Debt, Racism, and the Power of a Conservative Court

By: Samantha Powers

Edited By: william tong and isabel gortner

Since the Biden administration launched its $400 billion student debt relief plan, six states have sued. The states—Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina—claim that Biden’s plan is an unlawful overreach of executive power. In addition, the states allege that Biden’s program comes from motives to fulfill his campaign promise to relieve at least $10,000 per person in student debt. On the other hand, the Biden administration argues that the states lack the standing needed to dismantle a nationwide initiative, an argument that was affirmed by U.S. District Judge Henry Autrey when he threw the suit out earlier in the case’s process. At most, the administration argues, the states could block debt relief for loans serviced by state-specific entities. [1] In lower courts, judges have placed holds on Biden’s plan by calling into question its constitutionality. Now, the Supreme Court has agreed to a request from the Biden administration to fast-track an appeal and hear oral arguments in February.

In one of the cases, Brown v. U.S. Dept. of Education (No. 4:22-cv-0908-P, 2022), District Judge Mark Pittman ruled that the Biden administration’s program is an overstep of its “legislative powers,” which should only be exercised with clear consent from Congress. [2] In addition, Judge Pittman added, the plan was enacted on the grounds of the Higher Education Relief Options for Students (HEROES) Act of 2003. This act was passed in response to 9/11, and its intent was to provide student debt relief for military personnel serving the country. There is, however, a provision in the act for the Secretary of Education to provide student loan relief for those affected economically by a state of national emergency, which the Biden administration declared the COVID-19 pandemic to be. [3] According to Judge Pittman, this connection is not grounds to uphold the new debt relief program. The U.S. 5th Court of Appeals sided with Judge Pittman, leaving the Biden administration to turn to the Supreme Court for a final decision. 

For now, the Biden administration has upheld the Trump-era hold on student loan payments in response to the COVID-19 pandemic, but this provision won’t last forever. Those who are relying on the student debt plan aren’t yet in the clear: at the latest, student loan payments will resume on Sept. 1, 2023. Without Biden’s program, millions of borrowers may be thrown into an economically impossible situation [4]. This pressure, taken together with intersecting factors of race and socioeconomic class, could wreak havoc on American families that have been historically disadvantaged.

Student loan debt disproportionately affects Black people in America. Black Americans are proven to borrow more often, borrow more, and have more difficulty paying off their loans in the future. [5] This can, in part, be attributed to the struggle of Black families in America to build generational wealth in the face of structural racism. Without family funds to fall back on, many Black college students are forced to fend for themselves. This has financial and mental ramifications that can last a lifetime. [6] An added difficulty is that Black borrowers have trouble saving money for their own kids to go to college, thus perpetuating the cycle that ultimately contributes to income inequality in America.

Now, millions of borrowers will be looking to the Supreme Court to decide their fate. The court is packed with 6 conservative justices and only 3 liberals, leaving the Biden administration with difficult odds in its battle against 6 GOP-led states. In addition, 6 out of the 9 justices are white, leading to unfavorable odds given the fact that a majority of the justices hearing the case don’t have the first-hand experience of racial injustice that might be needed to make a fully informed decision concerning issues of debt and generational wealth. [6] This doesn’t make things look good for the millions of borrowers relying on Biden’s plan to relieve them, but ultimately, only time will tell on which side of history this nation will fall.

NOTES:

1. Amy Howe, “Court will review legality of Biden’s student-debt relief, but plan remains on hold for now,” Scotus Blog, Dec. 1, 2022, https://www.scotusblog.com/2022/12/court-will-review-legality-of-bidens-student-debt-relief-but-plan-remains-on-hold-for-now/.

2. Brown v. Department of Educ., No. 22-11115 (Nov. 30, 2022)

3. Higher Education Relief Opportunities for Students Act, Pub. L No. 108-76, 117 Stat. 904 (2003).

4. “By The Numbers: Millions of Americans’ Student Loan Costs Will Rise Dramatically Under Republican Officials’ Plans,” The White House, Nov. 3, 2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/11/03/by-the-numbers-millions-of-americans-student-loan-costs-will-rise-dramatically-under-republican-officials-plans/.

5. Judith Scott-Clayton and Jing Li, “Black-white disparity in student loan debt more than triples after graduation,” Brookings, Oct. 20, 2016, https://www.brookings.edu/research/black-white-disparity-in-student-loan-debt-more-than-triples-after-graduation/.

6. “How Student Debt Harms Black Borrowers’ Mental Health,” The Education Trust, July 28, 2022, https://edtrust.org/resource/how-student-debt-harms-black-borrowers-mental-health/. 

7. “Current Members,” Supreme Court of the United States, accessed Dec. 3, 2022, https://www.supremecourt.gov/about/biographies.aspx.

BIBLIOGRAPHY:

“By The Numbers: Millions of Americans’ Student Loan Costs Will Rise Dramatically Under Republican Officials’ Plans,” The White House, Nov. 3, 2022. https://www.whitehouse.gov/briefing-room/statements-releases/2022/11/03/by-the-numbers-millions-of-americans-student-loan-costs-will-rise-dramatically-under-republican-officials-plans/.

“Current Members,” Supreme Court of the United States, accessed Dec. 3, 2022. https://www.supremecourt.gov/about/biographies.aspx

“How Student Debt Harms Black Borrowers’ Mental Health,” The Education Trust, July 28, 2022. https://edtrust.org/resource/how-student-debt-harms-black-borrowers-mental-health/. 

Howe, Amy. “Court will review legality of Biden’s student-debt relief, but plan remains on hold for now,” Scotus Blog, Dec. 1, 2022. https://www.scotusblog.com/2022/12/court-will-review-legality-of-bidens-student-debt-relief-but-plan-remains-on-hold-for-now/. 

Li and Scott-Clayton, “Black-white disparity in student loan debt more than triples after graduation,” Brookings, Oct. 20, 2016. https://www.brookings.edu/research/black-white-disparity-in-student-loan-debt-more-than-triples-after-graduation/.

Iran: A Case Study of Judicial Failure

By: Darya Tadlaoui

Edited By: Renan Dennig and Maayan Abouzaglo

The shouts of Iran’s youth are unmistakable: “Jin, jiyan, azadi!” – or “Woman, life, freedom!” The Kurdish slogan originated in the Kurdish Freedom Movement of the 80s and was first popularized in 2006 during International Women’s Day marches in Turkey.[1] Now, after the death of Mahsa Amini, a Kurdish woman, in police custody, the phrase has become a rallying cry for Iranians across ethnic and linguistic backgrounds in the country’s greatest political upheaval in recent memory.[2]

The turmoil following Amini’s death has resulted in severe pushback by the regime and its leaders. In the past few months, thousands of peaceful protestors – activists, women, children, human rights lawyers, journalists – have been arrested.  The death toll amongst protestors has grown to 304 as of Nov. 11, including 41 children; and eight protestors have been charged with the death penalty on the basis of moharebeh, or “enmity against God,” and “corruption on Earth.”[3] The United Nations has condemned the large-scale indictments and death sentences, holding a Special Session of the Human Rights Council on Nov. 24 in which 25 countries agreed to launch an investigation into the treatment of protesters.[4] 

How has the Iranian government evaded accountability for so long? What institutions allow the regime to continue its reign even when its authority is challenged?

The answer to both questions lies in the notion of systemic impunity: legal structures prop up the revolutionary administration, with support from all branches and levels of government.[5] The system is impregnable; it abuses power not merely by circumventing existing law, but also by enacting laws and supporting systems for reinforcement.

The Law

Iran’s current government was established in 1979 after the shah (king) was overthrown by the Islamic Revolution, whose leaders immediately enacted Sharia Law, an application of Islam based on both the passages of the Quran and the many teachings of the prophet Mohammed.[6] In practice, elements of this law can seem rather Draconian. For instance, the Qisas law denotes punishments like retribution for murder, stoning for adultery, and amputation for theft and national security offenses.[7] These guidelines, coupled with a government infamous for harsh sentences, amplify the rate and severity of abuse toward political dissenters.

Ironically, many of the country’s laws actually safeguard privileges like dissent. Articles 23-27 of the Constitution of the Islamic Republic protect the freedoms of belief, press, association, and assembly, as well as the privacy of communication.[8] These rights are further ensured by Articles 18-22 of the International Covenant on Civil and Political Rights (ICCPR), a treaty Iran signed in 1968 and ratified in 1975.[9] Similarly, the Constitution protects individuals’ right to a fair trial as per Articles 32-37 – prohibition of arbitrary arrest or detention, right to a competent court, legal counsel, competent sentencing, and presumption of innocence, all of which are additionally outlined in and supplemented by Articles 9 and 14 of the ICCPR.[10] 

How, then, is it possible for Iran’s government to violate these rights? Put simply, its judiciary is airtight – and parts of it nonexistent.

The Judiciary

The same regime that established Sharia Law in 1979 also constructed a justice system to enforce it. In Iran’s theocracy, the judiciary acts as the primary arm by which to silence dissenters.[11] Some divisions adopted by the regime were standard: civil, criminal, and military courts were established at all levels, and elements of the pre-revolutionary justice system were preserved within these courts – right to public trial, guaranteed counsel, etc.[12] But the new rulers also established Revolutionary Courts and the Special Court for the Clergy – both of which were never incorporated into the Constitution. Consequently, they are seemingly untouchable: their abuses are outside the scope of law.[13]

The former courts oversee cases involving drug smuggling, national security, and espionage accusations, while the latter prosecutes clerics accused of various unlawful acts.[14] The two courts work in tandem to prevent any meaningful change from disturbing the revolutionary system. National security indictments have provided Revolutionary Courts with enormous power to arrest, prosecute, and even execute protestors under the nebulous charge of “posing a threat.”[15] Rigid prerequisites for clerics delineate they must have completed a degree at a religious law school or trained in Islamic jurisprudence in order to become a judge; once appointed, they must refrain from showing any support to reformists, or else risk being charged and removed by the Special Court for the Clergy.[16] Thus, the mojtaheds (high-ranking clerics) in positions of power – head of the judiciary, prosecutor general, Supreme Court judges – cannot risk being unaligned with the values of the regime.[17]

Even if members of Parliament, rather than jurists, attempt to enact reforms, a body of jurists that acts as an upper legislative house called the Council of Guardians can – and often does – overrule them.[18] Half of its members are specialized in Islamic Canon Law and appointed by Iran’s Supreme Leader (head of state), while the other half are civil jurists nominated by the Supreme Judicial Council and appointed by Parliament.[19] The Council reviews all legislation passed by Parliament, and can veto any bill if the majority of Islamic Canon leaders believe it to violate Islamic law, meaning the civil jurists’ beliefs are largely irrelevant in making legislative decisions and can be instantly overruled.[20] This makes it virtually impossible to hold the judiciary accountable; they have historically stonewalled Parliament interventions, claiming they only answer to the Supreme Leader, and, as a result, the court system perpetuates harsh sentences for all defendants considered enemies of the state.[21]

(In)justice in Practice

1. Courtrooms

Despite the protections supposedly afforded them by the Constitution and the ICCPR, those accused of political upheaval endure trials that function decidedly to their disadvantage. The experience of Jason Rezaian, a former Washington Post Tehran bureau chief of dual American-Iranian citizenship who was prosecuted by the Courts for espionage among other “hostile” crimes, exemplifies the one-sidedness of hearings for high-profile political cases.[22]

Rezaian’s 2015 trial was closed – no jury, no observers.[23] He was denied a lawyer of his choosing, and when assigned a state-appointed attorney, the two met for a mere ninety minutes prior to the start of the proceedings; moreover, no evidence was presented to them.[24] Further, a 1995 statute allows judges to simultaneously act as prosecutors in the same case, and Rezaian’s trial was no different; he had to both defend himself against and answer to Judge Abolghassem Salavati, notorious for harsh verdicts.[25]

Between his eventual conviction and drawn-out trial, Rezaian was imprisoned for 544 days.[26] And for the length of his trial, Rezaian was detained at Evin Prison, the primary site housing Tehran’s political prisoners – the conditions within its walls have been described as nothing short of torturous.[27]

1. Detainment

Perched on the hills of northern Tehran, Evin Prison was initially established during the reign of Iran’s former shah to detain his opponents and held around 1500 inmates.[28] It now holds an estimated one quarter – 15,000 – of Iran’s political prisoners: journalists, activists, ethnic minorities, and members of alternative faiths, among others.[29] The institution is in direct violation of the UN’s Standard Minimum Rules for the Treatment of Prisoners – its cells and communal rooms lack any sunlight; inmates suffer from regular food poisoning; utensils have been cycled among prisoners for decades; and inmates sleep on metal beds.[30] Furthermore, Iran’s State Prison Procedures stipulate that prisoners convicted of “acting against national security” – i.e. the inmates that Evin Prison houses – are exempt from receiving furlough, a temporary leave granted to most inmates in the Islamic Republic for medical reasons or familial events.[31] Political prisoners are, in essence, treated as subhuman.

Worse, these conditions are only heightened in Iran’s widespread system of nahad-eh movazi – “parallel institutions,” or extralegal systems of state coercion such as underground prisons.[32] The total number of illegal detention centers is unknown as they do not keep records nor register with the National Prisons Office, but reports have indicated that the number is growing.[33] Moreover, these networks use solitary confinement, interrogation, and intimidation tactics to produce forced confessions, all while the guards work in strange “plainclothes” rather than government-issued uniforms, thus undetectable and unaffiliated with the regime.[34] These establishments allow “state enemies” to go unaccounted for at the disposal – though not technically the fault – of Iran’s government. They represent an extension of an extension of judicial power: not only are they excluded from the state’s Constitution, they are excluded from regulation entirely.

Hope for reform?

Given the all-encompassing domination of Iran’s Revolutionary Government, is there even a slim possibility that the current protests will make an impact on the country’s socio-political conditions?

Looking to the past seems to indicate their impact, if any, will be slim. Though it is clear judiciary leaders themselves have very little room to execute reforms, the most successful reform attempts were made by Mahmoud Shahroudi, judiciary head from 1999-2009.[35] The majority of these endeavors were blocked by conservative clerics and their allies before they could even be passed, but even the implemented Citizens Bill of Rights in 2004 has not been enforced in practice or by courts; thus, his successor abandoned pursuits of reform altogether.[36]

In terms of public protest, the 2009 Green Revolution was the largest challenge to Islamic Republic by its populace since its inception in 1979.[37] The uprisings were sparked by alleged election fraud after incumbent Mahmoud Ahmadinejad (incumbent and the regime’s preferred candidate) won the 2009 presidential election despite having a relatively small supporter base; however, these protests lacked effective leadership and any ideological alternative, and thus the crackdown on protests and violence perpetrated by state forces dissuaded citizens from continuing their dissent.[38]

Experts say we must learn from the mistakes of the 2009 protests and establish organized leadership in order to make strides toward freedom.[39] However, outing the leader(s) of the ongoing protests could simply make them targets, as it is clear the government will act swiftly against any identifiable groups or individuals.[40]

There is a chance that the regime’s refusal to modernize will ultimately prove to be its downfall. The government’s firm belief in tradition affects its approaches to all spheres of politics, including its consistent choice to meet unrest with violence. Because it has not adapted its methods of handling protests in four decades, it may be unequipped to handle this generation’s “cyberspace-based” and “pluralist” upheaval.[41] 

In any case, the systemic impunity of Iran’s judiciary officials serves as an important reminder that legal systems have the power to condemn and marginalize just as they can protect and serve. Law is merely a reflection of those establishing and presiding over it; it is a tool to be handled with great caution, its power to be wielded with great purpose, or else it can fail the people whose lives depend on it.

NOTES:

1. Seyma Bayram and Diba Mohtasham, “Iran's Protesters Find Inspiration in a Kurdish Revolutionary Slogan,” Georgia Public Broadcasting, accessed December 1, 2022. https://www.gpb.org/news/2022/10/27/irans-protesters-find-inspiration-in-kurdish-revolutionary-slogan.

2. Pouya Alimagham, “Iran Then and Now: What Similarities in Protests in 2009 and 2022 Demonstrate,” Cambridge University Press, last modified October 21, 2022. https://www.cambridgeblog.org/2022/10/iran-then-and-now-what-similarities-in-protests-in-2009-and-2022-demonstrate/.

3. “Iran: Stop Sentencing Peaceful Protesters to Death, Say UN Experts,” Office of the High Commissioner for Human Rights, last modified November 11, 2022. https://www.ohchr.org/en/press-releases/2022/11/iran-stop-sentencing-peaceful-protesters-death-say-un-experts.

4. Golnar Motevalli and Yasna Haghdoost, “Iran Protests: UN to Investigate Iran for Human Rights Violations,” Bloomberg.com, Bloomberg, last modified November 24, 2022. https://www.bloomberg.com/news/articles/2022-11-24/un-to-investigate-iran-for-human-rights-violations-in-protests?sref=0Xh9npns&leadSource=uverify+wall.

5. “Iran Archives,” Amnesty International, accessed November 30, 2022. https://www.amnesty.org/en/location/middle-east-and-north-africa/iran/report-iran/.

6. Kali Robinson, “Understanding Sharia: The Intersection of Islam and the Law,” Council on Foreign Relations, Council on Foreign Relations, December 17, 2021. https://www.cfr.org/backgrounder/understanding-sharia-intersection-islam-and-law.

7. “The Islamic Judiciary,” The Iran Primer, last modified March 15, 2021. https://iranprimer.usip.org/resource/islamic-judiciary.

8. “The Prisoners*,” Center for Human Rights in Iran, last modified March 13, 2017. https://iranhumanrights.org/2016/06/wwr-the-prisoners/.

9. (United Nations (General Assembly) 1966)

10. “The Prisoners*.”

11. “Islamic Judiciary.” 

12. “Iran - Judicial System,” Encyclopædia of the Nations, accessed November 28, 2022. https://www.nationsencyclopedia.com/Asia-and-Oceania/Iran-JUDICIAL-SYSTEM.htm.

13. “Islamic Judiciary.”

14. “Islamic Judiciary.”

15. “Islamic Judiciary.”

16. “Islamic Judiciary.”

17. “Islamic Judiciary.”

18. “Council of Guardians,” Encyclopædia Britannica, Encyclopædia Britannica, inc., accessed November 28, 2022. https://www.britannica.com/topic/Council-of-Guardians.

19. “Council of Guardians.”

20.  “Council of Guardians.”

21. “Islamic Judiciary.”

22. “Iran Trial for Washington Post Reporter Jason Rezaian Starts,” BBC News, BBC, May 26, 2015. https://www.bbc.com/news/world-middle-east-32879675.

23. Kasra Naji, “Jason Rezaian Trial: What Are Iran's Islamic Revolutionary Courts?” BBC News, BBC, May 26, 2015. https://www.bbc.com/news/world-middle-east-32890565.

24. Naji, “Jason Rezaian Trial.”

25. Naji, “Jason Rezaian Trial.”

26. “Wilmerhale Wins $180 Million Judgment against Iran for Jason Rezaian and Family,” WilmerHale, Accessed January 4, 2023. https://www.wilmerhale.com/en/insights/news/20191212-wilmerhale-wins-180-million-judgment-against-iran-for-jason-rezaian-and-family.

27. “The Ward,” Center for Human Rights in Iran, last modified March 13, 2017. https://iranhumanrights.org/2016/06/wwr-the-ward/.

28. Kian Tajbakhsh, “Iran Has Become a Prison,” The Atlantic, Atlantic Media Company, November 1, 2022. https://www.theatlantic.com/international/archive/2022/11/iran-mahsa-amini-protest-evin-prison-fire/671950/.

29. “The Ward.”

30. “The Ward.”

31. “Furlough,” Center for Human Rights in Iran, last modified March 13, 2017. https://iranhumanrights.org/2016/06/wwr-furlough/.

32. “V. Detention Centers and Ill-Treatment, ” Human Rights Watch, Like the Dead in Their Coffins: Torture, Detention, and the Crushing of Dissent in Iran 16, no. 2 (June 2004): 13-14.

33. “Detention Centers.”

34. “Detention Centers.”

35. “Islamic Judiciary.”

36. “Islamic Judiciary.”

37. Alimagham, “Iran Then and Now.”

38. Alimagham, “Iran Then and Now.”

39. Alimagham, “Iran Then and Now.”

40. Haleh Esfandiari and Marina Ottaway, “When Do Protests Succeed? the Case of Iran and the Arab World,” Wilson Center, accessed November 30, 2022. https://www.wilsoncenter.org/article/when-do-protests-succeed-case-iran-and-arab-world.

1. “Research Finds It May Be Too Late to Quell Iran Uprising,” Iran International Newsroom, Iran International, last modified November 23, 2022. https://www.iranintl.com/en/202211239386.

BIBLIOGRAPHY:

Alimagham, Pouya. “Iran Then and Now: What Similarities in Protests in 2009 and 2022 Demonstrate.” Cambridge University Press. Last modified October 21, 2022. https://www.cambridgeblog.org/2022/10/iran-then-and-now-what-similarities-in-protests-in-2009-and-2022-demonstrate/.

Amnesty International. “Iran Archives.” Accessed November 30, 2022. https://www.amnesty.org/en/location/middle-east-and-north-africa/iran/report-iran/.

Bayram, Seyma, and Diba Mohtasham. “Iran's Protesters Find Inspiration in a Kurdish Revolutionary Slogan.” Georgia Public Broadcasting. Accessed December 1, 2022. https://www.gpb.org/news/2022/10/27/irans-protesters-find-inspiration-in-kurdish-revolutionary-slogan.

BBC News. “Iran Trial for Washington Post Reporter Jason Rezaian Starts.” BBC, May 26, 2015. https://www.bbc.com/news/world-middle-east-32879675.

Center for Human Rights in Iran. “Furlough.” Last modified March 13, 2017. https://iranhumanrights.org/2016/06/wwr-furlough/.

Center for Human Rights in Iran. “The Prisoners*.” Last modified March 13, 2017. https://iranhumanrights.org/2016/06/wwr-the-prisoners/.

Center for Human Rights in Iran. “The Ward.” Last modified March 13, 2017. https://iranhumanrights.org/2016/06/wwr-the-ward/.

Encyclopædia Britannica. “Council of Guardians.” Encyclopædia Britannica, inc. Accessed November 28, 2022. https://www.britannica.com/topic/Council-of-Guardians.

Encyclopædia of the Nations. “Iran - Judicial System.” Accessed November 28, 2022. https://www.nationsencyclopedia.com/Asia-and-Oceania/Iran-JUDICIAL-SYSTEM.html.

Esfandiari, Haleh, and Marina Ottaway. “When Do Protests Succeed? the Case of Iran and the Arab World.” Wilson Center. Accessed November 30, 2022. https://www.wilsoncenter.org/article/when-do-protests-succeed-case-iran-and-arab-world.

Human Rights Watch. “V. Detention Centers and Ill-Treatment.” Like the Dead in Their Coffins: Torture, Detention, and the Crushing of Dissent in Iran 16, no. 2 (June 2004): 12-30.

Iran International Newsroom. “Research Finds It May Be Too Late to Quell Iran Uprising.” Iran International. Last modified November 23, 2022. https://www.iranintl.com/en/202211239386.

The Iran Primer. “The Islamic Judiciary.” Last modified March 15, 2021. https://iranprimer.usip.org/resource/islamic-judiciary.

Motevalli, Golnar, and Yasna Haghdoost. “Iran Protests: Un to Investigate Iran for Human Rights Violations.” Bloomberg.com. Bloomberg, November 24, 2022. https://www.bloomberg.com/news/articles/2022-11-24/un-to-investigate-iran-for-human-rights-violations-in-protests?sref=0Xh9npns&leadSource=uverify+wall.

Naji, Kasra. “Jason Rezaian Trial: What Are Iran's Islamic Revolutionary Courts?” BBC News. BBC, May 26, 2015. https://www.bbc.com/news/world-middle-east-32890565.

Office of the High Commissioner for Human Rights. “Iran: Stop Sentencing Peaceful Protesters to Death, Say UN Experts.” Last modified November 11, 2022. https://www.ohchr.org/en/press-releases/2022/11/iran-stop-sentencing-peaceful-protesters-death-say-un-experts.

Robinson, Kali. “Understanding Sharia: The Intersection of Islam and the Law.” Council on Foreign Relations. Council on Foreign Relations, December 17, 2021. https://www.cfr.org/backgrounder/understanding-sharia-intersection-islam-and-law.

Tajbakhsh, Kian. “Iran Has Become a Prison.” The Atlantic. Atlantic Media Company, November 1, 2022. https://www.theatlantic.com/international/archive/2022/11/iran-mahsa-amini-protest-evin-prison-fire/671950/.

United Nations (General Assembly). 1966. “International Covenant on Civil and Political Rights.” Treaty Series 999 (December): 171.

“Wilmerhale Wins $180 Million Judgment against Iran for Jason Rezaian and Family.” WilmerHale. Accessed January 4, 2023. https://www.wilmerhale.com/en/insights/news/20191212-wilmerhale-wins-180-million-judgment-against-iran-for-jason-rezaian-and-family.

Rule 23 and Me: The Problem with Class Action Lawsuits

By: Ava Raine

Edited By: Luke Vredenburg and Emily yang

Americans’ tendency to sue – businesses, employers, each other – is so well established, it has become a punchline. Jokes aside, accountability is important, and lawsuits often provide it by vindicating the aggrieved party and forcing the wrongdoer to make amends. However, a serious flaw in this system arises when ordinary people attempt to sue large corporations. This type of lawsuit is known as a “class action,” and involves a group of multiple plaintiffs (called “class members”) collectively suing a defendant. This is often the only way that individuals with limited finances can take on wealthy corporations in court. However, even when class actions succeed, the damages paid by the company are typically only a small fraction of its profit – hardly enough to deter future wrongdoing. Meanwhile, the class members must divide the settlement between so many people that, in the end, they receive next to nothing. Therefore, class actions, though appealing in theory, ultimately fail to provide justice for either victims or perpetrators in reality. 

The legal basis for class action lawsuits is known as Rule 23, under which a class member may sue as a representative of all members so long as certain requisites regarding the commonalities among class members are met. [1] When a class action is successful, the settlement paid to the class members will include both compensatory damages (a sum intended to compensate for harms inflicted) and punitive damages (an additional sum, intended to punish the wrongdoer and deter future transgressions). [2] Ideally, meting out damages in this manner would both reimburse victims and prevent companies from committing harmful acts in the first place.

Unfortunately, in practice, damages must be divided between all class members. Therefore, even settlements that seem generous result in only meager payments to each victim. For instance, General Motors was recently sued over a flaw in their car engines which led to stalling and breakdowns. In October of 2022, the jury ordered that General Motors pay $102.6 million to the class members. However, once divided amongst the approximately 38,000 class members and their lawyers, it amounted to a mere $2,700 per class member. [3] That amount is, at best, barely sufficient to cover the cost of engine repairs. It is certainly not enough to also compensate for all the additional hardships class members may have experienced due to their cars’ faulty engines: missed work time resulting from unreliable transportation, medical and insurance bills for injuries and vehicle damage sustained in automobile accidents, or the cost of towing cars which broke down on the road, to name a few. 

Similarly, a class action lawsuit was filed against the genetic testing company 23andMe for false advertising. The company made claims that their product could diagnose genetic predispositions to medical conditions – including life-threatening diseases such as cancer – without FDA approval. After the lawsuit was settled in September 2017, class members were given compensation either in the form of a $12.50 cash payment, or a $40 certificate that could be put towards purchasing a new 23andMe genetic testing kit. [4] Neither of these options is sufficient to cover the cost of even one genetic testing kit. For the many class members who purchased the expensive kit because they were misled, this means their expenditures were not reimbursed. It adds further insult to injury that the company also used the settlement itself as an opportunity to promote their product; by giving out certificates which only partially cover the cost of a testing kit, they induced class members to spend more of their own money on 23andMe products in order to be able to make use of the settlement they received. Practices such as this clearly erode the efficacy of class actions to bring justice. 

In each of these cases, the small payments class members received were hardly sufficient to make up for the harms inflicted upon them, financial or otherwise. This pattern holds true for most class actions. Thus, the primary goal of class action lawsuits (to provide justice for victims) is not sufficiently met by class actions in their current form. However, to assume that this failure is an inevitable side effect of having to split settlements between so many class members would be obtuse, and would only serve to foster the continuation of these inequities in court. Large class sizes are, after all, a direct result of the number of people a company has wronged; and class members often do not have the means to pursue individual suits against companies with almost unlimited financial resources. It does not, therefore, make sense to punish class members by forcing them to ration insufficient settlements amongst themselves. It would be much more reasonable to solve this problem by increasing the amount of damages companies have to pay. This solution would place the financial burden in class actions back where it belongs: on the perpetrators. It would also ensure that the compensatory damages they pay do, in fact, “compensate for an injury or loss caused by another party's unlawful conduct… [making] the claimant ‘whole,’” as they are intended to do. [5]

Furthermore, there is an additional rationale for increasing the size of class action settlements; the current standards for settlements mean that the companies at fault are often not sufficiently penalized. Millions of dollars in damages are barely a drop in the bucket for companies worth billions. Even one of the largest class action lawsuit settlements in US history – the $14.7 billion settlement against Volkswagen in the so-called “dieselgate” scandal of 2017, in which the car company misled regulators regarding the polluting nature of their vehicle – failed to have a meaningful impact on the company's wealth, as Volkswagen brought in roughly $256.6 billion worth of sales revenue in that year alone. [6][7] Similarly, in 2015, Takeda Pharmaceutical settled a class action for $2.4 billion, when one of their drugs was found to put users at risk of cancer. [8] Yet, Takeda Pharmaceutical brought in roughly seven times that amount in revenue, with their assets worth over sixteen times the sum of the settlement. [9] The disparity between the 2022 General Motors settlement and their income is even greater; the class action was settled for $102.6 million, while their total revenue for that year was $127 billion, with assets worth $244.7 billion. [10][11] In a statement to The Washington Post, the executive director of the Center for Auto Safety, Clarence Ditlow, observed that when it comes to General Motors, “‘There’s no problem too big that money can’t solve’... GM “‘[buys] its way out of a criminal prosecution.’” [12] Yet, this is not only true of General Motors. It holds true for many, many corporations. In most class actions, the corporation at fault is made to pay only a tiny fraction of its overall worth. 

As a result, companies settle class action with ease, avoiding any real consequences for the harms they perpetrate. This is a fundamental problem, and not only because it runs counter to one's sense of justice. In order for punitive damages to have their intended effect – “to deter the wrongdoer and others from engaging in unlawful conduct in the future” – they must impose a financial incentive for corporations to steer clear of harmful practices. [13] Only settlements which take a significant fraction of a business’s profit can achieve this. Otherwise, it may well be more profitable for companies to continue illicit activities, notwithstanding the occasional small lawsuit settlement, than to alter their behavior. This phenomenon is apparent in practice. Many companies are sued repeatedly; their legal histories are dotted with lawsuit after lawsuit and settlement after settlement. General Motors, for one, was fined $900 million after the discovery of another dangerous engine flaw back in 2015. [14] This lawsuit came seven years before the later $102.6 million settlement that took place in 2022. [15] The company was also sued in 2019 yet again, for a vehicle flaw and, according to Reuters reporter Brendan Pierson, “GM has faced litigation accusing it of covering up problems with its vehicles over the years, including alleged deadly flaws in steering wheel sensors and ignition switches.” [16][17] If those lawsuits had the desired effect, a single class action should have been enough to prevent future transgressions. The fact that General Motors has dealt with so many similar lawsuits over time, indicates that the damages they are being made to pay are not a sufficient deterrent, and that lawsuits are ineffective at preventing the company from taking dangerous shortcuts with their products. 

These problems are compounded and reinforced by existing legal infrastructure. In particular, laws which cap the damages a company can be made to pay. Individual states have differing laws regarding such caps; for instance, Alabama limits the ratio of punitive to compensatory damages to 3:1. Meanwhile Louisiana places no cap on compensatory damages, but “disfavors” levying punitive damages altogether. Wisconsin caps punitive damages at two times compensatory damages. [18] These are only a few examples; however, they indicate a general trend of limiting punitive damages. In light of this, it is unsurprising that settlements in class actions are often too small to effectively deter corporations from repeatedly cheating, scamming, and endangering consumers. If the potential profit of illicitly cutting corners is larger than the sum of the resultant damages, and if those damages will not significantly impact a business’ wealth, then there is no incentive against continuing negligent or dangerous practices. As a result, customers’ health, safety, and pocketbooks suffer, as illustrated in the examples above. 

All of this is not to say class actions are pointless or obsolete; on the contrary, they can be a powerful tool for change and for holding corporations accountable. The problem is that current legal precedents and limitations decrease this potential. To be effective, damages paid must be a large enough sum to fully compensate the victims and to deter corporations from cutting corners. Currently, settlements are generally not large enough to satisfactorily achieve either of these aims. 

One solution to this problem would be to increase maximum permitted ratios of punitive to compensatory damages at the state level. This would increase the total sum of the damages paid in settlements. Additionally, a sliding scale based on the defendant’s income could be used to calculate the appropriate punitive damages. This would prevent large corporations from getting off lightly, simply because their superabundant profits allow them to easily absorb the blow of a settlement, while also ensuring that smaller companies pay a fair amount within their means. State legislation could incorporate practices such as this in order to reform the laws which currently place caps on the amount of damages a company can be made to pay. If changes such as these were implemented, class action lawsuits would be transformed into real opportunities for justice.

NOTES:

1. “Rule 23. Class Actions.” Legal Information Institute. Legal Information Institute. Accessed November 29, 2022. https://www.law.cornell.edu/rules/frcp/rule_23. 

2. “Compensatory Damages | Practical Law - Westlaw.” Thomson Reuters. Accessed November 29, 2022. https://content.next.westlaw.com/practical-law/document/I0fa00d5def0811e28578f7ccc38dcbee/Compensatory-Damages?viewType=FullText&contextData=(sc.Default); “Punitive Damages | Practical Law.” Thomson Reuters. Accessed November 30, 2022. https://uk.practicallaw.thomsonreuters.com/6-501-5593?contextData=(sc.Default). 

3. Person, and Brendan Pierson. “GM Hit with $102.6 MLN Jury Verdict in Engine Flaw Class Action.” Reuters. Thomson Reuters, October 6, 2022. https://www.reuters.com/legal/litigation/gm-hit-with-1026-mln-jury-verdict-engine-flaw-class-action-2022-10-05/. 

4. Tassin, Paul. “23andMe DNA Testing Kit Class Action Settlement.” Top Class Actions, May 18, 2019. https://topclassactions.com/lawsuit-settlements/closed-settlements/23andme-dna-testing-kit-class-action-settlement/. 

5. Reuters, “Compensatory Damages.”

6. Shepardson, David. “U.S. Judge Approves $14.7 Billion Deal in VW Diesel Scandal.” Reuters. Thomson Reuters, October 25, 2016. https://www.reuters.com/article/us-volkswagen-emissions/u-s-judge-approves-14-7-billion-deal-in-vw-diesel-scandal-idUSKCN12P22F. 

7. Carlier, Mathilde. “Revenue of Volkswagen 2006-2021.” Statista, June 10, 2022. https://www.statista.com/statistics/264349/sales-revenue-of-volkswagen-ag-since-2006/. 

8. Pollack, Andrew. “Takeda Agrees to Pay $2.4 Billion to Settle Suits over Cancer Risk of Actos.” The New York Times. The New York Times, April 28, 2015. https://www.nytimes.com/2015/04/29/business/takeda-agrees-to-pay-2-4-billion-to-settle-suits-over-cancer-risk-of-actos.html. 

9. “Takeda Pharmaceutical | Company Overview & News.” Forbes. Forbes Magazine. Accessed November 29, 2022. https://www.forbes.com/companies/takeda-pharmaceutical/?sh=6a79b7ec6f4c. 

10.  Person and Pierson, “GM Hit with $102.6 MLN Jury Verdict.”

11.  “General Motors | GM Stock Price, Company Overview & News.” Forbes. Forbes Magazine. Accessed November 29, 2022. https://www.forbes.com/companies/general-motors/?sh=7f653aab4e09. 

12.  Harwell, Drew. “Why General Motors' $900 Million Fine for a Deadly Defect Is Just a Slap on the Wrist.” The Washington Post. WP Company, October 23, 2021. https://www.washingtonpost.com/news/business/wp/2015/09/17/why-general-motors-900-million-fine-for-a-deadly-defect-is-just-a-slap-on-the-wrist/. 

13.  Reuters, “Punitive Damages.”

14.  Harwell, “General Motors' $900 Million Fine.”

15.  Person and Pierson, “GM Hit with $102.6 MLN Jury Verdict.”

16.  18-14371 - Berman et al v. General Motors LLC (United States District Court Southern District of Florida November 15, 2019). 

17.  Person and Pierson, “GM Hit with $102.6 MLN Jury Verdict.”

18.  Plosser, W. McDonald. “Sky's the Limit? A 50-State Survey of Damages Caps and the Collateral Source Rule - Insurance Laws and Products - United States.” Sky's The Limit? A 50-State Survey Of Damages Caps And The Collateral Source Rule - Insurance Laws and Products - United States. Butler Snow LLP, December 11, 2018. https://www.mondaq.com/unitedstates/insurance-laws-and-products/762574/sky39s-the-limit-a-50-state-survey-of-damages-caps-and-the-collateral-source-rule.

BIBLIOGRAPHY:

18-14371 - Berman et al v. General Motors LLC (United States District Court Southern District of Florida November 15, 2019).

Carlier, Mathilde. “Revenue of Volkswagen 2006-2021.” Statista, June 10, 2022. https://www.statista.com/statistics/264349/sales-revenue-of-volkswagen-ag-since-2006/.

“Compensatory Damages | Practical Law - Westlaw.” Thomson Reuters. Accessed November 29, 2022. https://content.next.westlaw.com/practical-law/document/I0fa00d5def0811e28578f7ccc38dcbee/Compensatory-Damages?viewType=FullText&contextData=(sc.Default).

“General Motors | GM Stock Price, Company Overview & News.” Forbes. Forbes Magazine. Accessed November 29, 2022. https://www.forbes.com/companies/general-motors/?sh=7f653aab4e09.

Harwell, Drew. “Why General Motors' $900 Million Fine for a Deadly Defect Is Just a Slap on the Wrist.” The Washington Post. WP Company, October 23, 2021. https://www.washingtonpost.com/news/business/wp/2015/09/17/why-general-motors-900-million-fine-for-a-deadly-defect-is-just-a-slap-on-the-wrist/.

Person, and Brendan Pierson. “GM Hit with $102.6 MLN Jury Verdict in Engine Flaw Class Action.” Reuters. Thomson Reuters, October 6, 2022. https://www.reuters.com/legal/litigation/gm-hit-with-1026-mln-jury-verdict-engine-flaw-class-action-2022-10-05/.

Plosser, W. McDonald. “Sky's the Limit? A 50-State Survey of Damages Caps and the Collateral Source Rule - Insurance Laws and Products - United States.” Sky's The Limit? A 50-State Survey Of Damages Caps And The Collateral Source Rule - Insurance Laws and Products - United States. Butler Snow LLP, December 11, 2018. https://www.mondaq.com/unitedstates/insurance-laws-and-products/762574/sky39s-the-limit-a-50-state-survey-of-damages-caps-and-the-collateral-source-rule.

Pollack, Andrew. “Takeda Agrees to Pay $2.4 Billion to Settle Suits over Cancer Risk of Actos.” The New York Times. The New York Times, April 28, 2015. https://www.nytimes.com/2015/04/29/business/takeda-agrees-to-pay-2-4-billion-to-settle-suits-over-cancer-risk-of-actos.html.

“Punitive Damages | Practical Law.” Thomson Reuters. Accessed November 30, 2022. https://uk.practicallaw.thomsonreuters.com/6-501-5593?contextData=(sc.Default).

“Rule 23. Class Actions.” Legal Information Institute. Legal Information Institute. Accessed November 29, 2022. https://www.law.cornell.edu/rules/frcp/rule_23.

Shepardson, David. “U.S. Judge Approves $14.7 Billion Deal in VW Diesel Scandal.” Reuters. Thomson Reuters, October 25, 2016. https://www.reuters.com/article/us-volkswagen-emissions/u-s-judge-approves-14-7-billion-deal-in-vw-diesel-scandal-idUSKCN12P22F.

“Takeda Pharmaceutical | Company Overview & News.” Forbes. Forbes Magazine. Accessed November 29, 2022. https://www.forbes.com/companies/takeda-pharmaceutical/?sh=6a79b7ec6f4c.

Tassin, Paul. “23andMe DNA Testing Kit Class Action Settlement.” Top Class Actions, May 18, 2019. https://topclassactions.com/lawsuit-settlements/closed-settlements/23andme-dna-testing-kit-class-action-settlement/.

Railroad Strike Derailed before Economic Disaster

By: Sarah Wejman

Edited By: Shiny Han and Angie Chung

With the holiday season approaching, the threat of a rail strike couldn’t have come at a worse time of year. Luckily, President Biden and Congress have settled on an agreement with the rail companies and unions, meaning there will be no strike in the near future. Despite it only coming up in the news recently, there have been conflicts between the government, rail employers, and rail unions for months. This article will present a brief overview of Congress’ legal interference with the railroads, how disagreements originated, and the resolution. 

The ability of Congress to intervene in conflicts between rail companies and unions stems from the 1926 Railway Labor Act. This power was delegated under the constitutional power of Congress to regulate commerce. In 1924, President Calvin Coolidge urged rail unions and companies to suggest legislation that could serve as conflict resolution and subdue threats of strikes. The result was a jointly drafted piece of legislation that was formally signed into law on May 20, 1926. [1] A few fundamental goals of the law are to avoid disruptions to commerce and to assist with dispute settlements regarding wages, working conditions, and contracts. [2] Congress has intervened this way 18 times before, the most recent being in 1992. [3]

On October 7, the third largest rail union in the U.S. rejected a deal with their rail company. The union, the Brotherhood of Maintenance of Way Employes (BMWE), voted against a five-year contract despite it including 24% raises and $5000 bonuses due to poor working conditions. [4] Demanding schedules is another issue, particularly for engineers and conductors, since they are on call 24-7, making it hard to take any time off. Meanwhile, although track workers have some more flexibility, their lack of paid time off is disgruntling and problematic for many. In a summary of these grievances, Tony Cardwell, the union president of BMWE, stated, “‘Railroaders are discouraged and upset with working conditions and compensation and hold their employer in low regard. Railroaders do not feel valued. They resent the fact that management holds no regard for their quality of life, illustrated by their stubborn reluctance to provide a higher quantity of paid time off, especially for sickness.’” [5] One Tennessee worker named Anthony Gunter worked “four 10-hour shifts in a row,” filled with physical labor. When his son needed surgery as a result of a heart defect he had since birth, he stayed home to be with his family. His supervisor was quite resistant and strongly urged him to return to work, claiming, “[y]ou have to be here.” Angered by this, Gunter quit his job at the railroad. [6]

The effects of the potential rail strike could have been detrimental to the economy. 40% of the nation’s freight is accounted for by railroads, and a strike would have taken a daily toll of $2 billion on the economy. [7] The strike would damage some of the United States’ most important industries by shutting down or delaying chemical manufacturing, commuter rail systems, automobile production, food processing and production, livestock feed delivery, and retail shipments. Additionally, on November 28, over 400 groups, including the U.S Chamber of Commerce, American Farm Bureau Federation, and National Association of Manufacturers, called on Congress to act on the concerns of national shipment crises. [8]

However, there has been a recent agreement that has halted the threat of a strike. After a December 9 strike was lurking, President Biden requested that Congress resolve the issue by imposing the tentative agreement reached this past fall. The initial agreement made on September 15, 2022, was between U.S rail companies and unions; of the twelve unions, four did not agree to ratify it. [9] However, to avoid a strike, all unions must agree. 

On December 1, the Senate passed a bill with an 80-15 vote that would force the unions to accept the temporary agreement they reached this past fall and make an imminent strike illegal. One measure, which entailed paid sick leave, was short 8 votes of the 60 needed to pass. [10] Both of the bills passed the House the day before. Democrats were partially in opposition to the ordeal because their pro-worker viewpoints clashed with Biden’s desire to stop the strike. Nonetheless, on December 2, President Biden signed legislation and applauded Congress’ promptness and efforts. [11] Despite the success on Congress’ end, workers were unsatisfied after the paid sick days portion did not pass; Cardwell expressed that “‘corporations won today and the working class lost’” [12].

Although the rail strike was avoided now, it is unlikely that the rail workers will settle in the future for subpar time off and work conditions. Even though the sick days bill didn't pass, politicians on both sides agreed that workers should receive a reasonable amount of paid time off. Thus, it is promising that there could be legislation to come that grants this reasonable and fair right to rail workers.

NOTES:

1. Pennsylvania Federation BMWED, “The Railway Labor Act Simplified,” Pennfedbmwe.org, 2019, http://www.pennfedbmwe.org/Docs/reference/RLA_Simplified.html.

2. “Railway Labor Act” (1926).

3. Hope Yen and Josh Funk, “Why Congress Is Intervening in a Labor Dispute between Railway Companies and Freight Workers,” PBS NewsHour, November 30, 2022, https://www.pbs.org/newshour/economy/why-congress-is-intervening-in-a-labor-dispute-between-railway-companies-and-freight-workers.

4. Josh Funk, “Large Rail Union Rejects Deal, Renewing Strike Possibility,” AP NEWS, October 10, 2022, https://apnews.com/article/business-economy-government-and-politics-0744cffe919f0d48fcc02d16c8a298b3.

5. Funk, “Large Rail Union”

6. Ian Prasad Philbrick, “A Strike, Averted.” The New York Times, December 4, 2022, sec. Briefing. https://www.nytimes.com/2022/12/04/briefing/railroad-workers-demands.html.

7. Yen, “Why Congress Is Intervening”

8. David Shepardson, “400 Groups Urge U.S. Lawmakers to Take ‘Immediate Steps’ to Block Potential Rail Strike,” Reuters, November 28, 2022, sec. United States, https://www.reuters.com/world/us/400-groups-urge-us-lawmakers-take-immediate-steps-block-potential-rail-strike-2022-11-28/. 

9. US EPA, “Railroad Agreement: Current Status and Potential Impact on Supply Chain Disruptions,” www.epa.gov, August 30, 2022, https://www.epa.gov/waterutilityresponse/railroad-agreement-current-status-and-potential-impact-supply-chain.

10. Ximena Bustillo, “Senate Passes Railroad Legislation to Prevent a Strike,” NPR, December 1, 2022, sec. Politics, https://www.npr.org/2022/12/01/1140123647/rail-strike-bill-senate.

11. US EPA, “Railroad Agreement”

12. Alex Daugherty, “Freight Rail Strike Averted, after Frenzied Negotiations,” POLITICO, December 1, 2022, https://www.politico.com/news/2022/12/01/schumer-senate-freight-rail-agreement-00071580.

BIBLIOGRAPHY:

Bustillo, Ximena. “Senate Passes Railroad Legislation to Prevent a Strike.” NPR, December 1, 2022, sec. Politics. https://www.npr.org/2022/12/01/1140123647/rail-strike-bill-senate.

Daugherty, Alex. “Freight Rail Strike Averted, after Frenzied Negotiations.” POLITICO, December 1, 2022. https://www.politico.com/news/2022/12/01/schumer-senate-freight-rail-agreement-00071580.

Funk, Josh. “Large Rail Union Rejects Deal, Renewing Strike Possibility.” AP NEWS, October 10, 2022. https://apnews.com/article/business-economy-government-and-politics-0744cffe919f0d48fcc02d16c8a298b3.

Pennsylvania Federation BMWED. “The Railway Labor Act Simplified.” Pennfedbmwe.org, 2019. http://www.pennfedbmwe.org/Docs/reference/RLA_Simplified.html.

Philbrick, Ian Prasad. “A Strike, Averted.” The New York Times, December 4, 2022, sec. Briefing. https://www.nytimes.com/2022/12/04/briefing/railroad-workers-demands.html.

Railway Labor Act (1926).

Shepardson, David. “400 Groups Urge U.S. Lawmakers to Take ‘Immediate Steps’ to Block Potential Rail Strike.” Reuters, November 28, 2022, sec. United States. https://www.reuters.com/world/us/400-groups-urge-us-lawmakers-take-immediate-steps-block-potential-rail-strike-2022-11-28/.

US EPA. “Railroad Agreement: Current Status and Potential Impact on Supply Chain Disruptions.” www.epa.gov, August 30, 2022. https://www.epa.gov/waterutilityresponse/railroad-agreement-current-status-and-potential-impact-supply-chain.

Yen, Hope, and Josh Funk. “Why Congress Is Intervening in a Labor Dispute between Railway Companies and Freight Workers.” PBS NewsHour, November 30, 2022. https://www.pbs.org/newshour/economy/why-congress-is-intervening-in-a-labor-dispute-between-railway-companies-and-freight-workers.