January 4, 2012
Quick background on important new case, Liza and Vincent Concepcion sued AT&T in 2006, alleging the wireless carrier defrauded millions of customers in California by advertising phones as "free," AT&T then tacked on an additional undisclosed $30 charge for the phone. When this charge is multiplied across all AT&T customers it amounts to millions of dollars in wrongful gains. AT&T sought to dismiss the case by invoking a forced arbitration clause containing a class-action ban that it had placed in the Concepsion's contract. Both the California and Ninth Circuit rejected AT&T's request, they continued to stand strong on the position that the class-action ban was unconscionable under California law because it would rid the company of accountability for wrong doing. When we, as individuals, are wronged in one way or another by a big corporation through employment, insurance, mortgages, consumer products, and many other contexts, the only way to really make it right is to ban together as a class action.
The U.S. Supreme court has opted to take that right away. California law has held for years that class action waivers are void in this type of "adhesion" contract – a contract a purchaser has no role in negotiating and it "Adheres" to a product or service that is purchased. The impact of this will be felt substantially when we notice little fee's in the fine print and decide, would we rather deal with a $30 rip off, or time in arbitration. The key in this ruling is that it allows big corporations to put clauses in their adhesion contracts that prohibit class action arbitrations. If a individual is harmed, they have to arbitrate it individually. So, in the AT&T case, the plaintiff would have to go through all the costs and trouble and time of getting ready for arbitration for an end result of $30. No one is going to do that. The whole benefit of class action is it allows people wronged for a few dollars to join together so it makes sense financially to fight it.
According to Consumer Attorneys of California President John Montevideo it gives major corporations a green light to insulate themselves when they cheat many consumers in a small way.
Consumers with small claims against big corporations won't be able to have their grievance heard anywhere. And corporations will be able to get away with wrongdoing that is wide in scope, but not individually severe enough to warrant a lawsuit by a single consumer." The U.S. Supreme Court is forcing upon us a creed that favors business over people, and puts ill-gotten profits ahead of justice.