Consumer Confidential With David Lazarus
Column

On people's right to sue, Trump's hypocrisy matches that of businesses

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 nor 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.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.

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