The National Consumer Law Center (“NCLC”) filed an amicus brief in AT&T Mobility v. Concepcion, which is pending before the U.S. Supreme Court. As mentioned earlier in this blog, the Concepcion case involves the issue of whether states retain authority to apply general principles of contract interpretation to class action waivers found in arbitration agreements.
The brief noted that losses suffered by individual customers as a result of business misconduct often are small, but the FTC has estimated that in one year, nearly 25 million adults are victims of certain kinds of consumer fraud, and the median loss was $220. When the loss is small consumers are less likely to know they have been cheated. Even if they realize they have been cheated, aggrieved consumers may not know they have legally enforceable rights, making it unlikely that they will seek relief from unlawful business practices. When individual damages are low, moreover it is often not economically feasible to hire a lawyer to take such a “negative value” suit without the ability to spread costs.
The following is quoted from the summary of the argument: Aggregate Litigation levels the playing field in disputes between business (which automatically aggregate the costs and benefits of a practice affecting consumers) and individual consumers (who can do so only by joining a class). Class actions enable plaintiffs “to exploit the economies of scale the defendant already naturally enjoys from treating separate claims as a single litigation unit.” Bruce L. Hay & David Rosenberg, “Sweetheart” and “Blackmail” Settlements in Class Action: Reality and Remedy, 75 Notre Dame L. Rev. 1377, 1382 (2000). Because class counsel “can spread their investment over all of the claims – just as a defendant does – it becomes possible to make investments in the litigation that the plaintiffs could not make if the claims were prosecuted separately.” Id. AT 1380. As the California Supreme Court has recognized, the availability of classwide action is, “particularly in the consumer context, often inextricably linked to the vindication of substantive rights.” Discovery Bank v. Super. Ct., 113 P.3D 1100, 1109 (Cal. 2005).
Oral argument will be heard in this case on November 9, 2010. You can see a copy of the NCLC amicus brief by clicking here: AT&T v. Concepion Amicus Brief