Monday, June 3, 2013
[Editor's note: We interrupt our Boilerplate Symposium to bring you this report from Shubhs Ghosh on another discussion of Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law.
A panel of five contracts law scholars met to discuss Margaret Radin’s Boilerplate in front of an audience of over thirty attendees at the annual Law & Society meeting in Boston on Saturday, June 1, 2013. Tal Kastner of Princeton University did a great job moderating and raising a provocative discussion. Although scheduled to end at 6:15 pm, the attendees stayed until almost 7 pm. What follows is a brief write-up of the discussion with my own comments interspersed.
The readers included Stewart Macaulay, David Campbell, Aditi Bagchi, Peter Benson, and Guy Rub, speaking in that order. Stewart was positive about the book and began his comments with a reminder of the anti-lawsuit attitude given voice in tort reform. The restrictions on rights that occur through boilerplate, he suggested, is a further reflection of this attitude as boilerplate drafters limit remedies and rights of consumers and their access to courts. As Stewart put it, advocates of court reform complain about money-chasing tort and class action attorneys but there is no mention of how much corporate lawyers make in drafting rights-limiting boilerplate clauses. Stewart ended his comments with skepticism about Radin’s proposals for top down reform from the legislature, whether federal or state.
David Campbell was more critical of the book, especially what he described as Radin’s idealized portrait of the contract bargain. Not all terms are always deliberated by the parties, but nonetheless contract terms can be read into the contract by courts. He was particularly skeptical that the solution lay outside contract. Properly applied, doctrines like formation, unconscionability and other contract terms can limit the negative applications of boilerplate. Unfortunately, some courts in the United States have not been enforcing the existing law in a reasonable manner.
Aditi Bagchi emphasized Radin’s theme of democratic degradation, boilerplate’s role in limiting key rights of citizenship through terms that remove rights of access to courts and compensation for injury. Although Aditi was less concerned with loss of procedural rights (such as class actions), she agreed that boilerplate terms should receive greater scrutiny when they involve limitations on compensation for personal injuries. Introducing the concept of a social wage, Aditi made the point that liberal society extols contractual freedom as part of a broader array of rights delineated in tort, property and other regimes. What society deems to be waivable through contract rests on choices regarding what should be allocated through markets and what should be allocated through political processes. Boilerplate allows a shift of these choices without democratic deliberation. The market de facto and de jure determines individual rights.
Peter Benson elaborated on some of the critical points raised by David Campbell. Introducing a comparative perspective from Canada and the EU, where boilerplate terms are regulated, Peter emphasized doctrines within the United States that could also serve to limit the imposition of noxious terms through boilerplate. The challenge Peter posed is identifying a legal standard for what terms would be deemed noxious, or troublesome. Commenting on Radin’s development of such standards subsequent to the publication of her book, Peter questioned whether such standards would be workable. He described them as highly manipulable and indeterminate.
Guy Rub ended the formal comments with criticisms of Radin’s proposed market-based and state-based solutions. Disclosure-type solutions would not work even if disclosures were simplified and coded so that they could be readily digested. Consumers either would tune such information out or would be willing to trade off unfavorable terms for a lower price. Similarly, any legislative solution would be subject to the same capture that gave rise to boilerplate. Guy provided the example of federal legislation on arbitration as an example. Guy did suggest grass roots-like solutions involving activism through exposure of noxious terms through social media and blogs. Such activism could be more effective, he suggested, than top-down regulation.
The interactions continued with Peggy’s responses. She took issue with some broad characterizations of her book, particularly her view of an idealized contract. Her concern is with overreaching by business entities in drafting terms that severely limit the rights of consumers. As she pointed out, she never said that no rights can be waived or limited. But some companies go too far in limiting their liability in the daycare and elder care contexts. Such noxious terms, she suggested, may have more to do with insurance companies than with the actual service providers. Nonetheless, the market dynamics lead to a market failure that occurs through boilerplate terms that severely shift risks to consumers in market transactions. The world does not have to be that way. Drawing a connection with her work on market inalienability, Peggy argued that boilerplate forces consumers to alienate fundamental attributes of citizenship through take it or leave it offers. Sympathetic to the comments on her proposed solutions, she tantalizingly suggested that a possible solution would be a return to an earlier common law of contract that existed before the law took a pro-business turn. She appealed to an older generation of common law judges to offer a correction to this turn. I wondered whether such judges actually exist anymore.
Discussion afterward was lively. Tal Kastner emphasized points about democratic degradation and the decline of communication and deliberation. Richard Lempert pointed out the betrayal of trust that occurs with boilerplate as consumers are invited to trust companies through the signing of boilerplate terms that are designed to “screw consumers.” Richard suggested that government may be trustworthy than private businesses, contrary to contemporary rhetoric. Amy Kastely raised a point about the drafting of the Restatement on Consumer Contracts that might exacerbate the problems with boilerplate. Robert Gordon questioned whether boilerplate should even be referred to as private ordering since it represented the imposition of terms by dominant players backed up by the sanctioning power of the state. Other points (which I could not attribute) were made about the regulatory approach to standard terms in the Netherlands and the possibilities of consumer activism to expose consumer-unfriendly terms that prominent companies impose through boilerplate.
The Author Meets Reader panel was a stimulating event. My own thoughts are that in some instances boilerplate in contract is used to realign the rights of consumers without having to engage in the democratic process. The consumer rights that companies may want to delimit could be imposed through legislation. In many instances, such legislative efforts would fail. Boilerplate provides a way to impose a change in underlying entitlements without having to engage the political process. In such situations, there is a real threat to the democratic process as market processes dominate.
The discussion of private power, public power, and individual rights made me think of Shelly v. Kramer, the landmark case in which judicial enforcement of racially restrictive covenants were deemed to be state action for the purposes of the Equal Protection Clause. If boilerplate is substituting for legislation, then perhaps noxious terms should be the basis for a due process or other constitutional violation. I raise this point to highlight the underlying issues as well as to pinpoint solutions. No court would be likely to adopt such a broad reading of Shelly v Kramer, a case that has already been limited to its narrow facts. But where constitutional efforts invariably fail activism on the legislative and through market pressure serve as more effective alternatives. Margaret Jane Radin’s Boilerplate is a great book about legal reform in a world where contracts and market processes have been used to displace democratic deliberation and legislation.
[Posted, on Shubha Ghosh's behalf, by JT]