Students Work on California Lawsuit That Shows ‘The Dark Side of Arbitration’

Yale Law School students played a key role in a lawsuit that was the subject of Business Week magazine’s June 5 cover story: “Banks vs. Consumers (Guess Who Wins?).”

The lawsuit was filed by San Francisco City Attorney Dennis Herrera on behalf of the People of the State of California against the National Arbitration Foundation (NAF), a company that resolves claims against consumers who are reportedly delinquent in payments to banks, credit card companies and retailers.

The lawsuit contends that NAF arbitrators are unfairly biased against consumers, deciding in favor of creditors 99.8% of the time, often without sufficient justification. It also charges that one of NAF’s largest clients, FIA Card Services, misuses the unfair process created by NAF.

Several Yale Law students were deeply involved in the case, researching the many legal issues involved and helping prepare the case for litigation.

“I was involved in everything from interviewing lawyers who had experience defending consumers against NAF, to combing through a recent trial transcript for helpful clues and ideas, to reading journal articles about the history of arbitration in this country,” says Giulia Good Stefani, a fellow at the Law School. “It’s a hot topic, and the NAF suit is important because it makes public what has so far been kept tightly under wraps. It reveals a dark side of arbitration.”

The Yale students began working with Herrera’s office back in September 2006 through a unique partnership called the San Francisco Affirmative Litigation Project (SFALP), which also includes students from Berkeley Law. Since that time, the office has filed four public policy cases, and Yale Law students - roughly 40 since the project began - have had a strong hand in developing and working on each of them. Additional lawsuits are in the formative stages.

The SFALP was co-founded by Heather Gerken, a professor at Yale Law School, and Kathleen Morris, a visiting lecturer at the Law School who works in the San Francisco City Attorney’s Office. Both agree that the program has far exceeded their original expectations.

“For example,” says Morris, “I hoped the students would find the project worth doing; instead, many said it was a high point in their legal education. I hoped the students’ work would be high-quality; instead, it has been nothing short of outstanding.”

“It’s been an incredible opportunity for our students to work on top-notch structural reform litigation in the public interest,” adds Gerken. “It’s giving them an insider’s view of the cutting-edge public interest work being done in San Francisco and is enabling them to see what opportunities are available in government lawyering, particularly at the state and local levels.”

The students say they are equally enthusiastic, and grateful for the guidance of the deputy city attorneys who have participated with them on working group teams.

“Working on this project has without a doubt been the most rewarding experience of my law school career,” says Benji Plener. “I love thinking strategically, interacting substantively with passionate and experienced - and kind - attorneys, and being part of a team united with a clear and noble vision.”

“I am incredibly proud to be a part of SFALP,” says Good Stefani, who will lead the project in the coming academic year with Gerken. “It’s given me direction and a new vision for what the law can be and do for a community - and a model for enacting change that I could point out to friends and family and say, ‘That’s the kind of lawyering I’m about; that’s why I went into law.’”

Indeed, says Gerken, the program has become a national model, with calls coming in from Harvard University and other elite schools interested in doing something similar.

“In just two years, it has become a vibrant program that Yale Law School boasts about when it recruits,” she says. “And every year it will get better.”

Share this with Facebook Share this with Twitter Share this with LinkedIn Share this with Email Print this