The U.S. Supreme Court has made another monumental ruling that empowers corporations while stripping everyday Americans of their consumer rights. In a 5-4 vote last week, the justices ruled to allow corporations the right to ban class actions in the small print of their contracts.
“Now, whenever you sign a contract to get a cell phone, open a bank account or take a job, you may be giving up your right to hold companies accountable for fraud, discrimination or other illegal practices,” the consumer watchdog group Public Citizen said in a response to the ruling.
The case originated with Liza and Vincent Concepcion, who sued AT&T in 2006, alleging the wireless carrier ripped off millions of customers by advertising “free” phones but then charging an undisclosed $30 fee for them. The $30 charge, multiplied across millions of customers, amounted to millions of dollars in wrongful gains, the lawsuit alleged.
Invoking a forced arbitration clause that banned class actions in the fine print of the Concepcions’ contract, AT&T motioned to have the case thrown out. But the California District Court and the Ninth Circuit both rejected AT&T’s request because, they ruled, forced arbitration would clear the company from accountability for wrong doing. Several other states have laws that interpret class-action bans as unconscionable and prohibit them under law.
The Supreme Court’s ruling will not only allow corporations to use arbitration clauses to prevent customers from pursuing legal action, it will also allow employers to use the same tactics against their own employees in employment contracts. The ruling in AT&T v. Concepcion essentially opens the door to all types of discrimination by requiring people to forfeit their rights as a condition of employment.
“Class actions are an essential tool for justice in our society. The fate of class actions should not be decided through the fine print of take-it-or-leave-it contracts,” Public Citizen said.
According to Beasley Allen attorney Gibson Vance, who is serving as American Association for Justice (AAJ) president, “The Supreme Court has allowed major corporations to grant themselves immunity when they cheat consumers or employees. This decision leaves Americans with practically no recourse to challenge corporate wrongdoing and gives corporations a blueprint to draft forced arbitration clauses to avoid accountability for a wide range of unfair or illegal practices.”
Mr. Vance called the ruling “a death blow” for Americans’ chances for justice, and one that trumps state laws designed to protect consumers.
“This devastating decision has the potential to result in virtually no consumer or employee cases involving small claims being heard anywhere. Corporations will now be allowed to get away with sweeping wrongdoing, particularly where the damages would be too small to justify pursuing individual claims,” Vance said.