Consumers Could Lose Right To Bring Class Actions

I just happened upon this article in the Los Angeles Times, written by David Lazurus.  Mr. Lazarus wrote about an important upcoming United States Supreme Court case called AT&T Mobility vs. Concepcion.  At stake in the Concepcion is essentially whether a corporation has the right to include a provision waiving its customer’s right to join a class action lawsuit in the fine print of an agreement.In the Concepcion case, the Concepcions claim that they purchased a cellular phone from AT&T that included a second, free phone.  After the activated the phone, they realized that AT&T was actually billing them numerous fees for the phone.  The Concepcions believed that this was wrong, and found out that other Californians were upset about the same thing.  Eventually, all of the upset customers joined together and filed a class action against AT& T Mobility.Each of their claims probably had a value in the range of a few hundred dollars, but when bundled together in a class action, the total value of the claims might have been a few hundred thousand dollars, or even over a million dollars.

AT&T countered with the argument that all of these customers had waived their right to bring a class action in the fine print of their cell phone service agreements, and that they would all have to attend binding arbitration, instead — according to the terms of the contract that AT&T admittedly drafted.

Despite not receiving a lot of publicity, this case is incredibly important to those interested in civil justice.  The plain fact of the matter is that without class action lawsuits, or at least the threat of such claims, large corporations have a huge economic advantage over most customers, and have little motivation to do the “right” thing.

Using the Concepcion case as an example, how likely is it that a customer who has a dispute with a corporation over a few hundred dollars would ever spend the money to hire an individual lawyer to prosecute such a claim.  The only hope that such a person has of realizing justice is to bundle together enough claims to make prosecuting the claim more efficient.

Not surprisingly, a phalanx of large corporate interests have filed briefs in this case.  Many commenters believe that the current Supreme Court is extremely pro-big business, so is likely to rule with AT & T.  It will be interesting to see what happens.