by Paul Bland, Claire Prestel, and Melanie Hirsch
The consumer and civil rights communities are closely watching AT&T Mobility v. Concepcion, a case that will be argued in the Supreme Court this November. Depending on how broadly the Court reads the question presented in Concepcion, the case could decide the fate of consumer and employee class actions for years to come.
[Disclosure: Deepak Gupta of Public Citizen Litigation Group, which hosts this blog, is counsel of record for the respondents in Concepcion. The views expressed in this article are solely those of the authors.]
The Corporate Abuse at the Heart of Concepcion
The Concepcion case involves the widespread corporate practice of using standard-form contracts to ban class actions. Many state courts have held such class-action bans unenforceable, but AT&T Mobility (“ATTM”) has asked the Supreme Court to find that at least some of that state law is preempted by the Federal Arbitration Act (“FAA”). To understand why the Court’s holding in Concepcion could be so significant, it is important to understand how class-action bans come to be and why they are often disastrous for consumers and employees.
Class-action bans are contract terms that purport to prevent consumers and employees from ever participating in class proceedings. As in Concepcion, they are often buried in companies’ standardized arbitration clauses. Class-action bans favor companies at consumers’ and employees’ expense, but companies can impose them unilaterally because they draft the contracts. Consumers and employees rarely have time to read the lengthy agreements companies send them, let alone the ability to understand their dense legalese. And even if they did, few consumers or employees could negotiate the contracts’ terms.
Companies love imposing class-action bans because they dramatically undermine enforcement of consumer- and employee-protection laws. Unlike European countries which mostly rely on large and powerful government agencies to enforce consumer protection and civil rights laws, the U.S. has relatively small government agencies which handle relatively few cases. Most enforcement of these laws in the U.S. is done by private parties. We rely upon individual consumers or employees who’ve been cheated or discriminated against to bring cases enforcing these laws. Many types of illegal behavior can be addressed through individual cases by a single consumer. But the reality is that many types of illegal behavior that harm very large numbers of people – thousands, sometimes hundreds of thousands of individuals – can only be meaningfully addressed through class actions.
