Essentially, this means companies can greatly reduce, or even eliminate, the threat of consumer class action suits by using carefully worded contracts.
The case that brought the decision about is AT&T Mobility LLC v. Concepcion. In the case, a California couple filed a claim against AT&T Mobility because they were charged $30 in sales tax for a phone that had been advertised as free. The contract for the phone, while it made provisions for arbitration between the parties, stipulated that claims be brought in the parties' ''individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding,'' according to the May 9th mondaq.com article, ''United States: U.S. Supreme Court Upholds Class-Action Waivers: What It Means For Consumer Product And Service Providers''.
In the Supreme Court's opinion, Justice Antonin Scalia wrote for the five-justice majority, and was quoted as saying that ''arbitration is poorly suited to the higher stakes of class litigation,'' and that permitting class action would "destroy arbitration as we know it,'' according to the npr.org article.
Justice Stephen Breyer was of the opinion ''that requiring consumers to arbitrate disputes individually could deprive them of their claims because the suits would not be worth enough to attract a lawyer.'' He was also quoted as saying: ''What rational lawyer would have signed on to represent [the couple in this case] in litigation for the possibility of fees stemming from a $30.22 claim?'' according to the npr.org article.
The court's decision may be viewed as welcome news for companies wishing to quickly and cheaply resolve customer disputes through individual arbitrations, but consumer advocate groups and attorneys for class-action plaintiffs are incensed.
They have called for congressional action to advance pending legislation that entail banning ''mandatory arbitration agreements in most consumer and employment contracts,'' according to mondaq.com article. Additionally, the newly formed Consumer Financial Protection Bureau created by the Dodd-Frank Wall Street Reform and Consumer Protection Act will examine the issues ''and may prohibit or limit the use of arbitration clauses in consumer financial product or service agreements.''
The Concepcion decision is one with far reaching implications for both consumers and corporations. Caveat emptor: consumers may find similar language in contracts they've signed for credit cards, cable service, and possibly even employment
Deepak Gupta, a staff attorney at Public Citizen Litigation Group, a group that has, since 1971, served ''as the people's voice in the nation's capital'', according to its website, was quoted as saying following the decision: ''If you take a job at a fast-food restaurant or a big-box retailer, if you sign up for a credit card or a cell phone, chances are you're going to be signing away your right to bring a class action,'' per the npr.org article.
It's oft been said that the more things change the more they stay the same. Is it possible this generation will see the pendulum swing back the other way, to the times of the Gilded Age, when big business ruled the day and the common man was often a means to an end?
Perhaps the only grain of comfort that might be taken is in the fact that the justices' decision, at 5-4, was so close. Perhaps the next go round will see a victory for the consumer. And there will undoubtedly be a next round.
Regardless, times they are a-changin'.
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