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Supreme Court: AT&T Can Force Arbitration 415

Posted by timothy
from the anywhere-it-wants-to dept.
suraj.sun writes with this unhappy news, as reported by Ars Technica: "The Supreme Court on Wednesday ruled that AT&T — and indeed, any company — could block class-action suits arising from disputes with customers and instead force those customers into binding arbitration. The ruling reverses previous lower-court decisions that classified stipulations in AT&T's service contract which barred class arbitration as 'unconscionable.' ... In cases where an unfair practice affects large numbers of customers, AT&T or other companies could quietly settle a few individual claims instead of being faced with larger class-action settlements which might include punitive awards designed to discourage future bad practices."
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Supreme Court: AT&T Can Force Arbitration

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  • Oohh.. (Score:4, Insightful)

    by fuzzyfuzzyfungus (1223518) on Thursday April 28, 2011 @04:02PM (#35967810) Journal
    Mandatory corporate kangaroo courts! What could possibly go wrong?
    • Absolutely nothing. (Score:5, Interesting)

      by KingSkippus (799657) on Thursday April 28, 2011 @04:54PM (#35968646) Homepage Journal

      Absolutely nothing, pretty much guaranteed.

      ...If you're a corporation.

      I think that was the whole point over fighting such a silly case all the way up to the Supreme Court--to virtually guarantee that you can never be subject to a class action case again. Let's not kid ourselves, who here thinks that any company will ever again sell any service again without a clause in it forcing arbitration and disallowing class action lawsuits?

      • by causality (777677) on Thursday April 28, 2011 @06:06PM (#35969576)

        Absolutely nothing, pretty much guaranteed.

        ...If you're a corporation.

        I think that was the whole point over fighting such a silly case all the way up to the Supreme Court--to virtually guarantee that you can never be subject to a class action case again. Let's not kid ourselves, who here thinks that any company will ever again sell any service again without a clause in it forcing arbitration and disallowing class action lawsuits?

        Note that arbitrators are notorious for overwhelmingly favoring the party which hires them. In this case, that'd be the company. This is part of a much larger and utterly foolish trend: the systematic dismantling of each available "working through the system" method of either getting justice or effecting change.

        Social unrest is like any other kind of energy. It can be neither created nor destroyed; it only changes form. It does not go away merely because you start removing the legitimate means of acting on it. Quite predictably, this is only going to lead to the exact kind of vendettas and feuds that the justice system was specifically put in place to avoid. We're already beginning to see this with groups like Anonymous.

        In fact I can sum up Anonymous quite easily. Right or wrong, I believe the reasoning goes like this: "I don't have the millions of dollars and years of my life that it takes to bring a lawsuit against a multinational corporation and actually prevail, but what I do have is some skill with computers and a lot of outrage with no approved outlet." Anonymous should be completely redundant. Instead, they are a blatantly obvious sign that the justice system is failing.

        When the authoritarian types witness this, do they feel an immediate need to reform the system? No, they don't. They haven't the wisdom. Instead, they feel a need to "crack down" on computer crimes, as though they were random events happening in a vacuum, as if that does anything to address why they are happening. Where are the leaders who actually understand how to deal with human beings? Are they extinct? Are they the ones who never desired power in the first place?

      • by Darinbob (1142669) on Thursday April 28, 2011 @10:00PM (#35971106)

        Arbitration seems to be a way to guarantee that whoever has the deepest pockets will win. A long time ago I even gave up some stock options because I had to sign an arbitration agreement first with a clause that essentially said that if either party was unhappy with the solution they could demand a new arbitration with cost to be paid "equally". That is, the company with all the money keeps asking for new arbitration until I run out of money.

        An arbitration agreement is about giving up your legal rights in return for some minor momentary benefit.

    • Mandatory corporate kangaroo courts!

      The United Corporations of America don't appreciate you talking down to their cronies on the Supreme Corporate Court.

  • South Park (Score:3, Funny)

    by MrEricSir (398214) on Thursday April 28, 2011 @04:03PM (#35967822) Homepage

    Basically, the Supreme Court saw last night's South Park [southparkstudios.com] and said "Yeah, that's exactly how the legal system should work!"

    • Hilariously, of course, Justice Antonin "the originalist" Scalia was on the side of the majority, voting against the idea that states had the right to regulate the limits of contractual obligations; because that would be at odds with the intent of the FAA... Though, this was the guy who gave us the broadest definition of "interstate commerce" that could (un)reasonably be imagined in Gonzales v. Raich.
  • In Canada... (Score:5, Interesting)

    by awehttam (779031) on Thursday April 28, 2011 @04:05PM (#35967876)
    For contrast: B.C. consumers can't sign away class-action right [www.cbc.ca]: Canada's highest court ruled Friday that British Columbia consumers can pursue class action lawsuits even after signing contracts that appear to waive that right.

    *shrug*

  • Lawyers (Score:5, Interesting)

    by increment1 (1722312) on Thursday April 28, 2011 @04:06PM (#35967880)

    I'm slightly torn on this. On the one side, this means that there won't be ridiculous class action settlements where the class members get a $5 coupon towards future purchases while the lawyers get millions of dollars. On the other side, it effectively removes the only real consumer protection from wide spread practices.

    I'd have to say, I'm leaning more towards it being a bad thing.

    • Re:Lawyers (Score:5, Insightful)

      by fuzzyfuzzyfungus (1223518) on Thursday April 28, 2011 @04:16PM (#35968030) Journal
      The fun thing about arbitration is that and individual is likely to only be involved in one or two cases, if that. This makes them a poor "customer" of arbitration services. Large companies, on the other hand, might deal with hundreds or thousands of cases a year. Guess which side an arbiter hoping for future work might consider favoring...
    • Re:Lawyers (Score:5, Insightful)

      by shadowfaxcrx (1736978) on Thursday April 28, 2011 @04:21PM (#35968138)

      Class actions aren't intended to bring restitution to the victims of corporate malfeasance. They're intended to apply enough leverage to significantly punish the corporations. If you want restitution, file your own lawsuit. If you want to teach the corporation never to do that again, join the class action.

      Basically, in a class action, you've already been screwed, and there's no way to get unscrewed, but at least you can take down the SOB who screwed you.

      • Re:Lawyers (Score:5, Informative)

        by jd (1658) <imipakNO@SPAMyahoo.com> on Thursday April 28, 2011 @04:47PM (#35968538) Homepage Journal

        The problem is that the contract prohibits private lawsuits. So, if AT&T "forces" you to go the individual route, they are then entitled to have the case thrown out as a contract violation. The supreme court only ruled that AT&T could force individual arbitration, it said nothing about AT&T then having to allow said arbitration to proceed.

        • by Dcnjoe60 (682885)

          The problem is that the contract prohibits private lawsuits. So, if AT&T "forces" you to go the individual route, they are then entitled to have the case thrown out as a contract violation. The supreme court only ruled that AT&T could force individual arbitration, it said nothing about AT&T then having to allow said arbitration to proceed.

          Actually, AT&T could not use your suing them as a means to cancel the court proceedings you brought. They could, however, use it to hold you in breach of contract, which at most would be the cost of the remainder of the contract fee. The question is would AT&T spend thousands on attorney fees to take you to court over breach of contract when the remedy would be a couple of thousand dollars? Plus, if you won in your suit, then you would have further grounds to show that you did not breach the cont

    • Re:Lawyers (Score:4, Insightful)

      by drooling-dog (189103) on Thursday April 28, 2011 @05:36PM (#35969206)

      The idea that you can "agree" to waive your right to legal recourse in a contract is a bit interesting, especially if you are required to do so as a condition of doing business with the other party. Is a contract really a contract if only one side is entitled to enforce it?

    • by guspasho (941623)

      The only reason those suits are ridiculous are because the corporations have come to expect that they can get away with screwing all their customers by a little bit. This just makes it so they will always get away with it. Basically, we're fucked.

      Let's say that your phone carrier charges you a little extra one time, and pay it not knowing the bill was willfully misrepresented. You call the company and ask for a credit of the $2 you lost, and they say there was no overcharge, or they just say no. What are yo

  • by rsilvergun (571051) on Thursday April 28, 2011 @04:07PM (#35967888)
    This is what 8 years of Bush bought us folks, a Supreme Court on the take (look it up, it's a fact that Clarance Thomas took bribes). Hopefully a few of 'em 'll retire while the Dems are in and Obama'll man up and put some liberals in.
    • by NevarMore (248971) on Thursday April 28, 2011 @04:14PM (#35967998) Homepage Journal

      This is what 8 years of Bush bought us folks, a Supreme Court on the take (look it up, it's a fact that Clarance Thomas took bribes). Hopefully a few of 'em 'll retire while the Dems are in and Obama'll man up and put some liberals in.

      Which will go stunningly well I'm sure. The courts will run like a well oiled machine then.

      Call me jaded, but when I choose between modern liberals and modern conservatives I'm really choosing which set of rights I want them to try and take.

      • by Svartalf (2997) on Thursday April 28, 2011 @04:28PM (#35968226) Homepage

        Comparing "modern" Liberals or Conservatives, I find little different...

        • by nutshell42 (557890) on Thursday April 28, 2011 @05:40PM (#35969278) Journal
          Well, there's apparently enough difference that those "modern" Liberals voted against this fuck up in a 5:4 decision while the Conservatives thought it was only fair.

          It was the same 5:4 for the money=free speech fuck up and you can bet your ass that corporations are gonna use billions of free speech to convince you that there's no difference between Libs and Cons.

          Roberts+Alito always rule corporations>government>people, Thomas votes for whatever he thinks will piss off Democrats and Scalia goes by his conscience and strictly texturalist world view which, funny thing, just about always is the reactionary side. Kennedy is the "swing vote" but the swing is broken.

        • Try taking a look at the last 10 5-4 court decisions if you're curious.

      • I'll take the liberal. Why? Because at least right now liberal means progressive, and at least that's progress. Yes, there's 'Blue dog' liberals, ones that aren't really liberals, but we can weed them out with time and effort. It's like my buddy keeps telling me: "why should I bother voting? I'm just going to lose!". The answer is, if you don't vote, if you don't do SOMETHING to keep the bastards in check and try to make PROGRESS, they're run roughshod all over you. Frankly, I would care if they did that to
    • by clang_jangle (975789) on Thursday April 28, 2011 @04:17PM (#35968054) Journal

      Hopefully a few of 'em 'll retire while the Dems are in and Obama'll man up and put some liberals in

      Do we even have any real Liberals left anywhere? Obama, Pelosi, Clinton, and their ilk are basically so centrist they're "Republican Lite". Surely I'm not the only left-leaning person who feels unrepresented. As far as that goes, the Republicans don't do a particularly good job at representing conservatives, either.

      • Obama, Pelosi, Clinton, and their ilk are basically so centrist they're "Republican Lite".

        Centrist? I don't think that's a good description. They are all conservatives, with a few notable exceptions on specific policies (namely, health care). But even then, they ushered in a healthcare reform that other developed nations laugh at -- even if it is better than nothing.

        I think we need to come up with another, better, descriptive axis on the US political viewpoint chart that reflects what I think frustrates

      • by Hatta (162192) on Thursday April 28, 2011 @06:43PM (#35969926) Journal

        Are you just noticing this? There hasn't been a serious leftist or even progressive candidate in my lifetime.

      • by Dcnjoe60 (682885) on Thursday April 28, 2011 @07:56PM (#35970464)

        Hopefully a few of 'em 'll retire while the Dems are in and Obama'll man up and put some liberals in

        Do we even have any real Liberals left anywhere? Obama, Pelosi, Clinton, and their ilk are basically so centrist they're "Republican Lite". Surely I'm not the only left-leaning person who feels unrepresented. As far as that goes, the Republicans don't do a particularly good job at representing conservatives, either.

        Actually, since the right has moved so far to the right, today's liberal is yesterday's conservative. A lot of Reagan's proposals would be shot down as liberal sh*t today.

      • by Lehk228 (705449)
        Alan Grayson
        Dennis Kucinich
        Ralph Nader
  • by RightSaidFred99 (874576) on Thursday April 28, 2011 @04:07PM (#35967894)
    They're just a way for legal firms to make ridiculous amounts of money. They're an abomination.
    • by Sonny Yatsen (603655) * on Thursday April 28, 2011 @04:26PM (#35968196) Journal

      Class action suits are good for one thing, though. Class action suits means that a firm doing something wrong will get punished with a hefty fine, especially if punitive damages are added in, which discourages them from continuing their wrongdoing.

      By contrast, arbitration claim means that individual claimants must make individual claims which is harder and results in fewer claims against the company, and thus a much lower payout.

      A company would much rather get 1000 people making individual arbitration claims and pay them 100 bucks each instead of a 10,000 people class action suit and pay out $5 million at once.

      • by X0563511 (793323)

        Shame that they can't just not be assholes, and not have to pay at all (because they didn't fuck everyone)

  • by jfengel (409917) on Thursday April 28, 2011 @04:09PM (#35967926) Homepage Journal

    AT&T can only force arbitration if you agreed to it in your contract. Which you did. All major companies make it a condition of the sale.

    What the court decided is that you can't get out of your contractual agreement with a class-action suit.

    The unconscionable part here is the law that they're upholding, the Federal Arbitration Act [wikipedia.org], which basically lets you give up your right to sue. You don't have to, but they don't have to give you the service, unless you agree to meet in a court of their choosing. Which, of course, they'll always require, as long as the law allows them to.

    That's been upheld before. This case is just deciding that the federal law trumps state anti-arbitration laws. I find it unconscionable in both cases, and "unconscionable" is supposed to be a way out of contracts, but the existence of the federal law and 5 Republican appointees on the Supreme Court says I'm wrong.

    • Which, of course, they'll always require, as long as the law allows them to.

      It's bigger than just the Federal Arbitration Act law. Cell phone companies enjoy a natural N-opoly (where N is a small integer) because it's hard to set nationwide coverage, and the FCC doesn't just let anyone use the airwaves.
      There's no market incentive to offer a service where you don't have to sue, since all the other players put these clauses into their contracts. The cell phone providers don't actually collude on this, they just have to see what the others use in their contracts. (Anyone know w

    • by MobyDisk (75490)

      The problem is that AT&T is a regulated monopoly. If the only companies that offer the service are monopolies, and they all force you to sign a contract that denies your right to sue, then the government has effectively taken away your right to sue. They just did it indirectly. Ex: There are two phone carriers that operate in my area: AT&T and Verizon. If both of them have contracts that deny my right to sue, then my only option is to forego service. That isn't reasonable.

  • What is arbitration? (Score:5, Interesting)

    by Caerdwyn (829058) on Thursday April 28, 2011 @04:13PM (#35967982) Journal

    Arbitration = "impartial" non-accredited non-monitored unaccountable random person bought and paid for, who if he decides for the customer more than once in a great while is fired in favor of another "impartial" random person. Alternate definition: how to bribe a civil court judge legally.

    No arbiter can be impartial. Their livelihood depends upon bias and outright prejudice (as in "pre-judging"). It is not an honorable profession.

    • by Maximum Prophet (716608) on Thursday April 28, 2011 @04:22PM (#35968140)

      No arbiter can be impartial. Their livelihood depends upon bias and outright prejudice (as in "pre-judging"). It is not an honorable profession.

      Like a judge appointed for life?

      Anyway, the state could set up their own arbitration board, and when a case comes up, they assign someone from the board. The companies would pay for the board, but they wouldn't have hiring and firing decisions. That would make it more impartial.

      • by NevarMore (248971)

        That would be worse. With private arbiters there are records and standards of conduct and a very obvious financial link between the arbiter and one of the parties in the case.

        With a board appointed by the state you'd either have another minor election the voters don't understand or a backdoor system of favor and connections to be appointed to it. It would also eliminate a very obvious link and replace it with one of political donations and favor that makes it easier to obscure the source of money.

        Furthermor

        • by Qzukk (229616)

          Finally, arbiters are usually paid either 50/50 by both parties or by the 'loser' of a decision rather than 100% by one party.

          If an arbiter finds against the corporation enough times, they get paid $0 when the company stops using him or her.

  • by dmgxmichael (1219692) on Thursday April 28, 2011 @04:14PM (#35967990) Homepage
    Justice Roberts once again proves his obedience to his corporate masters. Once upon a time the SCOTUS was seen as above such petty matters. Now it is clearly the pawn of the corporations - and this has been obvious ever since the ruling which allowed the corporations unlimited access to fund/bribe politicians.
    • Re: (Score:3, Informative)

      by alen (225700)

      SCOTUS didn't say you have to submit to arbitration in all cases, just in dumb suits like this one.

      most states have a law where you pay the sales tax on the full pre-coupon price. AT&T had a special on a phone where they gave it away for "free". idiot couple paid the tax. instead of giving back the phone they sued. this should have been kicked back to small claims court not a class action lawsuit that will cost millions of $$$ to fight

    • by Optic7 (688717)

      It started well before that ruling. Ever since Roberts and Alito came in, the court seems to be overwhelmingly favoring the powerful over the powerless, usually in a 5 to 4 decision.

      This country is well along its path to becoming a banana republic, and the supreme court is actively participating in this transformation.

  • Entire body of citizens, have legally became whores to the whim of corporate interests now ?
    • Just don't use a cellphone. Or a landline. Or cable TV. Smoke signals are right out, but Semaphores between the hours of 10am and 4pm will still be allowed. (Tin cans and string will be allowed, as long as you don't have to cross a public street and it's not a permanent installation)
  • In the absence of real justice, vigilantism will inevitable fill the vacuum. The SCOTUS should have considered that...

    Time to hack AT&T into the ground.

    • Time to hack AT&T into the ground.

      Yes! Everybody go out and buy some more iPhones! [tomsguide.com]

      Oh, wait.

    • by Amouth (879122)
      you know.. copper is 3-5$ a pound and interconnects aren't lite.. quick to remove a pain for them to install.. i'm not suggesting anything - but if we where all to go to the nearest bell box and pull out the interconnect and just drop it in someones recycling box.. just the shear volume would cripple them.. but of course for that to work it has to be everyone at about the same time..

      they abuse the public land they where entrusted - lets pull their wires out and get rid of
  • Which is probably the goal of the five conservatives on the court.

    Perhaps Congress will change the statute.

  • by C_Kode (102755) on Thursday April 28, 2011 @04:29PM (#35968260) Journal

    What should be illegal is a company's contract blocking your legal recourse if they screw you over. This is what Paypal did too and pretty much robbing their own customers who could not sue them in return because of the same type of garbage.

  • "larger class-action settlements which might include punitive awards designed to discourage future bad practices"

    I hear this line often, and it is wrong. Big corporations have no memory, and these "crimes" are hardly ever done on purpose. You cannot adjust your intentions if the outcome that needs correcting was never intended in the first place. Before getting into any details at all, it is blatantly obvious that any corporation would try to avoid a class action lawsuit of any kind. Same with recalls. The damage is done and the outcome is already secondary.

    Of course, if it was done on purpose, then the outcome is alr

  • by StormReaver (59959) on Thursday April 28, 2011 @04:47PM (#35968550)

    Don't Supreme Court justices know the law anymore? This decision is so out in right field that it doesn't even pretend to be supported by law passed by Congress. Contracts used to be invalid if:

    1) They are so one-side as to be entirely unfair.
    2) They force one party into a position because there is no alternative (the offer you can't refuse).

    Carrier-forced arbitration meets both these points. Carriers, by the nature of their enormous power relative to consumers, will always win arbitration because the arbitrators are, for all practical purposes, on the carriers' payrolls. This is because carriers are repeat customers, whereas carrier customers are not. This severely biases the arbitrator in favor of the carriers. There is no easy way to make this even remotely fair to carrier customers. This, by itself, would be enough to nullify arbitration clauses in any sane country.

    Carrier customers have no choice but to have a phone of some sort. You just can't exist in most modern markets without the ability to communicate with other people. And all carriers have the same arbitration clause in their contract, so customers have no alternative. This should also, all by itself, be enough to nullify arbitration clauses in contracts in any sane country.

    Put these two things together, and it's clear that the Surpeme Court has no intention of applying the law. It seems that they don't even bother reading it anymore. They just want to apply their own sense of right and wrong as it aligns with their political philosophies. If we had a Constitutional Supreme Court, meaning a Supreme Court defined and authorized by our Constitution, prior to this ruling, it just evaporated.

    • by erroneus (253617)

      Congress is on the payroll of lots of companies too... including carriers.

      I'm just hoping to survive the rest of my life with as little trouble as possible and if a revolution breaks out, I hope I have some ability to protect myself remaining.

  • by cmholm (69081) <cmholm@NOSPaM.mauiholm.org> on Thursday April 28, 2011 @05:01PM (#35968774) Homepage Journal

    Per Jeffrey Toobin, “in every major case since he became the nation’s seventeenth Chief Justice, Roberts has sided with the prosecution over the defendant, the state over the condemned, the executive branch over the legislative, and the corporate defendant over the individual plaintiff.” That’s conservative jurisprudence in a nutshell.

    As has become abundantly clear, "activist judges" are only a problem when their rulings don't fit the conservative POV.

    • by SirGarlon (845873)

      This ruling not only screws the little guy, it supports federal authority trampling state law, and seems to me to directly contradict the Seventh Amendment [constitution.org] (IANAL). My mind boggles that the justices who wrote it are considered "conservative". The word has lost its meaning.

  • by IHC Navistar (967161) on Thursday April 28, 2011 @06:15PM (#35969664)

    As patently stupid as this is, the court forgot one detail:

    There is nothing that says customers can't band together and force AT&T to arbitrate with a large group of people at the same time. Or drag out the arbitration proceedings until they are no longer profitable.

    It would be nice to see some states force companies to give up the right to forced arbitration as a condition of doing business in their state! No state is obligated to permit a business to operate, especially if they deny a permit to operate as a means of protecting their citizens from unfair practices.

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