Trump is hyp­ocrite on peo­ple’s right to sue

Los Angeles Times - - BUSINESS - DAVID LAZARUS

Pres­i­dent Trump has been party to nearly 4,100 law­suits over the last three decades. About half the time he was the one do­ing the su­ing; the other half he was the one be­ing sued.

But what makes Trump a com­plete hyp­ocrite on this score — and aligns him with the busi­ness world — is that al­though he’s never hes­i­tated to use the le­gal sys­tem to pro­tect his own in­ter­ests, he’s de­nied his em­ploy­ees and cam­paign work­ers the same right, re­quir­ing in­stead that they take any dis­putes to pri­vate ar­bi­tra­tion.

This is worth not­ing in light of Corey Le­wandowski, Trump’s for­mer cam­paign man­ager and current ad­vi­sor, tak­ing to the air­waves the other day to call on the pres­i­dent’s new chief of staff, John F. Kelly, to sack the head of the Con­sumer Fi­nan­cial Pro­tec­tion Bureau.

Le­wandowski said on NBC’s “Meet the Press” that CFPB Di­rec­tor Richard Cor­dray should be given the heave-ho be­cause he’s “all but run­ning for gov­er­nor in the state of Ohio” and be­cause “you’ve got an un­elected bu­reau­crat sit­ting in an of­fice right now.”

This is re­mark­able for two rea­sons. First, what­ever Cor­dray’s po­lit­i­cal am­bi­tions, he’s voiced no plans to run for of­fice or filed any such pa­per­work. When Le­wandowski says Cor­dray is “all but run­ning,” what he means is “not run­ning.”

Sec­ond, Le­wandowski wants Kelly, an un­elected bu­reau­crat, to fire Cor­dray for be­ing an un­elected bu­reau­crat, which is noth­ing short of bizarre. All Cab­i­net mem­bers and agency heads are un­elected bu­reau­crats.

What’s re­ally go­ing on here has more to do with Cor­dray hav­ing re­cently announced a rule that would make it eas­ier for

con­sumers to band to­gether in class-ac­tion law­suits against fi­nan­cial firms.

The rule is ra­dioac­tive to banks, credit card com­pa­nies and other lenders be­cause, like Trump when he was run­ning his busi­nesses, th­ese firms rou­tinely in­clude manda­tory ar­bi­tra­tion pro­vi­sions in their con­tracts, forc­ing peo­ple to pri­vately ar­bi­trate rather than have a day in court.

Many busi­nesses pre­fer ar­bi­tra­tion be­cause the process tends to be more fa­vor­able to com­pa­nies than to con­sumers. Not coin­ci­den­tally, busi­nesses pay ar­bi­tra­tors’ fees to de­cide cases.

Also, no busi­ness is willing to give up its own right to sue, which be­lies com­pa­nies’ ar­gu­ment that ar­bi­tra­tion is more ef­fec­tive than lit­i­ga­tion.

Al­though it’s likely the CFPB’s new rule will be over­turned by Repub­li­can law­mak­ers be­fore it takes ef­fect next month, I’m see­ing Le­wandowski’s out­burst this week as a trial bal­lon floated on be­half of the pres­i­dent, who has made no se­cret of de­sir­ing a more busi­ness-friendly di­rec­tor overseeing the con­sumer agency.

Trump can only fire Cor­dray “for cause” be­fore Cor­dray’s term ends in July 2018, mean­ing there must be ev­i­dence of neg­li­gence or in­com­pe­tence.

Le­wandowski’s re­marks — de­liv­ered out of left field — seem to be part of a cam­paign among Repub­li­can law­mak­ers and Trump as­so­ciates to help make that case.

Af­ter “Meet the Press” host Chuck Todd noted that fir­ing Cor­dray “was sort of a ran­dom thing you just in­tro­duced there,” Le­wandowski pressed his case:

“Two weeks ago, Richard Cor­dray through the CFPB passed a rule with the an­tithe­sis of, you know, it’s go­ing to be about a tril­lion dollars’ worth of ar­bi­tra­tion that the gov­ern­ment’s go­ing to have to go through now, and he’s an un­elected of­fi­cial, he’s announced — all but announced, Chuck — that he’s run­ning for gov­er­nor of Ohio, and if he wants to run for gov­er­nor of Ohio, go run for gov­er­nor of Ohio, but don’t do so while you’re sit­ting in a fed­eral of­fice right now.”

Loopy syn­tax aside, it’s not clear how Le­wandowski reached that tril­lion-dol­lar fig­ure, which rep­re­sents al­most a third of the en­tire fed­eral bud­get, or why the gov­ern­ment would “have to go through” pri­vate-sec­tor dis­putes.

A spokes­woman for the CFPB de­clined to com­ment.

If Trump were half the pop­ulist he makes him­self out to be, he’d em­brace the CFPB’s rule, which says a manda­tory ar­bi­tra­tion clause can’t be used to deny cus­tomers of fi­nan­cial firms their right to join class ac­tions.

How­ever, Trump clearly has no in­ter­est in a level play­ing field.

The As­so­ci­ated Press got its hands last year on the con­fi­den­tial­ity agree­ment Trump rou­tinely forced on em­ploy­ees of his busi­nesses and, sub­se­quently, his po­lit­i­cal cam­paign.

The crux of the legally bind­ing con­tract is that work­ers are pro­hib­ited from re­leas­ing any sen­si­tive or dis­parag­ing in­for­ma­tion about Trump, his fam­ily or his com­pa­nies.

The agree­ment also in­cludes an ar­bi­tra­tion pro­vi­sion that, ac­cord­ing to the AP, en­sures dis­putes are kept out of court and that po­ten­tially em­bar­rass­ing in­for­ma­tion stays un­der wraps. The de­ci­sion to ar­bi­trate “is the sole dis­cre­tion of Trump and others pro­tected by the agree­ment,” the news agency said.

There’s no way of know­ing how many times Trump has en­forced this pro­vi­sion be­cause, un­like the court sys­tem, the ar­bi­tra­tion process is shrouded in se­crecy.

I asked the Trump Or­ga­ni­za­tion, now run by Trump’s sons, Don­ald Jr. and Eric, if ar­bi­tra­tion pro­vi­sions are still part of the com­pany’s em­ploy­ment con­tracts. No one got back to me.

Trump re­port­edly is frus­trated that, as pres­i­dent, he can’t make fed­eral em­ploy­ees sign nondis­clo­sure agree­ments and can’t block them from su­ing — or from writ­ing tell-all books, as for­mer FBI Di­rec­tor James B. Comey is now do­ing.

The pres­i­dent un­doubt­edly is still smart­ing from hav­ing ne­glected to in­clude an ar­bi­tra­tion clause in con­tracts for his now-de­funct Trump Univer­sity. Fail­ure to do so re­sulted in class-ac­tion law­suits for al­leged fraud that Trump set­tled out of court for $25 mil­lion shortly af­ter his elec­tion.

It was a dumb over­sight on Trump’s part. Nearly all for-profit schools that re­ceive fed­eral fi­nan­cial aid make their stu­dents agree to manda­tory ar­bi­tra­tion, ac­cord­ing to a re­port last year from the Cen­tury Foun­da­tion.

Trump Univer­sity wasn’t re­ally a school — it was a money-making ven­ture — and its stu­dents weren’t el­i­gi­ble for fed­eral ed­u­ca­tion sub­si­dies.

But as a busi­ness, there was noth­ing stop­ping it from im­pos­ing an ar­bi­tra­tion clause on cus­tomers, which the U.S. Supreme Court af­firmed in a 2011 rul­ing.

I had hoped to ask some­one at the Trump Or­ga­ni­za­tion why Trump un­char­ac­ter­is­ti­cally had left him­self open to lit­i­ga­tion with the univer­sity. But, like I say, no one got back to me.

When Trump talks about de­fend­ing the in­ter­ests of “the for­got­ten men and women of our coun­try,” he’s ob­vi­ously not talk­ing about those who have been for­got­ten by the le­gal sys­tem.

If Trump, the self-styled pop­ulist bil­lion­aire, cared about the coun­try’s for­got­ten peo­ple, he would con­grat­u­late the CFPB for look­ing af­ter their in­ter­ests. Since its es­tab­lish­ment six years ago, the agency has re­turned more than $12 bil­lion to ag­grieved con­sumers.

In­stead, Trump sends out lack­eys such as Le­wandowski to seek the di­rec­tor’s head on a plat­ter.

Trump also has been a keen ad­vo­cate of over­turn­ing the fed­eral law that cre­ated the CFPB and do­ing away with the watch­dog agency en­tirely.

That’s not how a man of the peo­ple be­haves.

But it’s cer­tainly in keep­ing with a busi­ness­man who be­lieves his own le­gal rights are more im­por­tant than those of the peo­ple around him.

Saul Loeb AFP/Getty Images

COREY LE­WANDOWSKI says Richard Cor­dray should be fired be­cause he’s “all but run­ning for gov­er­nor” in Ohio and be­cause he’s “an un­elected bu­reau­crat.”

Alex Wong Getty Images

RICHARD COR­DRAY, di­rec­tor of the Con­sumer Fi­nan­cial Pro­tec­tion Bureau, can be fired by Pres­i­dent Trump only “for cause” be­fore his term ends in July 2018.

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