Q&A with Daniel Karon: What a Biden White House means for Class Actions

The transition from one White House administration to the next is a volatile time in any era, but perhaps especially so during the switch from Donald Trump to Joe Biden. 

The person occupying the White House influences just about everything in America’s institutions, including consumer protections and class action legislation.  

This is where our friend Daniel Karon comes in. He manages Karon LLC, chairs the American Bar Association National Institute on Class Actions, taught complex litigation at Columbia Law School, teaches consumer law and class actions at the University of Michigan Law School, co-chaired the American Association of Justice Class Action Litigation Group, writes a column on class actions and civil justice for Law360, is author of The Last Class Action – a legal thriller, and hosts www.yourloveablelawyer.com, an important legal wellness website intended to bring legal empowerment to consumers.

Karon is an expert in consumer laws and class actions, and he wrote a piece in his Law360 column that caught our attention at Top Class Actions called “What the Biden Presidency Means for Class Actions.”

As an organization whose entire model is based around class actions, we wanted to get in on the story. We reached out to Karon to get the insider’s scoop on the piece and go into a little more detail on what he expects from Washington over the next few years. 

Top Class Actions

Q: So, Daniel, Top Class Actions saw your article about where consumer protection laws and norms stand as Washington and the White House go through a transition in the administrations from Trump to Biden. You had some really smart things to say about what’s been going on in the class action space and what you think might come. Can you tell us a little bit about what brought you to write that article?

Daniel Karon 

A: The transition to the new administration has left a lot of lawyers and business owners with questions. I thought it was important to consider how we might expect the Biden administration to approach them. I write a regular column and every time I put out a piece I want to make it timely and essential to my readers. 

Top Class Actions 

We thought you laid out the big themes in an easy-to-read way. You talk pretty specifically about consumer protections, and you zeroed in on the Consumer Financial Protection Bureau (CFPB), which was established under the Barack Obama administration based on ideas from Senator Elizabeth Warren. Can you tell us what you think the future is for the CFPB over the next few months and years?

Daniel Karon 

Senator Warren set up the CFPB and Richard Cordray was its first director. Together, they had a great mission in mind for the organization. It started commendably, making restitution of about $12 billion. 

When Trump took over, we all expected the CFPB’s effectiveness would be chiseled. Its directorship wasn’t nearly as zealous and purposeful as had been the case during the Obama administration. When Mick Mulvaney stepped in, CFPB took in meager dollars — about $800 million in its first three years. Predictably, Mulvaney’s CFPB didn’t really do a whole lot to address the ravages of payday lenders. It seemed like the CFPB wasn’t much working for consumers. But under Rohit Chopra, the incoming director — who’s got a consumer background — we can expect that to change, and in a good way.

Top Class Actions

Even though the agency isn’t directly involved in class action lawsuits, do you suspect Chopra’s ascent and the administration overall will lead to more class action opportunities in the next year or so?

Daniel Karon  

I think so. The CFPB obtains restitution, meaning money back from victims. But to the extent the CFPB doesn’t, or identifies industry schemes or changes the overall enforcement vibe and returns focus on and importance of consumer protection, I have to believe we’ll see an uptick in consumer class action cases – cases that were really kind of neglected, ignored, and de-emphasised under Trump’s CFPB.

Top Class Actions

Interesting. I think we’re all looking out for something positive in that direction. You note another potential positive for consumers when you talk about arbitration and moving forward on some forced arbitration clauses and contracts. Can you give us a quick summary of how you see the landscape possibly changing there.

Daniel Karon  

Sure. Last session the House passed the FAIR Act – or Forced Arbitration Injustice Repeal Act – which would have taken a big bite out of forced arbitration clauses in the consumer space. It never went anywhere in the Mitch McConnell-controlled Senate, which is what everybody expected. 

But just the other week, Representative Henry Johnson — a Democrat from Georgia who was the original sponsor of the FAIR Act —  reintroduced it. After clearing the House again, I’m hoping it will again pass the Senate, so President Biden can sign it into law. 

There’s uncharacteristic positivity around the fate of forced arbitration and what companies will no longer be able to do to victimize consumers. So whereas, there was a very dour forced arbitration vibe under the Trump administration, we’re expecting that to change under the Biden administration, and in a good way. 

And when I say good way, I don’t just mean for consumers. I also mean for well-behaving companies who do things the right way, obey the laws, and don’t want to see unpoliced people and companies steal their market share, sales and profits. You see, the only folks who benefit from lax consumer laws and class action enforcement are cheaters.

Top Class Actions

That’s really well-said, like with an exclamation point! So, there seems to be two positives for moderates and progressives: almost expectations under the Biden administration moving toward more protections for consumers and the arbitration mood seems like it’s moving in a positive direction. Is there anything that you think of the Biden administration? People maybe want to temper their expectations around the Biden administration.

Daniel Karon

I don’t know if I call this tempering. But as it concerns price fixing cases, meaning cases involving multiple firms who get together to decide they’re going to manipulate markets or set prices to the detriment of their customers, those have always been bipartisan cases and concerns. I mean nobody likes hardcore felony price fixers. So price fixing enforcement didn’t really suffer during the Trump era. Because of that, cartel enforcement probably won’t go up measurably in the Biden era. When you ask whether there’s something we might want to guard against, I’m trying to give you a positive answer. Price fixing enforcement is already in a pretty good space and in a pretty good place. I don’t think it’s going to get better. But that doesn’t mean it’s been bad. 

Top Class Actions

We’ve been talking about some Supreme Court decisions pending on TCPA legislation this year. Do you want to offer any thoughts on where you see that going?

Daniel Karon

The Court just accepted another statutory damages case involving Article III standing. The Court took a good bite out with Spokeo. Whether statutory damage cases will survive going forward with a 6-3 conservative court is up for debate, considering the question that the court accepted, which is really slanted. It’s up for debate what it means for TCPA and other statutory damage cases. 

Top Class Actions

Excellent. That’s a lot to look out for. 

Daniel. Thanks for your time, is there anything that you think you’d like our readers to know as the last line?

Daniel Karon  

Consumer laws are important. They’re important for  businesses and consumers. We’re all in this together, and it’s difficult to evade cheaters. The laws shouldn’t support cheaters substantively or procedurally – this means on the merits or as it concerns class actions to enforce consumer laws. I’m confident that with renewed energy coming out of DC, we’ll be in a better place to help everybody who needs it because everybody supports doing that.

Top Class Actions

Thank you very much.