Corporate Block on Supreme Court Limits Class Action Suits

Monday, May 02, 2011
David and Goliath by Osmar Schindler (1888)
The five-member pro-business block of the U.S. Supreme Court has ruled in favor of corporations that prefer to force consumers with complaints into arbitration hearings, rather than allowing them to band together in class-action lawsuits in civil court.
In AT&T Mobility v. Concepcion, the court struck down a California law that forbid companies from denying customers the right to sue as a group in court. The issue involved contracts that consumers often accept as part of buying cell phones or other products that stipulate any grievances be handled by an arbitrator. AT&T was accused of defrauding consumers by advertising free cell phones and then charging $30.22 in sales tax and other fees.
The U.S. Ninth Circuit Court had ruled that AT&T’s class action waiver violated California’s Discover Bank rule which, among other things, allowed class action suits instead of arbitration if “it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money.”
AT&T hailed the ruling, saying its arbitration program is “free, fair, easy to use and consumer friendly.” AT&T was backed in this case by several heavy hitters in the big business community, including the American Bankers Association, The Financial Services Roundtable and the U.S. Chamber of Commerce.
Deepak Gupta, who represented the plaintiffs in the case, called the ruling a “crushing blow to American consumers and employees” and said it leaves consumers powerless against arbitration agreements buried in fine print.
The five justices who voted in favor the AT&T position were John Roberts, Antonin Scalia, Anthony Kennedy, Clarence Thomas and Samuel Alito.
-Noel Brinkerhoff, David Wallechinsky
Court Gives Business New Shield Against Class Actions (by Jess Bravin, Wall Street Journal)
Syllabus AT&T Mobility v. Concepcion (U.S. Supreme Court) (pdf)
Supreme Court May Ban Class Action Lawsuits (by Kristen Friend, SEO Law Firm)


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