thinking the unthinkable… hilary b. miller payday loan bar association november 14, 2008

Thinking the unthinkable…

Hilary B. MillerPayday Loan Bar AssociationNovember 14, 2008

Proposed legislation to amend the FAA State common-law defenses based on

principles of contract law (unconscionability, etc.; e.g., Szetela)

Agency rulemaking (e.g., FNMA) State statutory enactments

determining class-action waivers to be unconscionable

Changes in S.Ct. composition

Hilary B. Miller - November 14, 2008

Class actions will proceed Risk of class arbitration Jury trial No matter what, protracted litigation

over procedural matters

Hilary B. Miller - November 14, 2008

Sidestep risk of bet-the-company litigation

Minimize incentives for plaintiffs’ class bar

Address problems one at a time

Hilary B. Miller - November 14, 2008

The best dispute resolution mechanism is the one that is complete before the customer has consulted counsel• Solve the problem at lowest-cost opportunity• Retain the customer• Minimize viral spread

Adopt a “customer satisfaction guaranty”• Ensure that customers know about it• Put teeth in it• Empower CSRs and front-line managers

Hilary B. Miller - November 14, 2008

Drafting opportunities to create enforceable pre-suit settlement opportunities:• Notice-and-opportunity-to-cure clauses• Contractual “offer of judgment” provisions• Mandatory mediation with plaintiff in person

Drafting opportunities to create post-suit benefits:• Waiver of trial by jury• In states that allow, submission to simplified

dispute resolution (e.g., CPLR)• Bump-up clause/attorneys’ fees

Hilary B. Miller - November 14, 2008

Disclosure Make it a bargained-for deal term

• Pay the customer/offer a reduced price if customer will agree to your pre-dispute dispute-resolution program

• Allow the customer a bona fide choice at the time of contracting (not post-transaction opt-out)

Contract with respect to favorable state law, if possible

Hilary B. Miller - November 14, 2008

Anticipate No-A Day arrival in next year Some post-No-A-Day lawsuits will

relate to previous putative misconduct Forms in use now must anticipate that

they will be the basis of post-No-A-Day disputes

Suggested steps are compatible with existing class-action waivers and arbitration clauses

Hilary B. Miller - November 14, 2008