Supreme Court: No Right to Class Action
April 30, 2011
by William P. Meyers

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The gruel of law is getting ever thinner for poor consumers. The Supreme Court of the United States ruled on April 27, 2011, in AT&T Mobility LLC v. Conception et ux., that businesses (mostly corporations) can protect themselves from class action lawsuits and arbitration by simply including a clause to that effect in contracts they force consumers to sign.

Justices Scalia, Roberts, Kennedy, Thomas and Alito voted for AT&T, while Justices Breyer, Ginsburg, Sotomayor and Kagan sided with consumers on this issue (5 to 4 in favor of corporations v. real people).

What does this mean? It amounts to a license to steal, if by "steal" one means to take unjustly, rather than to take illegally.

Here's how it works. You want to buy a product or service, but Xample Corporation, like all corporations, requires you to sign a Supreme-Court approved contract to make the purchase. The contract says you cannot sue, you must arbitrate if you have a complaint, and you must arbitrate alone. You cannot join in a class action arbitration to spread the costs of an attorney over a large number of your fellow customers of the Xample Corporation.

Xample has your credit card, and you discover that Xample has charged it $30 more than you thought you were supposed to be charged. You complain to Xample, but they refuse to refund the $30. Your option under the gruel of law? You can call the police, but they will judge this a civil, contractual matter, because the criminals at Xample got incorporated before they over charged you.

You can fire bomb Xample corporate headquarters, but that seems extreme over $30, it does not get your money back, makes you a criminal (the police react differently when they get a call from Xample about trouble makers), and could get you killed.

You can report it to the Better Business Bureau, who will listen to you and then find Xample is in the right. When other people look up Xample at BBB, they will see that "all complaints have been resolved" and Xample gets their highest rating.

You can hire a lawyer. Hundreds of thousands of dollars in legal expenses later, you might get your $30 back. On the other hand, you might lose in court (after all, its the same court system headed by the Supremes), and be ordered to pay for Xample's army of lawyers, which almost certainly include former DA's who should have protected you in the first place.

Or you can eat it. 99.9% of consumers will eat it. A smallish local business that rips off 1000 customers this way will net $30,000. They might be held in check by the idea of 1000 local people angry at them.

But suppose you are a cellular telephone company and you did this to say, 10 million people during the course of a fiscal year (maybe tucking in $3 or so per monthly bill). That is a tidy $300 million in profits handed to you by Scalia, Roberts, Kennedy, Thomas and Alito. Send the boys a gift basket. Xample stockholders will be happy, and the CEO will get a $45 million bonus for his efforts.

What should be the rule of law is really the gruel of law, and it is getting thinner all the time.

So be careful what you buy, and what contracts you sign, and if you want the full protection of the Law, and something better than gruel to eat, be sure to be born into the ruling class of these United States of America.

See also:

Supreme Court Allows Contracts that Prohibit Class-Action Arbitration [by Adam Liptak, New York Times]