The February 28 op-ed story in the New York Times about sealed court hearings in Delaware is one of the more concerning news stories I've seen in quite some time. If you subscribe (as I do) to the Bill Moyers school of political thought, which says that America is being taken over by corporate interests, this is a story which confirms all of your worst suspicions.
The story details a Delaware law that allows corporations or individuals to pay an extra fee to have "arbitration hearings" before a state judge sealed instead of appearing in the public record. The law states that if litigants have $1 million at stake, for a fee of $12,000 and $6000 a day after, "they [can] use Delaware's Chancery judges and court rooms for what [is] called an 'arbitration' that produces enforceable legal judgments."
In other words, in the state of Delaware, if you don't want your legal proceedings to be a matter of public record, you can pay extra money to have a judge decide your case in secret.
Why is this a big problem? Because it allows private businesses and wealthy individuals to use the force of law to conduct operations without public knowledge. The government, including regulatory departments, police, and other legal authorities will enforce court decisions without the public ever knowing what they are or how the decision was arrived at. Public policy would be decided in secret.
Unfortunately, since this practice has not yet gotten started, it is difficult to know what kind of corporate behaviors might be affected by this new policy. But for once it is worth invoking the cliché that conservatives love to brandish against privacy advocates: If you don't have anything to hide, what are you worried about? Why, after all, was this law passed unless there was a demand by private corporations to conduct their lawsuits out of public view, with the goal of hiding certain business practices from the public?
Think of all the personal and private information that businesses have about us. Think about all the licensing agreements you are forced to sign, such as credit card agreements, software licensing, and cable contracts, and of the information releases you sign for your health insurance company to review your medical records. You sign all those agreements without reading them because, after all, who can afford a lawyer to get a cell phone or an operation?
Now imagine one of these companies forced terms on you that you couldn't accept. So you sue them, and they respond by paying money to a court to make the case secret so when your case goes to trial, no one can ever know what evidence you put in, what your lawyer argued, what evidence they used, or even what the judgment was. Then later, if someone else is in a similar situation and like you, choses to sue, he or she would have no knowledge of your suit and how it was settled. Each new case would be blind, the lawyers re-inventing the wheel each time. Advantage then goes to the rich corporation who knows what happened at the previous trials and knows all the arguments, evidence, and judgments.
One of the ways one can identify a plutocracy is by following the lines of accountability. If rich people are not accountable in the same way that poor people are for illegal activity, that is strong evidence of a plutocracy. The Delaware law says it all: you have to have $1 million to be eligible for this law, and have to be able to afford $12,000 just to take advantage of it. That makes this a law which applies only to wealthy people. How can this not be evidence that our democracy is turning into a plutocracy?
The United States Supreme Court is expected to rule on this issue fairly soon. This is just my personal prejudice, but in light of recent Supreme Court decisions I am not confident that the Supreme Court is going to throw this law out. If the law remains in place, there will be a rush by corporations to establish themselves in Delaware to take advantage of it. As has been the case in the past, I would expect that other states would then move to match Delaware's extremely business friendly practice to keep businesses from relocating from their states. So, the law in Delaware would very rapidly become the law in many other places.
One of the things that is lost in arguments about how businesses need to be unfettered by government is that many businesses, if not all businesses, depend on the government to provide their basic operating framework. For example, how many media corporations would exist if there was no such thing as copyright protection? How many manufacturing corporations would exist if there was no such thing as a patent? And Wall Street would fairly rapidly cease to exist if there was no such thing as contract law. After all, stocks, bonds, loans, and derivatives are nothing more than contract agreements.If you couldn't get Uncle Sam to back up your claim that owning a share of a company guaranteed you certain rights, it's doubtful that you would ever invest money in the stock market.
Despite what many conservative politicians argue, businesses depend on government regulation and protection at least as much as poor people and the working class do. The problem is, businesses only want regulation that is favorable to them, and unfortunately, as of late, they seem to have the power to arrange it that way.
However, the court system — your court system — belongs to the people of the United States. It may be of benefit to the rich, but it does not belong exclusively to the rich. It is extremely important that the court system be independent of wealth and of business interests. If we can't expect the courts to treat wealthy citizens the same way that it treats middle class and lower class citizens, then American democracy is in trouble.