Supreme Court:AT&T can force arbitration,block class-action

[Xon]

Link

The Supreme Court on Wednesday ruled that AT&T—and indeed, any company—could block class-action suits arising from disputes with customers and instead force those customers into binding arbitration. The ruling reverses previous lower-court decisions that classified stipulations in AT&T's service contract which barred class arbitration as "unconscionable."

The particular case at hand, AT&T Mobility LLC v. Concepcion, stemmed from a California couple (the Concepcions) that had been charged sales tax on mobile phones that AT&T had advertised as "free." The couple believed the charges were unfair and constituted false advertising and fraud on the part of AT&T. They filed a lawsuit against AT&T, which was later promoted to class-action status. AT&T attempted to have the case dismissed on the grounds that its service contract requires individual arbitration and bars "any purported class or representative proceeding."

...

The decision, which fell precisely along ideological lines, could have far-reaching effects on consumers' ability to challenge corporations in court over future disputes. In cases where an unfair practice affects large numbers of customers, AT&T or other companies could quietly settle a few individual claims instead of being faced with larger class-action settlements which might include punitive awards designed to discourage future bad practices.

That really is quite crazy, but something that isn't very suprising in the current pro-corporation enviroment in the USA legal system.

[Alyeska]

Supreme Court might as well have ruled that companies can trump all law. You can contractually become a slave because contract law trumps all. What utter horse shit.

[Xon]

They don't use the word 'slave'. It's 'just' having your wages garnished for the rest of your natural life without bankrupcy discharging the debt and/or making it dramatically harded for an individual to qualify for bankrupcy procceedings which would discharging the debt .

[Teebs]

Is there no equivalent to the UK's Unfair Contract Terms Act which basically severely restricts what companies can do in standard form contracts with consumers?

[Patrick Degan]

Are the rightwingers in this government actually trying to create the conditions for revolution?! Practically, this removes from the people any recourse to remedies against corporate fraud or negligence, since individuals certainly do not have the financial resources to challenge a large corporation on anything approaching equal terms. The Supreme Court is effectively setting corporations above the law and above the common citizenry, while at the same time Republicans are doing everything in their power to nullify government as a counterbalancing force against corporations and financiers.

This is a growing state of affairs that can only end badly.

[Lord MJ]

This court is why I'm not confident of HCR standing up on appeal to SCOTUS.

[Simon_Jester]

I'm not asking "will," here, I'm asking "can," from a legal standpoint: I am not interested in hearing another round of "it'll never happen."

Can this be overridden by act of Congress?

Or would it have to wait until somehow the Fuck Corporations Amendment passes by whatever acts of God would be required?

[Dave]

I'm not asking "will," here, I'm asking "can," from a legal standpoint: I am not interested in hearing another round of "it'll never happen."

Can this be overridden by act of Congress?

Or would it have to wait until somehow the Fuck Corporations Amendment passes by whatever acts of God would be required?

Limited understanding of the issue here, but I believe the ruling weighed on the Federal Arbitration Act, whose whole point is to cut down on the amount of pointless / wasteful suits that are brought to court. (working from the article quoted here.)

IIRC the function of our Supreme Court was to interpret the finer points of the law. If Congress wrote an act that effectively neutered the Federal Arbitration Act AND caused contracts to be negotiated through court (because precedent has been established here), then maybe we could see people fight these things through the courts again. A side order of whatever the UK's Unfair Contract Terms Act is sounds good too.

Congress overriding this specific decision is a somewhat fruitless battle, since it doesn't deal with
(1) the core issue -- companies using arbitration to circumvent nastier legal battles and
(2) the fact that precedent is set with this decision.

DISCLAIMER: I am not a lawyer, I do not pretend to be a lawyer or even marginally informed as to the legal issues here, I just took one intro class in business law a year or so ago.

EDIT: clarity

[Versac]

I'm not asking "will," here, I'm asking "can," from a legal standpoint: I am not interested in hearing another round of "it'll never happen."

Can this be overridden by act of Congress?

Or would it have to wait until somehow the Fuck Corporations Amendment passes by whatever acts of God would be required?

Limited understanding of the issue here, but I believe the ruling weighed on the Federal Arbitration Act, whose whole point is to cut down on the amount of pointless / wasteful suits that are brought to court. (working from the article quoted here.)

IIRC the function of our Supreme Court was to interpret the finer points of the law. If Congress wrote an act that effectively neutered the Federal Arbitration Act AND caused contracts to be negotiated through court (because precedent has been established here), then maybe we could see people fight these things through the courts again. A side order of whatever the UK's Unfair Contract Terms Act is sounds good too.

Congress overriding this specific decision is a somewhat fruitless battle, since it doesn't deal with
(1) the core issue -- companies using arbitration to circumvent nastier legal battles and
(2) the fact that precedent is set with this decision.

DISCLAIMER: I am not a lawyer, I do not pretend to be a lawyer or even marginally informed as to the legal issues here, I just took one intro class in business law a year or so ago.

EDIT: clarity

I hate asking others to do my analysis for me, but I'm pressed for time these days. Gonna have to just throw out a few links and a question.

The Act in question
Previous relevant SCotUS decision limiting scope of arbitration

Is there any particular reason why arbitration is not an acceptable outcome? It is, of course, lower-profile and less potentially damaging than a class-action suit, but that doesn't seem to be a justice-oriented argument by itself. I'm looking for potential or actual abuses of this process, rather than just "fuck corporate America, let's make them bleed."

[Count Chocula]

I dunno, at first blush this sounds like a "read the fine print before you sign" kind of issue. Some hairsplitting from the cell provider is obviously involved; THEY didn't charge a cent, but the Feds still had to have their cut.

The Conceptions sued over some pissant, lunch-for-two-at-Panera, FEDERAL taxes? Then they should have sued the USG. I fail to see how this is a "big buzines is teh best screw peons hurr-durr" decision.

[Dave]

I hate asking others to do my analysis for me, but I'm pressed for time these days. Gonna have to just throw out a few links and a question.

The Act in question
Previous relevant SCotUS decision limiting scope of arbitration

Is there any particular reason why arbitration is not an acceptable outcome? It is, of course, lower-profile and less potentially damaging than a class-action suit, but that doesn't seem to be a justice-oriented argument by itself. I'm looking for potential or actual abuses of this process, rather than just "fuck corporate America, let's make them bleed."

Recalling anecdotes off the top of my head from my business law class, some ways the process can be abused is:
(1) You live in (say) California, so your contract says that your arbitration session is in New York a week from the time you file the claim.
(1a) If you don't show, you forfeit.
(2) Don't like it? You signed the contract, and you can't really debate a contract unless you either fight it with arbitration or you can show the company breached the contract. And the company made damn sure it didn't do that.
(3) In theory everyone agrees to a neutral arbiter, but in reality, it's usually someone the company wants. Or it was written in your contract.
(4) Per contract, you cannot appeal the decision of the arbiter.
(5) Arbiters are usually paid on a per case basis, so the arbiter has an incentive to get things over with.

Responding to Count Chocula -- yes, it is largely a "read fine print" issue, but (1) finding a provider that doesn't do this can be hard and (2) who reads these contracts when they fill a full-size desk with 6-point font?

Again, IANAL and I'm going from memory here.

[Simon_Jester]

The obvious potential abuses come when corporations are able to buy off "arbitrators," or force arbitration to go to This is strictly illegal, but as with political corruption, it's hard to catch and suppress such things.

Even harder to stop corporations from relying on arbitrators with a track record of letting corporations off with a slap on the wrist. Also, there's the huge problem that this allows contract law created by corporations to override the legal system, for practical purposes. The government courts, which are answerable to the elected government, are being cut out of the decision loop when it comes to curtailing corporate abuses; these privately employed arbitrators, which aren't answerable to anyone, are being cut in.

Unless we police our arbitrators as well as we police our courts (unlikely), this will inevitably lead to corporations being in a stronger position to buy and sell judgments that favor their ability to do as they please, regardless of how badly it harms the public or whether it violates the laws restraining their conduct.

[Mr Bean]

Is there any particular reason why arbitration is not an acceptable outcome? It is, of course, lower-profile and less potentially damaging than a class-action suit, but that doesn't seem to be a justice-oriented argument by itself. I'm looking for potential or actual abuses of this process, rather than just "fuck corporate America, let's make them bleed."

1. The arbitrators are picked by the Corporation
2. The Arbitrators are PAYED by the Corporation, in fact it's legal for them to be former members of the company your trying to get a judgement against.
3. It's a retainer system, IE if they don't like the judgements they are free to fire Arbitrators after a judgement and hire different ones in the future.

Had I more time I'd quote you the data which from memory says that depending that people forced into (rather than it being a mutual choice) average a awesome 10% success rate as in 90% of cases are decided in favor of the corporation, bringing a lawyer to negations jumps that to the mid 30% range but best results means that Arbitrators award two out of every three cases to the corporations and award in this case means the corporation has to pay nothing.

[Count Chocula]

Jester makes a good point. I've done a couple of contract negotiations/renegotiations after the fact, and by reflex hired folks from the American Arbitration Association. Just as with technical training, common, high standards are good. If you look at a contract that stipulates arbitration but not who, just walk away.

[Teebs]

A side order of whatever the UK's Unfair Contract Terms Act is sounds good too.

It's mainly a consumer protection act based on the idea that consumers shouldn't be held to the same standard of contractual liability if they're just signing standard form contracts since they have no negotiating power and probably don't have the time/will to read the things.

UCTA 1977

The important bits:
- You can't exclude liability for death or personal injury caused by your negligence.
- You can't exclude liability for loss caused by your negligence unless it's reasonable to do so.
- If you're a business dealing with a consumer you can't restrict or exclude liability for any breach of contract on your part unless it's reasonable to do so.
- No excluding the Sale of Goods Act (more consumer protection legislation) unless it's two businesses dealing with each other.

Reasonableness is, in relation to this act, fairly harsh on the business. The burden is on them to prove they were reasonable. Other factors considered include relative bargaining power and practical consequences of the term being considered.

All in all, a pretty nice piece of legislation.

[Duckie]

Binding arbitration, by the way, was also in the news a while ago Halliburton/KBR.

After a woman was gang-raped there, the contract forced her to go to binding arbitration, with the arbiter selected by the company, whereupon the allegations were dismissed. And since it's binding, you're then not allowed to press criminal charges.

Congress passed an amendment to the defence appropriations bill banning federal contractors from receiving money if they require sexual assault, battery, or discrimination cases to go to arbitration.

It passed (all democrats and female republicans vs all male republicans) for the defence bill one year, but the Obama Administration opposes it for some reason and "feels it cannot be enforced" (read: won't enforce it).

So you'll forgive me if I don't raise an eyebrow at the news that now you can forbid class action lawsuits and criminal lawsuits via contract.

[Psychic_Sandwich]

As a minor nitpick the KBR case isn't a criminal case, because KBR security forces conveniently 'lost' the rape kit containing most of the evidence; it's indisputable that the woman was raped, but since she was drugged and unconscious at the time, she can't provide any suspects. Since there didn't appear to be enough evidence to prosecute, no attempt was made to do so, which is why the woman had to try a civil suit. If the rape kit hadn't been handed over to KBR, then things would have been different.

[Bakustra]

I hate asking others to do my analysis for me, but I'm pressed for time these days. Gonna have to just throw out a few links and a question.

The Act in question
Previous relevant SCotUS decision limiting scope of arbitration

Is there any particular reason why arbitration is not an acceptable outcome? It is, of course, lower-profile and less potentially damaging than a class-action suit, but that doesn't seem to be a justice-oriented argument by itself. I'm looking for potential or actual abuses of this process, rather than just "fuck corporate America, let's make them bleed."

In addition to all the other points people brought up, this requires individual arbitration. Paradoxically, this should take up more time than a class-action, as every wronged customer has to go through the arbitration on their own, but in practice I doubt that the arbitration would be fair. The advantage of class-action is that a class of people with the same legal complaint/tort can file as a group and thus be addressed as a group. This can lend weight to their claims- if you have a class of 8,000 people complaining about an exploitative advertising campaign, that's a whole lot more weighty than 8,000 individual cases spread across the country would be. In addition, it's easier and quicker to address group concerns as a group. But in individual arbitration, it's a whole lot easier for companies to hire biased arbitrators, bully customers into signing agreements, and generally marginalize complaints even if the arbitration is fair, not to mention that it really ought to take up more of their time than a simple class-action suit would.

[Andrew J.]

Supreme Court might as well have ruled that companies can trump all law. You can contractually become a slave because contract law trumps all.

Contracts for illegal behavior are still void; that's a separate issue from unconscionability.

[Alyeska]

Supreme Court might as well have ruled that companies can trump all law. You can contractually become a slave because contract law trumps all.

Contracts for illegal behavior are still void; that's a separate issue from unconscionability.

Except SCOTUS just determined that a contract can supersede law. So in essence everything a contract stipulates is legal.

[Andrew J.]

Supreme Court might as well have ruled that companies can trump all law. You can contractually become a slave because contract law trumps all.

Contracts for illegal behavior are still void; that's a separate issue from unconscionability.

Except SCOTUS just determined that a contract can supersede law.

...no, it determined that a California statute about contracts is inconsistent with a federal statute about contracts, and thus invalid under the Supremacy Clause. There is nothing in the opinion to support the broad proposition you are asserting here.

[TheHammer]

It seems to me that most "class action" suits only end up making certain lawyers rich, and giving the complaintants a small pittance. If anyone actually has a potential big money claim, they'll usually go it alone...

[Simon_Jester]

Yes, and if ten, or a hundred, thousand people have claims for two thousand dollars each?

Class-action lawsuits play a very large and significant role in situations like that- one that corporatists would love to be able to avoid.

[Master of Ossus]

Yes, and if ten, or a hundred, thousand people have claims for two thousand dollars each?

Then, under AT&T's arbitration clause, if they file for arbitration, AT&T pays all costs associated with that arbitration (including reasonable attorney's fees, provided that their claims are not frivolous as determined by the arbitrator), and if the arbitrator ends up awarding them more than AT&T's last settlement offer then they get an automatic $7500--which is invariably higher than what they would have received if they just got the award.

Class-action lawsuits play a very large and significant role in situations like that- one that corporatists would love to be able to avoid.

And that they're willing to pay all costs for both parties, and offer a huge incentive to bring individual arbitrations in lieu of. I don't see what's unconscionable about this, and I cannot understand the histrionics that have greeted this decision.

[Master of Ossus]

In addition to all the other points people brought up, this requires individual arbitration. Paradoxically, this should take up more time than a class-action, as every wronged customer has to go through the arbitration on their own, but in practice I doubt that the arbitration would be fair. The advantage of class-action is that a class of people with the same legal complaint/tort can file as a group and thus be addressed as a group. This can lend weight to their claims- if you have a class of 8,000 people complaining about an exploitative advertising campaign, that's a whole lot more weighty than 8,000 individual cases spread across the country would be. In addition, it's easier and quicker to address group concerns as a group. But in individual arbitration, it's a whole lot easier for companies to hire biased arbitrators,

That's explicitly barred by other cases on point in the past. Under AT&T's provision, the customer chooses the arbitrator.

bully customers into signing agreements,

How?

and generally marginalize complaints even if the arbitration is fair,

How does one minimize a complaint when there's a $7500 premium for bringing a valid complaint that the company doesn't offer to settle, in full, prior to the decision?

not to mention that it really ought to take up more of their time than a simple class-action suit would.

That's debatable, but in any case the objective is almost certainly to limit the value of individual decisions as precedent.