Friday, November 5, 2010

The Supreme Court to decide the future of Class Action suits in AT&T Mobility vs. Concepcion

The basic question before the court is whether companies can bar class actions lawsuits in the fine print of their take-it-or-leave-it contracts with customers and employees.

High courts in California and elsewhere have ruled that class-action bans are unconscionable and contrary to public policy.

At issue at next week's court hearing is whether the Federal Arbitration Act of 1925 preempts state courts from striking down class-action bans. The federal law requires both sides in a dispute to take their grievance to an arbitrator, rather than a court, if both sides have agreed in advance to do so.

Vincent and Liza Concepcion sued AT&T in 2006 after signing up for wireless service that they'd been told included free cellphones. The Concepcions alleged that they and other Californians had been defrauded by the company because the phones actually came with various charges.

AT&T asked the U.S. District Court for the Southern District of California to dismiss the case because its contract forbade class actions. The court declined, ruling that a class-action ban violates state law and is not preempted by the federal law.

The U.S. 9th Circuit Court of Appeals upheld the lower-court ruling last year. AT&T subsequently petitioned the Supreme Court to hear the case.

If the Supreme Court rules for the petitioner AT&T, it would likely lead to more and more companies adding language to their contracts to prohibit customers from filing or entering into Class Action suits. Furthermore, this could also have a chilling effect in employment as similar language could be added to employment contracts as well.

So far, all of the Amicus Briefs filed in the case have been from agencies in support of the Petitioner. And given that the Supreme Court has demonstrated its sympathies towards business and corporate interests, this case ranks right up there with Citizens United vs. the FEC, Gross vs. FBL Services, and Ricci vs. DeStephano, in its potential to radically alter the American legal landscape.

Amicus Briefs

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