What Does The Supreme Court Ruling in AT&T v Concepcion Mean to Consumers?

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With all the recent news of the royal wedding, the death of Bin Laden and the horrific flooding through much of the country, you may have missed a recent Supreme Court decision that affects all of us.   If you missed it, the decision reached was a big win for not just the big corporation involved, but a large number of big corporations.  So, you can imagine who lost.  That's right, the consumer.

In a recent decision, in the case of AT&T v. Vincent and Liza Concepcion, the Supreme Court decided that AT&T and other companies can ban class action lawsuits in the fine print of their contracts.

To give you a brief history of this case, the Concepcions felt that their $30 state tax fee, was an unfair way for AT&T to charge them for a free phone.  Although, they, like most of us, signed their mobile phone contract, with the class action lawsuit ban included.  California, like many other states, view forced arbitration through fine print to be unfair. So these states have enacted laws that would allow consumers to file class action lawsuits.  Under California state law, the Concepcion would be permitted their day in court, and two state courts agreed.

Unfortunately, the Supreme Court did not.

Right now, you are probably wondering why this is such a big deal. Well, consider this: What if a big corporation tacked a few extra dollars onto your cell phone or utility bill every month? What if similar excess charges were happening to your student or auto loan? How about your hospital bill or grandparent's nursing home?

It's only a dollar or two every month, no big deal. But what if you learned this wasn't just happening to you but to millions of people. Now we're talking about millions of dollars. That big corporation is making a lot of money off you--unfairly.

Are you going to be able to afford an attorney to get your money back? Not likely. But if an attorney took the company to court on behalf of all of those millions of people--asking for repayment, penalties, court fees, interest and even punitive damages--that corporation may think twice before charging those fees again. In this hypothetical situation, it's easy to understand why corporations don't like class action lawsuits. But it's even easier to understand that without them: unfair and deceptive acts go undeterred. 

In today's world it means, that instead of pooling financial resources consumers would have to bare the cost of fighting a large company such as AT&T alone.  While Bill Gates may have the ability to take on such a costly endeavor, the majority of us don't have such deep pockets. 

Class action lawsuits give the average consumer and large corporations the ability to battle on an even playing field.  In cases where consumers have grievances where the sums are small, such as the case with the Concepcions, fighting is just not feasible without class action lawsuits. 

Some people may be thinking that there is still the ability to find justice through a fair compromise through arbitration.  Until that is, they've been forced to go that route.

First off, arbitration is fraught with fees that would make small sums seem hardly worth it.  Simply filing a case for arbitration can cost a consumer hundreds of dollars and this does not include the cost for the arbitrator.  Compare that to what your grievance is over, usually less than $1,000 and it's probably not likely that you or any other consumer would pursue. 

Secondly, in recent years, arbitration has not exactly proven beneficial for consumers. Many investigations, consumer and employee complaints and consumer/employee driven lawsuits proved the rulings are often anything but fair.

In fact, The National Arbitration Forum, arguably the most well known national arbitration organization, has faced their own lawsuits that ended up forcing NAF to abandon consumer arbitrations.  With a big light brought previous rulings out of the dark, even bigger problems shined through: rulings appeared to be biased with the majority of decisions favoring big business.  This came as no surprise to advocates and consumer attorneys who have for years been fighting against forced binding arbitration.

More facts about forced binding arbitration, a for-profit system that:

  • is a lawless system. The arbitrators are usually retired judges, who do not have to follow the law or even justify their decisions.
  • takes away your right to appeal an unfair or bad decision
  • normally costs much more than using the courts and it is usually required that you go to the city and state they reside in
  • prevents you from being part of most class action lawsuits
  • favors business rather than you because decisions are made behind closed doors
 The truth is, all of us could have easily stepped into the shoes of Vincent and Liza Concepcion.  We have all looked at our cell phone bills and tried to figure out how the barrage of fees, that could easily add $30 - $50 to the cost of your plan, were incurred.

Though the Court delivered consumers and employees a significant blow with their 5-4 decision ruling  that the Federal Arbitration Act barred states from protecting their citizens from the unfair; you can't sue me clauses, there is hope.

There is some good news.

Public Justice does not believe that the AT&T Mobility ruling wipes away all of the protections that consumers and employees have against unfair contract terms that would ban class actions.

As Public Justice Senior Attorney,  Paul Bland puts it:

The recent U.S. Supreme Court decision in AT&T Mobility v. Concepcion certainly bodes poorly for class actions as a means to seek justice, but it does not necessarily spell doom for class actions. There may even be some breaks in this dark cloud. Read his view and key points raised its entirety here: THE AT&T MOBILITY v. CONCEPCION DECISION: NOW WHAT?

An Editorial in today's L.A. Times: Carving out class-action exceptions
Offers hope: Supreme Court decision on a class-action suit involved a federal statute, not the Constitution, Congress can -- and should -- overrule the court.

So what can you do?

You can contact your legislators. Urge Congress to overrule the court  or create legislation that will protect and preserve our rights -and our justice system. Our laws are designed to protect the innocent and deter wrongdoers from engaging in illegal, unfair and deceptive acts. They were not designed to shield corporations from them.

Remind Congress that the American justice system works on the notion that if you do wrong, you will have those wrongs exposed in a court of law and wrongdoers will be punished. When cases get settled out of court, behind closed doors, without a judge making a public ruling, it's as though it never happened--there isn't a shred of case law for the next victim to utilize when he or she is seeking justice.  Without access to justice, how will we right wrongs?

You can also visit fairarbitrationnow.org and sign their petition to ban forced arbitration.

 Supreme Court Blog

The Supreme Court decision
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