Supreme Court to Consider Future of Class Actions

The High Court will hear arguments today in the case of AT&T Mobility v. Concepcion, which could seriously affect the future of class action lawsuits and potentially put an end to them completely. The question before the Court is whether the Federal Arbitration Act preempts state courts from deeming arbitration agreement provisions banning class-action lawsuits unconscionable.  According to the Brief for Respondents, twenty states have held such bans unenforceable whether or not they are found within arbitration agreements.

In Conception, Vincent and Liza Conception sued AT&T claiming that they had been defrauded when they signed a service contract that purported to come with free cell phones.  Though AT&T claimed the phones were free of charge, the plaintiffs were obliged to pay tax on the full retail prices.  Due to the small amount of money at issue, the Conceptions sued on behalf of a class of similarly situated consumers.  The AT&T contract, however, stipulated that any action must proceed to arbitration and that arbitration could not go forward as a class action.  The Ninth Circuit held that, in keeping with its ruling in Shroyer v. New Cingular Wireless Services, Inc., the arbitration clause does, in fact, have “the practical effect of rendering [AT&T] immune from individual claims,” and is therefore unconscionable and unenforceable.

On appeal to the Supreme Court, AT&T argues that the Federal Arbitration Act preempts California’s invalidation of arbitration agreements that do not authorize class-wide dispute resolution.  In a piece for the San Francisco Chronicle, Brian Fitzpatrick, a law professor at Vanderbilt, points out that the current Court is very business-friendly and that many experts believe it may rule in favor of AT&T.  He notes the incredibly detrimental effect this could have for consumers, and writes that, “If the court goes down AT&T’s path, the consequences could be staggering. It could be the end of class action litigation…It may be hard to believe that, in one largely unknown case, the Supreme Court could end a class action system that has existed for decades…”

If AT&T wins, the majority of consumers may well be deterred from filing suits for small claims.  If this happens, what’s to stop businesses from cheating the little guy?