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Released: November 05, 2010

Supreme Court to decide whether corporations can ban class actions

Contact: Michelle De Mooy, Consumer Action (301) 244-5081 | Linda Sherry, Consumer Action (202) 544-3088

The Supreme Court will hear arguments next Tuesday in AT&T v Concepcion, a case that will have broad implications for consumers. The Court will decide whether companies can ban class actions in their consumer contracts. Consumer Action, a national nonprofit organization that provides consumer advocacy and education, signed onto an amicus brief in the case, supporting the consumer right to pursue class action claims against companies. “Class actions are a critical tool for consumers to pursue justice against giant corporations like AT&T,” says National Priorities Director Linda Sherry. Vincent and Liza Concepcion sued AT&T in 2006, alleging that the company defrauded millions of customers by advertising phones as “free,” then tacked on an undisclosed $30 charge for the phone. AT&T tried to dismiss the case, saying that its phone contract bans class actions like this and instead forces its customers to use its handpicked arbitration firm. “AT&T and companies like it are aware that most consumers cannot or will not initiate a complicated legal process, however purportedly consumer-friendly, to recover a small amount of money,” says Sherry. In Concepcion, judges in both the original and appellate cases said the company was not allowed a "get out of jail free" card and said the contract mandating arbitration was not enforceable. Now AT&T has asked the Supreme Court to overturn California law and that of 19 other states that have always held that consumers have the right to hold businesses accountable through class actions. This problem extends beyond consumer protection. Employers are increasingly inserting arbitration clauses with class action bans into employment contracts, presenting them to employees on a take-it-or-leave-it basis. If the Court agrees with AT&T, it could eliminate an important means for enforcing longstanding civil rights and employee protections. Consumer Action has long been a champion for consumer rights and has a record of successfully challenging consumer mandatory arbitration requirements. With representation by Trial Lawyers for Public Justice, Consumer Action and Darcy Ting in 2003 prevailed as plaintiffs in Ting vs. AT&T, ensuring that AT&T will not impose mandatory arbitration on its California customers. As a plaintiff in the 1998 case Badie vs. Bank of America, Consumer Action was successful in its challenge of the enforceability of a new, across-the-board arbitration requirement for all of the bank’s existing deposit and credit card account agreements. The Supreme Court will hear the AT&T v Concepcion case next Tuesday, November 9.