Submitted by Elaine Magliaro, Guest Blogger

Last Wednesday, the Supreme Court handed down its ruling in the case of AT & T Mobility v. Concepcion.  The justices split along ideological lines once again. The 5 to 4 decision came down on the side of corporations—and most likely eliminated the right of citizens to band together to bring class action lawsuits against large corporations.

The Concepcion case involved cellphones and a common type of contract that requires customers to press their claims through arbitration instead of through lawsuits. As reported by Robert Barnes in The Washington Post, these types of contracts “which mandate individual rather than group claims, are becoming standard for companies offering loans, cable service, credit cards and even employment.”

In a November 2010 Mother Jones article titled Consumer Protection’s Citizens United, Stephanie Mencimer wrote: “AT&T v. Concepcion has been called the consumer protection equivalent of Citizens United. At stake is the ability of consumers to stop corporate ripoffs via class action lawsuits, which allow lots of people with small claims to band together and bring a suit large enough to make it worth a lawyer’s time. The case could affect everything from the rights of workers to fight systemic discrimination or wage violations to the ability of cell phone customers to fight the small but lucrative rip-offs that are so common among wireless providers. As a sign of how big a case this is for corporate America, the wireless lobby has hired former Solicitor General Paul Clement, a rock star of the Supreme Court bar, to represent it on an amicus brief in the case. The parties backing AT&T include the Chamber, Comcast, Dell, and DirectTV.”

According to a Think Progress report written by Ian Milhiser about the Supreme Court’s ruling in AT & T Mobility v. Concepcion, Justice Scalia’s opinion in the case will permit corporations “to refuse to do business with anyone who refuses to sign away their right to bring a class action lawsuit if the corporation breaks the law. After Concepcion, it is only a matter of time before nearly every credit card provider, cell phone company, mail-order business or even every potential employer requires anyone who wants to do business with them to first give up their right to file a class action.” As reported by Adam Liptak in The New York Times, businesses will now be able to use standard-form contracts to forbid consumers from banding together in a single arbitration. Liptak wrote: “Though the decision concerned arbitrations, it appeared to provide businesses with a way to avoid class-action lawsuits in court. All they need do, the decision suggested, is use standard-form contracts that require two things: that disputes be raised only through the informal mechanism of arbitration and that claims be brought one by one.”

Milhiser also wrote that the ruling in AT & T Mobility v. Concepcion expands on an abusive practice known as “forced arbitration.”  This expansion could allow corporations to force their consumers, workers, and patients to sign away their right to sue the company in a real court.

Amanda Rice reported that the Court held that California state contract law, which provides that class-action waivers in arbitration agreements are unenforceable when certain criteria are met, is preempted by the Federal Arbitration Act. (SCOTUS blog)

In his decision Scalia wrote: “States cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.” He said that if the case was allowed to proceed as a class action, it would run afoul of a federal law that promotes arbitration.

Writing for the minority, Justice Breyer said that the decision made at the state court level did not violate the federal law that favored arbitration. “Class arbitrations,” Justice Breyer wrote, “are perfectly appropriate ways to resolve claims that are minor individually but significant in the aggregate.” Breyer said he was puzzled by the assertion made by Scalia that there was tension between the goals of arbitrations and class treatment. “Where does the majority get its contrary idea — that individual, rather than class, arbitration is a fundamental attribute of arbitration?”

Breyer said requiring consumers to arbitrate cases on an individual basis could lead parties making claims to abandon small-money cases rather than to go forward with litigation. “What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?”

Would a “rational lawyer” care to answer that question posed by Justice Breyer?

SOURCES

Consumer Protection’s Citizens United (Mother Jones)

Supreme Court Nukes Consumers’ Rights In Most Pro-Corporate Decision Since Citizens United (Think Progress)

The Supreme Court’s One Thousandth Cut Against Consumers (Think Progress)

Supreme Court rules against consumers. Again. (Daily Kos)

A Poor Concepcion of Consumer Rights (Huffington Post)

The AT&T v. Concepcion decision and the final oral argument of the Term. (SCOTUS Blog)

Supreme Court Allows Contracts That Prohibit Class-Action Arbitration (New York Times)

Supreme Court says arbitration agreements can ban class-action efforts (Washington Post)

After AT&T Ruling, Should We Say Goodbye to Consumer Class Actions? (Wall Street Journal)