In all fairness, that is not exactly what the Supreme Court actually ruled, but that certainly is the effect of the ruling. The Court held that a suit which involved individual claims of $30.22 against AT&T Mobility could not proceed as a class action because the claimants had each agreed to arbitrate any disputes with the company. In reality, absent the vehicle of a class action, no one was going to pursue a claim for $30.22. So in the face of the millions of arbitration clauses that appear in all types of purchase, licensing and similar agreements (unbeknownst to consumers) their chance of recovering small claims has been effectively barred. No individual is going to spend the time and money to pursue such a claim in arbitration.
Companies that do not have such clauses in their purchase or licensing agreements will certainly include them now. Raise your hand if you have ever read the agreement you sign with your telephone company or the licensing agreement you accept with your software. Consumers are totally at the mercy of the companies with whom they deal. Arbitration, indeed, makes good sense in many instances, but not where it is utilized to defeat claims, particularly such as the ones asserted here based upon fraud and false advertising.
There has been some valid criticism of past class action abuses, but the very purpose of class actions was to permit persons to join together in situations such as this in which their individual claims were not worth pursuing or it was too expensive or difficult to do so. Although I have no knowledge as to the merits of the claims asserted here, in rendering this decision, the Supreme Court has permitted alleged corporate fraud to go unheard and unpunished and, in turn, has silenced the voice of the consumer in the process.
No, that's not quite what they ruled either. The class action was blocked because the contract contained a clause that required that claims could only be brought in an “individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding.", according to the contract language quoted by Justice Scalia in his opinion. The California Supreme Court had previously ruled that a clause prohibiting class arbitration was unconscionable. The Court held that the state court was preempted from making this ruling by the Federal Arbitration Act.
It is not relevant to the case, but Justice Scalia pointed out some rather unusual features of the AT&T Mobility arbitration clause. According to him:
"In the event the parties proceed to arbitration, the agreement specifies that AT&T must pay all costs for nonfrivolous claims; that arbitration must take place in the county in which the customer is billed; ... and that the arbitrator may award any form of individual relief, including injunctions and presumably punitive damages. The agreement... in the event that a customer receives an arbitration award greater than AT&T’s last written settlement offer, requires AT&T to pay a $7,500 minimum recovery and twice the amount of the claimant’s attorney’s fees."
How many people could actually understand them if they read them?
Ignorance of the law is no excuse......................creates a legal system where only the lawyers or those with the money to hire them, have even the vaguest of notions of what a legal contract says, and even they can't agree on it most of the time.
Our system of government, and our system of morals is broken. Look to the people that profit from a "broken system" and you will see why.
Right and wrong no longer even matter, it's what's legal or illegal that governs.
Romans1 - Christians 0
1) If there is a conflict because of the Preemption Clause the FAA will trump state contract law.
2) The FAA mandates upholding arbitation agreements-of all variety- in contracts unless there is a contract defense which is generally applicable.
3) Such generally applicable defenses are fraud, duress and in this case, unconscionability.
4) Thus no one debates that if a state strictly outlawed arbitration agreements that the FAA would override this.
5) In California historically to show unconscionability you needed to show both procedural and sunstantive unconscionability. The former would be satisfied by certain contracts of adhesion like ATTs, while the latter usually required some result that "shocked the conscience".
6) A $30.22 injustice would almost certainly fail the latter requirement.
7) However, about 5 years ago in the Discover Bank case California got cute and invalidated- under the guise of unconscionability- consumer agreements with class action waivers that involved small sums.
8) Technically, the Discover Bank rule didn't apply to just arbitration waivers-it also applied to class action lawsuit waivers- but it clearly didn't flow from the historical principles of unconscionability in California. Although California is free to carve at new defenses, under the FAA it can't disfavor arbitration agreements. Because the "Discover Bank" rule was essentially tailor-made for such agreements it did just that.
I am not sure I would recommend this because if it happens often enough, AT&T will change the arbitration clause to include something like ... if you sue us in small claims court on a matter which should have been arbitrated, and a decision by such court is eventually overturned, you agree to pay all our attorney's fees in reaching such conclusion - and they might just make examples of a few folks who do this.
So, yes, even the relief valve of individual action is unlikely to help.
The goal of the shadow elite has been to make the cost of legal redress available only to the very wealthy, i.e., themselves. They have succeeded.
Your article is appreciated.
If we ever get to have representatives elected by the people again or fair representation on the Supreme Court again, things may change. Otherwise revolution is the only remaining redress, and despite our second amendment rights, we are hopelessly outgunned.
didn't say it would be easy... but take class action...
No justice at all in Small Claims.
So, what is there to keep businesses honest?
How about the knowledge that customers are essential for business success. No customers = no business. Period.
As long as there is enough real competition out there, maybe litigation and arbitration can be avoided. Smart consumers will find the good companies out there, and tell people about it. Smart companies will adapt to consumer needs, or be replaced by a company who can.
The real question is can we separate business and politics to allow that to happen?
"The revised agreement provides that customers may initiate dispute proceedings by completing a one-page No-tice of Dispute form available on AT&T’s Web site. AT&T may then offer to settle the claim; if it does not, or if the dispute is not resolved within 30 days, the customer may invoke arbitration by filing a separate Demand for Arbitration, also available on AT&T’s Web site. In the event the parties proceed to arbitration, the agreement specifies that AT&T must pay all costs for nonfrivolous claims; that arbitration must take place in the county in which the customer is billed; that, for claims of $10,000 or less, the customer may choose whether the arbitration proceeds in person, by telephone, or based only on submissions; that either party may bring a claim in small claims court in lieu of arbitration; and that the arbitrator may award any form of individual relief, including injunctions and presumably punitive damages. The agreement, moreover, denies AT&T any ability to seek reimbursement of its attorney’s fees, and, in the event that a customer receives an arbitration award greater than AT&T’s last written settlement offer, requires AT&T to pay a $7,500 minimum recovery and twice the amount of the claimant’s attorney’s fees. 3"
How much did these folks plan on making off of $30.00. Small Claims court is also allowed under the agreement.
"...the customer may invoke arbitratioÂn by filing a separate Demand for ArbitratioÂn, also available on AT&T’s Web site. ..."
Still, if T loses the demand... what's the recourse then?
Would also like to see who the arbitrators are and how they get selected/paid/graded/career path - i.e., grounds for bias in decision making.
Here is a link..
http://www.law.cornell.edu/supct/html/09-893.ZO.html
As far as I know, no consumer giveaway includes paying the sales tax on the item. If you win a car, you pay income taxes and sales taxes on the car, the same goes for Free Airline Tickets which are taxable form an income tax standpoint as well as sales taxes.
If the State felt this was a legitamet case of fraud the California AG's office could have brought fraud charges based on any one or several of the existing consumer laws to bear against AT&T. WHich could have resulted in fines and demands of reimbursement to those affected following a conviction on criminal charges. In this scenario, the FAA would have no bearing, as the "Victims" are not the subject of the case but is instead focussed on Criminal Fraud.
The Supreme Court also pointed out that the plaintiffs had a better chance at a remedy via Arbitration or under the Ammended Agreement Small Claims court. The California Superior court agreed on this point as well.
All of this said, the California AG's office could bring criminal charges if their was a legitatmet case of fraud which would not be subject to the FAA requirement. Is interesting that they did not.
What benefits? They do not keep the sale's tax money...they turn it in to the state. I am at a loss to understand what the "misconduct" could be in this case.
The last time I checked a company has no power to negate state laws regarding sales tax collection. If they pay the sales tax, it is then taxable to the beneficiary...If you win a car, you pay the sales tax, excise tax and income tax on the gain, even though the car itself was in fact FREE.
In this case the Phone was free...not tax exempt.