Moral Low Ground

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U.S. Supreme Court Rules Corporations Can Block Customers’ Class-Action Lawsuits

In another major victory for corporations, the United States Supreme Court Wednesday ruled 5-4 that companies may use arbitration clauses to block class-action lawsuits by customers. According to the Los Angeles Times, the decision, AT&T Mobility v. Concepcion, is the “biggest ever” on class actions.

(Photo: Mark Fischer)

“It gives companies a green light to exempt themselves from all class actions from their customers or from their employees,” Vanderbilt University law professor Brian Fitzpatrick told the Times. “Companies can basically escape from the civil justice system,” he added.

The case stems from Vincent and Liza Concepcion, a San Diego area couple charged $30.22 by AT&T Mobility for what was promoted as a free cellphone. When the Concepcions attempted to join a class-action lawsuit against AT&T, the company told them their contract barred class-action claims; they’d have to go to arbitration as individuals.

State and federal judges in California ruled in favor of the couple. But the US Supreme Court has now reversed their decisions. Chief Justice John G. Roberts , along with Justices Antonin Scalia, Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito Jr.– all Republican appointees– sided with the corporations, while Justices Stephen G. Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan– all appointed by Democrat Presidents– dissented. Breyer asserted that limiting class action lawsuits would allow companies to “insulate” themselves “from liability for [their] own frauds” by denying dissatisfied customers the means for meaningful redress. Breyer also said that banning class actions would prevent lawyers from representing small-claims clients. “What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim,” he asked.

Still, the corporate-friendly Court, which last January ruled in Citizens United v. Federal Election Commission that corporations are people, money is free speech, and therefore corporations were entitled to spend as much money as they pleased to influence the outcome of elections (while individuals like you and I are limited in how much we may donate to candidates), doesn’t seem to care much for the individual consumer lately.

This ruling seriously undermines consumers’ rights and is part of an ongoing process of  handing control of our democracy over to corporations. It is now the rule, not the exception, that consumers agree to settle disputes through arbitration. Such clauses are commonplace in contracts for everything from cable TV subscriptions, cell phones, online purchases, even cars. The Supreme Court’s latest gift to corporations allows them to use what Concepcion attorney Deepak Gupta calls the “fine print of take-it-or-leave-it contracts” as a “shield against corporate accountability.” And that’s exactly the way the Court’s conservative majority wants it.

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2 Comments

  1. Scott GApril 29, 2011 at 11:29 pmReply

    ‎”Class Action” is nothing more than a SCAM foisted on you by the Trial Lawyer Lobby.

    It does not benefit any aggreaved party. Haven’t you seen the $1 – $5 coupon you got for the wrong done to you because you iPod screen could scratch? You didn’t know you were ‘wronged’ by that evil corporation?

    And what about the rest of us who had to pay off this ransom/extortion through higher prices? That’s Econ 101.

    “Class Action” is nothing more than a transfer of wealth from the consumer, who ultimately pays, to a group of elite law firms who know how to work a corrupt system.

    I’m surprised you don’t see that…

    • Brett WilkinsApril 29, 2011 at 11:43 pmReplyAuthor

      Indeed, it does seem like the main beneficiaries of class-action lawsuits are the attorneys who reap windfalls while the claimants often come out with nothing more than the coupons you mention. Still, as is the case with unions and collective bargaining rights, ’tis better to have rights and have them abused by some than not to have rights at all.

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