Microsoft user agreements now ban class actions

Posted on: June 18th, 2012 by Steve Larson
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Buy a Microsoft consumer product, and you won’t be allowed to join a class action suit against the company, even if you feel you’ve been harmed.  That’s what the fine print on Microsoft’s new end user license agreement (EULA) says.  Last week, Tim Fielden, assistant general counsel for Microsoft announced the details in a Microsoft blog.  Microsoft knew the change wouldn’t go down well, which is why it chose to make the announcement just before Memorial Day weekend, when people are rarely paying attention to the news.

Fielden explained the change as follows:

“When a customer in the United States has a dispute about a Microsoft product or service, many of our new user agreements will require that, if we can’t informally resolve the dispute, the customer bring the claim in small claims court or arbitration, but not as part of a class action lawsuit.”

He went on to explain:

“We think this is the right approach for both Microsoft and our U.S. customers.  Our policy gives Microsoft powerful incentives to resolve any dispute to the customer’s satisfaction before it gets to arbitration, and our arbitration provisions will be among the most generous in the country.  For instance, we permit arbitration whereever the customer lives, promptly reimburse filing fees, and, if we offer less to resolve a dispute informally than an arbitrator ultimately awards, we will pay the greater of the award or $1,000 for most products and services – plus double the customer’s reasonable attorney’s fees.  Most important, this approach means customer complaints will be resolved promptly, and in those cases where the arbitrator agrees with the customer’s position, the customer will receive generous compensation, and receive it quickly.”

In case you’re wondering whether the new language is legal, it is, thanks to a terrible ruling from one of the worst Supreme Courts the U.S. has lived through.  According to the New York Times, the Supreme Court ruling in AT&T v. Concepion, “…appeared to provide businesses with a way to avoid class action lawsuits in court.  All they need to 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.”

Brian T. Fitzpatrick, a law professor at Vanderbilt University, said to the New York Times about the ruling:

“This is a game-changer for businesses.  It’s one of the most important and favorable cases for businesses in a very long time.”