Supreme Court Refuses to Hear Class-Action Ban Issue

by Deepak Gupta

  A cutting-edge issue in the world of consumer law--and one that this blog has discussed many times before (see, e.g., here, here, and here)--is the extent to which corporations can enforce class-action bans placed in consumer adhesion contracts. Class-action bans are clauses that purport to strip consumers of the right to seek any classwide relief, whether through class-action litigation or classwide arbitration. 

The question matters because class actions are often the only thing stopping companies like cell phone or cable providers from getting away with practices that cheat large numbers of consumers out of small amounts of money. As Judge Posner has put it, "[t]he realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30." 

This morning, the U.S. Supreme Court rebuffed an attempt by one of corporate America's leading Supreme Court litigators, Carter Phillips, to get the Court to weigh in on the battle over class-action bans. Public Citizen filed the brief in opposition, and we're thrilled at the result.  The Court's decision not to hear the issue is a good sign that, at least as far as class-action bans are concerned, the Supreme Court is going to allow the law to continue to develop in a way that vindicates the rights of consumers and employees to access the courts.  (You can read an Associated Press story about the case here.)

As we explain in our brief, the state and federal courts have increasingly been holding that class-action bans in arbitration clauses are unconscionable under state contract law.  These courts have also uniformly rejected industry arguments that the Federal Arbitration Act--which demands neutrality as to arbitration--preempts state law on this issue.  The reason for that is pretty simple: The Federal Arbitration Act expressly saves generally-applicable state contract law of unconscionability from preemption.

In T-Mobile v. Laster, 07-976, the petition denied today, T-Mobile asked the Court to take a case from the Ninth Circuit, arguing that a recent Third Circuit decision (Gay v. Creditinform) created a conflict among the lower courts.  T-Mobile also filed several other petitions on the same issue, asking the Court to hold all of those cases for Laster.  Today, the Court denied Laster and two of the tag-along cases--T-Mobile v. Gatton and T-Mobile v. Ford.

You can read Public Citizen's brief in opposition to the petition here, and the petition and the rest of the briefs here.

Comments

[Joseph]

AAA Client plead GUILTY to HOME REPAIR FRAUD AAA maliciously slanders Victims/Single Father, 4 and 9 year old then making victims pay AAA client/Contractor Guilty of Home Repair Fraud $5,000.00 plus AAA arbitration fees. Yes AAA makes the victims pay $5,000.00 to AAA/client the criminal plus arbitration fees. AAA false statement also used against THE STATE OF ILLINOIS Winnebago County States Attorneys Office to get AAA/clients indictment charges dropped. Even with AAA fraud statement maliciously slandering single father ,4 and 9 year old was not enough Father has overwhelming amount of evidence also full investigation by one of the top 20 in the fortune 500 which will back father 100% on fraud charges. All based on facts. AAA/client PLEAD GUILTY TO HOME REPAIR FRAUD. FACT PROVE AAA MALICIOUSLY used award to give perception that father breached contract and benefited to award AAA/client $5,000.00 nominal Damages Both AAA and client profit from victim. Full story more malicious then one would make up. AAA award 5/12/2006 AAA denied all father request and complaints telling father NO ATTORNEY DARE FIGHT AGAINST AAA. Father has been fighting alone since 5/12/2006 and has been able to get Full Investigation ,Warrant issued, charges, 2nd investigation indictment and on 5/5/2008 A plea of Guilty by Indictment from AAA/client for Home Repair Fraud.. [Winnebago County Illinois Court Case 2007 CF 01469] Overwhelming facts. NO BUT ANDS OR IF ABOUT IT. Family lost over $37,000.00, B Better living conditions, been Falsely Accused, Family Name Slandered and had to Pay AAA fees and AAA client Guilty of Criminal/fraud $5,000.00 Father will now fight against Goliath If one fight against me with a law against the U.S. Constitution. Then I request An investigation like the Martha Stuwarts case Of how a law did not get investigated. All law makers took an oath to protect the U.S. Constitution. A law against protection of The U.S. Constitution would be perjury by any who signed even a statement. Disrespect against all Americans is bad but disrespect for those how died to stop this very thing make me fight even harder. In the last three year what I have made and what I have paid for children schooling , activities and donations makes me non-profit far more than AAA. I dare them to match me. 1-144,000

[Mark]

The question matters because class actions are often the only thing stopping companies like cell phone or cable providers from getting away with practices that cheat large numbers of consumers out of small amounts of money.

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