The right of consumers to band together to take action against corporate rip-offs is something that is enshrined in case law, enforced by the state courts and depended on by average Americans as a catchall to fight corporate fraud.
Tomorrow, we face the potential death of this right. The U.S. Supreme Court will hear a potentially landmark case, AT&T v. Concepcion, which involves the widespread corporate practice of using standard-form "take-it-or-leave-it" contracts to ban class actions.
Class-action lawsuits have become the way our society empowers and magnifies the disparate voices of numerous people faced with similar injustices, be it discrimination or consumer rip-offs. The historic case Brown v. Board of Education, which ended segregation in American schools, was a class-action lawsuit that elevated the voices of a class of persons with a similar huge problem.
If Concepcion goes the wrong way, regular citizens could lose their megaphone. By taking the matter to court, AT&T is seeking a way around the legislative process. Large corporations have been unable to get Congress to ban class-action lawsuits, so they are turning to the fine print of contracts to do their dirty work.
Vincent and Liza Concepcion sued AT&T in 2006, saying that the wireless carrier defrauded millions of customers in California by advertising phones as "free," then charging an undisclosed $30 charge for the phone. If multiplied by millions of AT&T California customers, the $30 charge would amount to tens or hundreds of millions of dollars in wrongful gains.
Most people won't take the time to sue to recover $30.
If AT&T can block class actions over this type of petty business misconduct, it can pocket hundreds of millions of dollars each year in unlawful profit from its customers nationwide.
Courts applying the law of 20 states have struck down attempted class-action bans because they would function as a "get out of jail free" card for corporate wrongdoing and keep groups of people with similar small-dollar claims from holding corporations accountable.
But AT&T is muddying the waters by citing the Federal Arbitration Act (FAA), a 1925 law that protects corporations' right to go to arbitration, even when state law says the opposite. Cleverly, AT&T stuck its class-action ban in a clause that requires disputes to be resolved only through binding arbitration, not in court. Using the FAA, AT&T is attempting to launder its otherwise unenforceable class-action bans. The company wants the Supreme Court to override the state courts and allow companies to ban class actions.
As the highest court in the land ponders this case, we know that the results will ring loudly though the country and have far-reaching consequences for civil rights, employment and consumer protection.
Class actions have uncovered and forced an end to widespread discrimination in employment, fair housing, mortgage lending, automobile financing, insurance and other areas. If the public were to lose this tool, the repercussions would be enormous.
It is essential that the court reject this end-run around justice and democracy and keep the class-action option alive for the American people.