consumers sign EULAs.) It's because, for the average transaction, the likelihood (and magnitude) of any real dispute is regarded as so low that most people are OK signing pretty much anything. This, I'd venture, is almost always a rational decision from a consumer's perspective. but the problem is that these individual decisions can add up to more than the sum of their parts by insulating companies from the broader regulatory goals of certain privately enforceable laws (i.e., laws that an individual has to sue to enforce). The freedom-of-contract defense GP is giving doesn't properly come to grips with the fact that many legal claims serve purposes other than vindication of personal rights (or, more broadly, the right to bring any claim in court, especially class actions), and therefore should not be so easily waived.

> Consumers have not been taught how to properly negotiate and enter contracts,

Did you negotiate your ISP contract ? you can't negotiate if every ISP have the same policies.

In the case of non-negotiated contracts ... such as with large companies offering goods for sale ... the way an oppressive contract term is bargained away by consumers, is by them choosing the goods or services of a competitor who does not have that term.

If the term is indeed material to the consumer, and if it is not oppressive to the company for them to give it, then at least one competitor will offer it, in order to win some portion of the market away from incumbents.

This usually does not happen with contract terms, because consumers do not look at the terms, nor usually do they care about the terms.

There was a great paper a few years back that calculated the time needed to be spent would everyone actually read the fine print---it was staggering and thus a great visceral way to get across how broken contracts are.

Legal and contractual bloat is a real problem.

I"m with you even though I'm extremely leery of arbitration in areas like automobile defects or employment agreements. In these cases it's often only the threat of massive awards that makes companies think twice before they engage in business practices that lead to substantial harm.

The potential harm related to Internet access does not seem very high. It's fair to balance that against the cost of frivolous litigation. The market can sort this one out.

I'm just curious what Comcast and Google are trying to defend against. You'd think that the cases your typical home subscriber and probably your business subscriber would bring would in most all cases be litigated in Small Claims court. It would be about early termination because the connection is too poor or the uptime does not conform to contract.

Are they trying to quash class-action suits or what? I haven't got a clue, someone more familiar with the subject should clue us all in.

It's usually class actions, which can be very expensive to fight and have large enough awards that legal teams are motivated take them on contingency. The claims you describe are so small they are barely worth litigating even in Small Claims court.

> This is efficient so long as the bargaining power in the market is not highly asymmetrical.

An asymmetrical legal and financial balance isn't even the real problem, it's that contracts from large companies are on paper non-negotiable with the real negotiation occurring is in court when the terms of the contract are contested. We already have some protections for people who agree to take-it-or-leave-it contracts but, to me, it's not terribly clear whether those protections extend to private arbitrators who might blindly rule on the letter of the contract.

It's difficult to understand how such clause is even legal to begin with. It basically sets up a "private" justice system for non criminal cases. That's insane. I get it, there are difference sort of tribunals. But it shouldn't be up to the corporations to decide where justice is supposed to be served.

It's legal because the five justices who decided that money is speech decided that money now gets its own courts.

https://en.wikipedia.org/wiki/AT%26T_Mobility_LLC_v._Concepc...

Not really. Arbitration has long been a path that judges recommend for non-criminal cases to reduce strain on the court system. I know that it can often seem nefarious, but a major part of the modern civil court system involves reducing the (frankly, unbelievable) strain on court resources, which are finite (and in many states, being reduced for budgetary reasons).

It's because Congress passed a law, called the Arbitration Act, allow explicitly allowing it. https://www.law.cornell.edu/uscode/text/9/2

For more information about arbitration courts, read this New York Times article:. http://mobile.nytimes.com/2015/11/01/business/dealbook/arbit...

The key quote in here, to save people fishing for what they know is in this article: "And the rules of arbitration largely favor companies, which can even steer cases to friendly arbitrators, interviews and records show."

Also, you might want to use a non-mobile link.

What scenario is Google worried about where they will face a massive, costly class action lawsuit over their internet service?

Data collection is my guess.

Maybe there are no specific scenarios, and it's just to be safe. If you were Google, why wouldn't you add such a clause? It's not like it's going to scare customers away.

Shouldn't it scare away customers that a company will only do business with them if they cannot be held in court for misdeeds regarding that business? I sadly understand that consumers don't read the fine print. But really, this clause should be treated as a dealbreaker.

It won't because usually your options are 50 Mbit line (maybe 100 if you're really lucky) or a 1Gb line for the same price.

I'd happily take the arbitration clause for 10x and probably 20x the speedup.

Beyond that, your other options will also usually include arbitration clauses. If it's a deal-breaker for choosing Google, it'll be a deal-breaker for choosing anyone else.

That's a fair point. As the article's title points out, Comcast does the same.

Does FairPoint?

http://www.fairpoint.com/document/Residential_HSI_Terms_of_S...

This document, found via a quick search, doesn't seem to contain the word "arbitration".

Yes, it will scare them into the arms of one of the many other ISPs in town offering reasonable service without the arbitration agreement.

OHWAIT.

Maybe it should be, but it isn't. Google probably doesn't care about losing the three tenths of one thousandth of a percent of customers who will 1) read the terms and 2) care enough about the arbitration clause to abandon ship.

I posted this on another article- https://news.ycombinator.com/item?id=11850870 -but it went unanswered, I'm hoping maybe this time someone will see this. It was in regards to google being brought a CA by advertisers who'd felt cheated (and rightly so if I understand correctly).

"Serious question- Would this(a class action suit for screwing customers) have been possible if Google had put in their contract that all parties waive their right to a class action? Many companies do this now- Microsoft's xbox live, for example not only forces you to forfeit any class action lawsuits, but at the time I stopped using their services, I believe they also required meditation with a mediator to be chosen by Microsoft. I sold my xbox 360 and never looked back.

edit- I also remember specifically Microsoft releasing a TOU update just days after, if not the day of, the ruling allowing companies to do this came down."

The mediation part is a moot point from what I've heard. Mediators don't really do anything other than facilitate discussion. If they got to choose an arbitrator that would be a different story.

Serious question: how is this legal? I can't imagine I could make someone sign a form that he waives his right to sue me and then shoot him, right? Assuming he doesn't die and it's him, not the government, that prosecutes/sues me.

Well that would be a criminal act and the state would be pressing charges, not the victim. Bad analogy.

> "the state would be pressing charges, not the victim"

I figured, so I edited in (about 30 seconds later, not sure if you fell in that time gap): "Assuming he doesn't die and it's him, not the government, that prosecutes/sues me."

Yeah, didn't see that

https://en.wikipedia.org/wiki/AT%26T_Mobility_LLC_v._Concepc...

5 to 4 decision, along the same lines as you'd assume.

Not exactly. This opinion only decided that an arbitration clause can disallow class-wide arbitration. The real answer to GP's question is the Federal Arbitration Act (which, by the way, was also the statutory basis for Concepcion): https://en.wikipedia.org/wiki/Federal_Arbitration_Act

> I can't imagine I could make someone sign a form that he waives his right to sue me and then shoot him, right?

To answer your question - yes, you could legally have someone sign a contract waiving his right to sue you for shooting him. However, the contract would be unenforceable, and he could sue you (for both shooting him and potentially for the contract - IIRC, that depends on the state). One of the things that became abundantly clear in contract law is that you can put essentially anything into a contract, legally. It's enforcement of said contract that the legal system gets involved in.

> you could legally have someone sign a contract waiving [t]his right [...] However, the contract would be unenforceable

I understand I can write any nonsense and sign it, probably because of freedom of expression or something. My point was whether that contract would be enforceable. If such a thing wasn't enforceable Google and others wouldn't be putting it in their contracts.

Not necessarily true. You have to challenge it to find out if it's enforceable in many scenarios, and it might act as a deterrent as well. Even a widely known unenforceable clause can deter someone who doesn't previously know that it is unenforceable from doing the action that the clause prohibits. So I can definitely see plenty of reasons to include these types of things in a contract. Plus, what does it cost them to include it in the contract?

Yes, unenforceable clauses in a contract can be used as a game of chicken.

  Customer: You can't enforce that clause.
  Google:   Yes we can.
  Customer: Nuh uh!
  Google:   Want to go to court to find out?
  Customer: ...

Well if the clause is not to take them to court, and they want to take them to court, then yes they do want to go to court to find out. But I do see your point.

> If such a thing wasn't enforceable Google and others wouldn't be putting it in their contracts.

This is simply false. Almost every contract signed in the US contains unenforceable language. The vast majority of people signing these contracts simply believe that if it's there, it's legal. For example, property law is wildly tenant friendly if you actually push it. The explicit reason for this is that landlords have an illusion of power and almost always include unenforceable provisions.

Has any state attempted to ban arbitration clauses via popular vote/referendum? If so, would that even hold up in court and across state lines?

Seems like the only way to deal with this crap as there's no incentive for corporations not to force customers into binding arbitration. If I was still running a large consumer focused corporation I'd insist on it as well.

Why ban it? Just make it so that when it's person vs. company, the person can choose the arbiter. Then they can't shop for a biased arbiter.

> Why ban it?

Because it prevents creating a class action to group together impacted customers. Individually it may not be worth it for a customer to proceed with a claim. En masse, there is an economy of scale.

Now I'm not in favor of frivolous lawsuits and these clauses are clearly intended as a defend against them, but if the response to that problem shouldn't be binding arbitration everywhere. It should be tort reform.

Yes, it might prevent class action, but if that many people have truly been harmed, the company will have a massive number of arbitration suits to handle which could be more expensive. So they still can't just go around and piss off large numbers of customers.

Half the things I've gotten pitiful $5 checks for were not at all in my interests and one, namely the Microsoft class-actions, I was tried but failed to figure out how to object to because of how badly the lawyers in this state sold the class out in what they settled for.

So I'm not convinced that many of the class actions were actually in the interests of the class members to begin with. I'd honestly prefer to bring my own cases to court than have some self-appointed class representative sell me out.

This isn't exactly rare. It's a very, very common clause in TOS's. It's also often a clause that isn't exactly enforceable (and I believe different venues have different rules about it).

Someone gave non-specific legal advice that a hackerspace I'm a part of include an arbitration clause in its liability waiver.

Comparing Google's to Comcast in this situation doesn't really feel right.

How is Google different anyway? They both support the TPP.

Is there really no other comparison between the two companies that you can think of?

They also both line politicians' pockets to ensure laws get passed in their favor? (Google has donated to over half of Congress according to OpenSecrets.org, in actual cash donated I think Comcast might still be on top, but the gap's closing fast.)

I'd also comment on their mutually horrible customer service, but at least Comcast HAS people you can call, even if they're lousy.

> (Google has donated to over half of Congress according to OpenSecrets.org, in actual cash donated I think Comcast might still be on top, but the gap's closing fast.)

Corporations can't donate to political campaigns. What OpenSecrets.org misleadingly advertises as "corporate" donations to political campaigns are employee donations to campaigns.[1] Google has 57,000 employees. Unsurprisingly, many of them exercise their rights as members of a democracy and support their favorite political candidates.

[1] Specifically, OpenSecrets lists donations from individual employees and company-sponsored PACs. Corporations are banned from contributing directly to political candidates, or from donating to regular PACs. Only Super PACs can accept money from corporations, but those are banned from donating to candidates.

It's not misleading. Many of the donations are from top ranking Googlers like Eric Schmidt who directly interact with these politicians in a business sense. Many of these donors have stock-based compensation with Google.

Unsurprisingly, almost all pro-Google legislation is sponsored by the same Congresspeople who have received the largest donations from Googlers.

So OpenSecrets' format is specifically designed to reveal corruption that would not be obvious with mere donor names alone.

"It's not misleading. " Of course it is. People are not the companies they work for. Period.

" Many of the donations are from top ranking Googlers like Eric Schmidt who directly interact with these politicians in a business sense."

"many".

Opensecrets lists 503 unique people identified as googlers donating. I don't believe you have any reasonable argument that there are 503 top ranking googlers who interact directly with these politicians in a business sense. I think you can argue maybe 1-2% of them are.

So 98% of them somehow don't fall into what you consider "many of the donations". That doesn't seem like many to me.

"Unsurprisingly, almost all pro-Google legislation is sponsored by the same Congresspeople who have received the largest donations from Googlers."

What is "pro-google"? Who are "the same congresspeople"?

Can you give specific examples of pro-google legislation and congresspeople who have repeatedly passed them, where there largest donations were from google?

I see a tremendous amount of handwaving in your comment, but pretty much no real data.

It's not misleading. " Of course it is. People are not the companies they work for. Period.

Did you read the leaked Sony email where one exec was hounding all the other execs to make large donations to a particular politician?

Again, there are 503 donators. There are not 503 execs at Google.

To clarify this excellent comment: Corporations can donate to political campaigns and the organizations running them. What they can't do is donate directly to candidates running for office.

Corporations cannot donate to campaigns either. What they can do is donate to Super PACs that make independent expenditures to support particular candidates.

Campaigns for office are a subset of all political campaigns.

Post-Citizens United, corporations can engage in or financially support any political campaigning they like in whatever form, as long as they don't make financial or in-kind contributions to the electoral campaigns of individual candidates. They don't need to form a PAC to do so.

https://en.wikipedia.org/wiki/Citizens_United_v._FEC#Super_P...

Fair enough. I didn't pick up on your use of "campaign" in the broader sense.

Google has people you can call for all paid services.

Does anybody care about the Constitution anymore? It seems like every day I read an article about someone either going against the Constitution, or getting very close to denying its importance in the United States.

You should be more specific if you want useful replies. Otherwise, people will chime in to soapbox on their pet constitutional issue.

This was in direct response to the article, in which Google Fiber's new policy strips users of their Constitutional rights.

what are you speaking of in particular?

The throwaway line about the first amendment in the linked article is based on ignorance. The phrase they're alluding to in the first amendment is "petition the Government for a redress of grievances." As in, grievances against the government.

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