by Scott L. Nelson
The United States Court of Appeals for the Eleventh Circuit has become the latest court to hold that an arbitration clause that contains a waiver of a consumer's right to bring a class action may be unconscionable if its application would effectively prevent consumers from vindicating their rights. The opinion, issued this Tuesday, September 4, in the case of Dale v. Comcast Corp., can be found here.
Dale involved a suit against Comcast by cable subscribers claiming that Comcast improperly collected excessive franchise fees from them. The amounts that were alleged to have been improperly collected within the limitations period added up to less than $11 for each subscriber, making an individual action obviously impractical. Comcast sought to derail the litigation by invoking a provision in its subscriber agreement providing for mandatory arbitration of all claims at the election of either party and prohibiting arbitration or litigation of any claims on a class basis.
Applying Georgia law, the Eleventh Circuit held that the class-action prohibition was unconscionable -- that is, so one-sided that it cannot in good conscience be enforced. The court held that as applied to a claim such as the one in this case, the prohibition on class actions is unconscionable because "[w]ithout the benefit of a class action mechanism, the subscribers would effectively be precluded from suing Comcast" for the violations at issue. As the court explained, "[t]he cost of vindicating an individual subscriberâs claim, when compared to his or her potential recovery, is too great." Permitting Comcast to avoid litigation through the class-action waiver, the court held, would "allow Comcast to engage in unchecked market behavior that may be unlawful. Corporations should not be permitted to use class action waivers as a means to exculpate themselves from liability for small-value claims." (emphasis added).
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