<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<HTML><HEAD>
<META content="text/html; charset=iso-8859-1" http-equiv=Content-Type>
<META name=GENERATOR content="MSHTML 8.00.6001.19046">
<STYLE></STYLE>
</HEAD>
<BODY bgColor=#ffffff>
<DIV><FONT size=2>
<DIV id=fb-root></DIV>
<DIV class=header>
<DIV class=left><A href="http://www.nytimes.com/"><IMG border=0 hspace=0
alt="The New York Times" align=left
src="http://graphics8.nytimes.com/images/misc/nytlogo153x23.gif"></A> </DIV>
<DIV class=left> </DIV>
<DIV class=left>
<HR align=left SIZE=1>
</DIV></DIV>
<DIV class=timestamp>May 12, 2011</DIV>
<DIV class=kicker></DIV>
<H1><NYT_HEADLINE type=" " version="1.0">Gutting Class
Action</NYT_HEADLINE></H1><NYT_BYLINE></NYT_BYLINE><NYT_TEXT>
<DIV id=articleBody><NYT_CORRECTION_TOP></NYT_CORRECTION_TOP>
<P>The Supreme Court’s 5-to-4 vote in <A
title="Supreme Court opinion in AT&T Mobility v. Concepcion"
href="http://www.supremecourt.gov/opinions/10pdf/09-893.pdf">AT&T Mobility
v. Concepcion</A> is a devastating blow to consumer rights. By upholding the
arbitration clause in AT&T’s customer agreement requiring the signer to
waive the right to take part in a class action, the court provided other
corporations with a model of how they can avoid class actions. It gave companies
even more power when it also ruled out class-based arbitrations. </P>
<P>These are major setbacks for individuals who may not have the resources to
challenge big companies in court or through arbitration. </P>
<P>When Vincent and Liza Concepcion signed a two-year contract for AT&T
cellphone service, they received what they were told were two free phones.
AT&T then charged them $30.22 in sales tax for the phones. They sued the
company for fraud in federal court and their case and another were consolidated
as a class action. </P>
<P>AT&T argued that the contract required the Concepcions to submit their
claim to individual arbitration. A federal trial court, upheld by the United
States Court of Appeals for the Ninth Circuit, struck down the AT&T
arbitration clause as unconscionable under California law and allowed the
plaintiffs to move forward against the company in a class action in federal
court. </P>
<P>With Justice Antonin Scalia writing for the majority, the Supreme Court
reversed that decision and, in a dramatic example of judicial activism, ruled
that class-based arbitrations also would not be permitted. </P>
<P>Justice Scalia argued that “class arbitration sacrifices the principal
advantage of arbitration — its informality — and makes the process slower, more
costly, and more likely to generate procedural morass than final judgment.” </P>
<P>In his <A title="Dissent of Justice Stephen Breyer"
href="http://www.law.cornell.edu/supct/pdf/09-893P.ZD">dissent</A>, Justice
Stephen Breyer highlights the damage to consumers: “What rational lawyer would
have signed on to represent the Concepcions in litigation for the possibility of
fees stemming from a $30.22 claim?” And he made clear that many rational couples
would not press their own case for that amount if it meant “filling out many
forms that require technical legal knowledge or waiting at great length while a
call is placed on hold.” </P>
<P>In 2005, the California Supreme Court defined a rule of “unconscionability”
for consumer contracts: when they<STRONG><FONT color=#ff0000> “deliberately
cheat large numbers of consumers out of individually small sums of
money.”</FONT></STRONG> The federal trial court and the Ninth Circuit applied
the rule in this case. </P>
<P>Writing about why the Federal Arbitration Act of 1925 pre-empts the
California law in question, Justice Scalia demonstrates both his pro-business
bias and the selective nature of his brand of originalism. </P>
<P>Contrary to what he suggests, when the law favoring arbitration was enacted,
arbitration’s purpose was to resolve disputes between businesses — not
businesses and consumers. He doesn’t try to trace his view on class arbitration
to the 1925 law because it is mute on the subject. Instead, he provides his own
definition of what arbitration should and should not be — with “no meaningful
support,” as Justice Breyer writes, in Supreme Court precedent. </P>
<P>In a welcome effort to protect consumers, employees and others, Senators Al
Franken and Richard Blumenthal and Representative Hank Johnson have just
introduced the Arbitration Fairness Act. It would make required arbitration
clauses unenforceable, although its chances aren’t great in the current
political environment. </P>
<P>Unless Congress fixes the problem, the Supreme Court’s decision will bar many
Americans from enforcing their rights in court and, in many cases like this one,
bar them from enforcing rights at all. </P><NYT_CORRECTION_BOTTOM>
<DIV
class=articleCorrection></DIV></NYT_CORRECTION_BOTTOM><NYT_UPDATE_BOTTOM></NYT_UPDATE_BOTTOM></DIV></NYT_TEXT></FONT></DIV><FONT
size=2>
<DIV>_______________________________________________<BR>Wayne A. Fox<BR>1009
Karen Lane<BR>PO Box 9421<BR>Moscow, ID 83843</DIV>
<DIV> </DIV>
<DIV><A href="mailto:waf@moscow.com">waf@moscow.com</A><BR>208
882-7975<BR></FONT></DIV></BODY></HTML>