Pro-Corporate Interest U.S. Supreme Court to Consider Class Action Waivers

August 30, 2010 by

The U.S. Supreme Court will hear oral argument in November in AT&T Mobility v. Concepcion.  The court will consider the extent to which companies can ban class-action lawsuits in the fine print of their contracts with consumers and employees.  AT&T Mobility’s Wireless Service Agreement includes an arbitration clause, which requires any disputes to be submitted to arbitration, and a class action waiver clause, which requires any dispute to be brought in an individual capacity.  The district court and the Ninth Circuit, following a long line of precedent, held that a class action waiver was unconscionable under California law, and, thus, unenforceable.  The Ninth Circuit opinion is found at 584 F.3d 849.  Class action waivers are also unenforceable under Oregon law.

AT&T Mobility petitioned the U.S. Supreme Court for certiorari on the ground that the Federal Arbitration Act should expressly or impliedly preempt state unconscionability law.  On May 24, 2010, in what would best be described as a disconcerting development, the U.S. Supreme Court granted certiorari.  Even more disconcerting is the fact that since then, the U.S. Supreme Court sided with corporations in a case involving an arbitration clause.  In Rent-A-Center v. Jackson, 130 S.Ct. 2772 (2010), the U.S. Supreme Court on June 21 ruled 5-4 that a company can force a person to go to an arbitrator, rather than a judge, to challenge the fairness of an arbitration clause.  One of the lawyers for the plaintiff, Deepak Gupta of Public Citizen, said “The court’s decision effectively puts the fox in charge of the henhouse.  Under the court’s logic, the company’s hand-picked arbitrator can decide whether it’s fair for the company to hand-pick the arbitrator.  That’s absurd.”

The dissent agreed.  In a stinging dissent, retiring Justice John Paul Steven wrote that neither party had recommended the rule the court adopted, and he characterized the court’s reasoning as “fantastic.”  If the conservative majority’s attitude favoring the corporate interest over the public interest continues in AT&T Mobility v. Concepcion, Congress may need to step in and pass the Arbitration Fairness Act, because it appears that the conservative majority will likely rule that the Federal Arbitration Act preempts state law, which will allow corporations to deliberately cheat large numbers of consumers out of small sums of money.

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Steve Larson
An experienced trial lawyer who handles both hourly and contingent fee cases, Steve has expertise in class actions, consumer cases, antitrust litigation, securities litigation, corporate disputes, intellectual property disputes, unfair competition claims, employment matters, and disputes involving family wealth. Steve regularly represents individuals and businesses in federal and state court and has obtained class-wide recovery in multiple class actions. A veteran practitioner, Steve's clients value his creative approach to resolving complex litigation matters.

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