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AT&T Communications Government Network Television The Courts The Internet United States

Forced Arbitration Isn't 'Forced' Because No One Has To Buy Service, Says AT&T (arstechnica.com) 342

An anonymous reader quotes a report from Ars Technica: AT&T is denying that its contracts include "forced arbitration" clauses, even though customers must agree to the clauses in order to obtain Internet or TV service. "At the outset, no AT&T customer is ever 'forced' to agree to arbitration," AT&T Executive VP Tim McKone wrote in a letter to U.S. senators. "Customers accept their contracts with AT&T freely and voluntarily; no one 'forces' them to obtain AT&T wireless service, DirecTV programming, or other products and services." AT&T was responding to concerns raised by Sens. Al Franken (D-Minn.), Richard Blumenthal (D-Conn.), Ron Wyden (D-Ore.), Patrick Leahy (D-Vt.), and Edward Markey (D-Mass.), who previously alleged that AT&T's use of forced arbitration clauses has helped the company charge higher prices than the ones it advertises to customers. While AT&T is correct that no one is forced to sign up for AT&T service, there are numerous areas of the country where AT&T is the only viable option for wired home Internet service. Even in wireless, where there's more competition, AT&T rivals Verizon and Sprint use mandatory arbitration clauses, so signing up with another carrier won't necessarily let customers avoid arbitration. One exception is T-Mobile, which offers a way to opt out of arbitration. The terms of service for AT&T Internet and DirecTV require customers to "agree to arbitrate all disputes and claims" against AT&T. Class actions and trials by jury are prohibited, although individual cases in small claims courts are allowed. AT&T doesn't offer any way to opt out of the arbitration/small claims provision, so the only other option is not buying service from AT&T.
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Forced Arbitration Isn't 'Forced' Because No One Has To Buy Service, Says AT&T

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  • by Anonymous Coward on Tuesday July 04, 2017 @08:08AM (#54741291)

    In a lot of markets, AT&T is part of an oligopoly or even may have a monopoly. High speed internet is necessary for a lot of people, especially if they need it for their jobs or classes. When there are very limited options for service, AT&T and their competitors might all include forced arbitration clauses. Get rid of the monopolies and oligopolies, and perhaps AT&T might have a point. Right now, the statement sounds like something I'd say when I'm trolling. No one is forced my ass. Bring in more competition, then we'll talk.

    • by jonsmirl ( 114798 ) on Tuesday July 04, 2017 @09:44AM (#54741703) Homepage

      Has anyone here ever received anything of value from a class action lawsuit? My best win so far is a $10 check. Most of the time I never received anything, and a few times I have received useless coupons.

      On the other hand the lawyers doing these suits get paychecks of $10M or more. And where do you think this $10M comes from? It is being added to the price of the product. I think it is probably more cost effective for consumers that these class actions are stopped. I don't really see them as helping consumers, instead they just enrich lawyers.

      I think it is far more effective to bombard a company with a thousand individual small claims. That makes them have to show up which costs them a lot of money. And get this -- you can actually win in small claims. My best win in small claims is over $5,000. Several times the judge has just ripped up their thirty page contracts, asked their rep if I have been harmed, and when they say yes, he awards what I am asking for. These small claim judges work more on what is a reasonable outcome, not on what is contained in a lopsided thirty page contract which the consumer is powerless to alter.

      In one case the judge even yelled at them for putting such ridiculous clauses in the contract. That was with ADT which has a clause stating that if you moved the contract automatically extended three years. I had moved three times so my original contract had extended to 12 years. Then I moved into a high rise which did not allow alarms and tried to terminate. ADT demanded over $10,000 to terminate my contract. They ended up with nothing.

      • by jedidiah ( 1196 ) on Tuesday July 04, 2017 @12:25PM (#54742563) Homepage

        > Has anyone here ever received anything of value from a class action lawsuit?

        Yes. Safe consumer products.

        Civil servants don't have the resources or motivation to properly enforce this stuff.

        The point of class action suits is to keep corporations in line and prevent them from turning you into green crackers. It's not about a personal pay day for you.

        It's not even about a personal windfall if it's just you and it's an injury lawsuit. It's about holding the responsible party responsible.

        • It is not obvious to me that class actions achieve anything other than enriching lawyers. We may have some lofty goals that class actions are supposed to achieve, but in reality they don't seem to achieve those goals.

      • by epine ( 68316 )

        And where do you think this $10M comes from? It is being added to the price of the product.

        This is getting pretty close to "follow the money" as a certifiable intellectual disability.

        Indeed, the American adversarial "free" market regulatory function is implemented more cheaply—as perceived through a conspicuously charismatic megadollar mental metal-detector—by "big" government oversight in many other free-market(ish) democracies.

        But isn't it funny how, at the end of the day, one needs to add up

      • though not always. It's the only remedy the working class has left. Voting doesn't work. We're more or less an oligarchy and even if we weren't single issue voters plus our winner take all system means we're boned. What do you do with gun fans that will vote away every economic issue on the off chance that somebody is going to outlaw assault rifles? Or the Cuban voters still punishing the left for Castro? Or the Religious Right? As for the American left wing, they're a lose confederacy at best that lacks th
    • Something about forced your ass? ... go on...

    • by Kevin Oakes ( 5011279 ) on Tuesday July 04, 2017 @10:31AM (#54741925)
      I bought internet in Rural PA last year. Verizon, AT&T, and a regional company were the only options. After the local company did a survey and determined they could not get a line to me, I called AT&T. The AT&T customer service rep looked up my address and said that's in a Verizon area, can I transfer you to Verizon support?" Having worked for AT&T just after deregulation, I was curious. So instead of saying, "ok" I asked some questions. AT&T and Verizon internet have worked out regional monopolies. Choice is a farce in these areas, and so an arbitration agreement is forced upon any customer who "wants" internet service. Take our terms, or have no internet. Cellular data was also abysmal in the area. On some days climbing out onto th me 2nd story roof was the only way to get email. So I "agreed" to Verizon's land line terms of service.
      • AT&T and Verizon internet have worked out regional monopolies.

        AT&T and Verizon did not "work out" regional monopolies. They were granted monopolies by the local governments, and are prohibited from competing with each other by the terms of the Bell Telephone breakup which split the original AT&T into lots of smaller phone companies who provided service in different regions.

        Choice is a farce in these areas, and so an arbitration agreement is forced upon any customer who "wants" internet service

  • No *customer* (Score:5, Insightful)

    by kav2k ( 1545689 ) on Tuesday July 04, 2017 @08:15AM (#54741313)

    [...] no AT&T customer is ever 'forced' to agree to arbitration [...]

    [...] no one 'forces' them to obtain AT&T wireless service, DirecTV programming, or other products and services.

    So basically, you only qualify as a customer if you do use products or services (that require agreement), but no customer is ever forced? I fail to see the logic here.

    • Re:No *customer* (Score:4, Insightful)

      by msauve ( 701917 ) on Tuesday July 04, 2017 @08:55AM (#54741477)
      Yep. "...no AT&T customer is ever 'forced' to agree to arbitration"

      They're not a customer unless there's a contract, so it's the opposite of what AT&T claims - all customers are forced to accept arbitration.

      Of course, if they want that claim to be true, they simply have to stop enforcing (or remove) that clause.
      • AT&T also offer prepaid phone services which are considered "NO CONTRACT". Now, are you still an AT&T customer?
    • The logic is sound. You are not required to obtain AT&T service - you can choose a different service. So anyone who chooses to accept their service and become a customer is not forced to either become a customer, nor forced to agree to arbitration. They choose to do so willingly (i.e. opposite of forced).

      If there are two restaurants, one which servers only hamburgers, and one which serves only cheeseburgers, and you choose to go to the cheeseburger shop, you are not being forced to get cheese on y
  • quite peculiar (Score:5, Insightful)

    by gsslay ( 807818 ) on Tuesday July 04, 2017 @08:17AM (#54741321)

    Why is it that American law permits clauses in contracts that deny people access to the law of the land?

    It's quite peculiar. In the UK any contract that attempts to limit a consumer's statutory rights and legal protections is automatically void. It cannot be done. This is why most sales contracts actually state that "This does not affect your statutory rights", because it cannot.

    • American law? (Score:5, Insightful)

      by Anonymous Coward on Tuesday July 04, 2017 @08:38AM (#54741391)

      We are a plutocracy in this land. Shit like this is forced on us without a peep from most people because they are being distracted by other issues. They don't care until the day comes that AT&T screws them over and discover that they have no choice but to pay up and shut up.

      While they are being gouged by the ISPs and given third world quality service, they are all being distracted by the latest tweet from the Big Orange small fingered vulgarian in the Whitehouse. While my state legislature (mostly Republicans) are being "lobbied" by these ISPs to keep their un-free markets and not-capitalistic business models, they are arguing over laws about who can use what bathroom depending on the sex on one's birth certificate.

      And my fellow citizen's allow themselves to get sucked into a moronic fight.

      That's the state of the American people. And we blame immigrants for our declining standard of living.

    • Re: (Score:3, Informative)

      by ewanm89 ( 1052822 )

      Yes, even in the US this is absolutely true, also unilateral contracts (one where all terms are set by a single party like an eula or a conditions of sale contract) are seen very different from a bilateral contracts and do not have anywhere near the same enforcement value.

      The courts frequently strike down such arbitration clauses as such clauses are direct unilateral violation of rights in a given jurisdiction.

      IANAL

      • Re:quite peculiar (Score:5, Informative)

        by DRJlaw ( 946416 ) on Tuesday July 04, 2017 @09:16AM (#54741567)

        The courts frequently strike down such arbitration clauses as such clauses are direct unilateral violation of rights in a given jurisdiction.

        IANAL

        That's obvious, because you're wrong.

        The Federal government passed the Federal Arbitration Act, which authorizes such arbitration clauses, and there's a pesky thing in the Constitution called the Supremacy Clause. AT&T itself won a U.S. Supreme court case that said that the Federal Arbitration Act of 1925 preempts state laws that prohibit contracts from disallowing class-wide arbitration [wikipedia.org], on the basis of statutory interpretation, since nobody seriously questioned that wireless contracts were within the scope of the Interstate Commerce Clause.

        Specifically, [supremecourt.gov]

        Relying on the California Supreme Court's Discover Bank decision, [the Ninth Circuit Court of Appeals] found the arbitration provision unconscionable because it disallowed classwide proceedings. The Ninth Circuit agreed that the provision was unconscionable under California law and held that the Federal Arbitration Act (FAA), which makes arbitration agreements "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract," 9 U. S. C. sec. 2, did not preempt its ruling.

        Held: Because it "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," Hines v. Davidowitz, 312 U. S. 52, 67, California's Discover Bank rule is preempted by the FAA. Pp. 4-18.

        IAAL.

      • Yes, even in the US this is absolutely true, also unilateral contracts (one where all terms are set by a single party like an eula or a conditions of sale contract) are seen very different from a bilateral contracts and do not have anywhere near the same enforcement value.

        The courts frequently strike down such arbitration clauses as such clauses are direct unilateral violation of rights in a given jurisdiction.

        IANAL

        No.

        Contracts of adhesion may be interpreted against the drafter, but the drafter still gets to write them. They are still binding better than nine times out of ten. In very rare cases you may have a successful argument voiding some portion of them, but this is uncommon, especially if they are decently drafted.

        Arbitration clauses and class action waivers are also binding. There are some ways to get around them sometimes to an extremely limited degree (for example, maybe you can litigate whether or not an arb

    • Re:quite peculiar (Score:4, Insightful)

      by Dragonslicer ( 991472 ) on Tuesday July 04, 2017 @09:16AM (#54741569)
      Companies can put anything they want in a contract. If the company forces you to arbitration, you can challenge it in court.

      There are three major problems with how the American legal system works with stuff like this:
      1. You can't challenge it in court until you're actually harmed, i.e. get in a situation where you're forced into arbitration.
      2. Court cases are expensive, and large companies have far more money than you do. A lot of litigation in the US is simply a competition to see which side is first to make the other side not want to pay any more.
      3. Even if you win and the clause is determined to be unenforceable, the only penalty to the company is not being able to enforce the clause against you. They'll still include the clause in their contracts and hope that most other people don't fight it.
      • You can challenge a contractual clause that requires binding arbitration, but the defendant will immediately file a motion to dismiss on that basis, and you'll have a hard time winning that fight.

    • Binding arbitration exists in the UK, just like it does in the US.

    • Why is it that American law permits clauses in contracts that deny people access to the law of the land?

      That's incendiary phrasing. You could ask why does British law forbid people the right to designate an arbitrator to resolve disputes. Both would be formulations of the question that do not shed light on the tension between two goals: giving people the power to determine their own arrangements versus ensuring that those arrangements are not contrary to public policy. Those two goals are non-orthogonal.

      To make it more concrete (and over-simplified), let's say that Alice hires Bob to write and deploy some sof

      • by sjames ( 1099 )

        The problem in your American scenario is that Bob and Alice came to a mutual agreement (a meeting of minds) to have Cherles arbitrate.

        To match the situation in TFA, Alice has killed literally every other developer out there. She writes in the arbitration clause naming her cousin Charles as the arbitrator and tells Bob "sign it or pound sand meathead!".

  • They're not wrong (Score:4, Interesting)

    by rsilvergun ( 571051 ) on Tuesday July 04, 2017 @08:18AM (#54741327)
    And if you accept that the free market should best sort these things out then this is the way to go. Let the two parties take care of it and if people don't like it they can vote with their wallets. Someone's bound to come along and compete directly with AT&T, right?
  • by davecb ( 6526 ) <davec-b@rogers.com> on Tuesday July 04, 2017 @08:20AM (#54741343) Homepage Journal

    In cases where the company is breaking Canadian law, contract language to force arbitration in California is null and void. A class action about “Sponsored Stories”, which uses the name and picture of a customer "without consent for the purposes of advertising" will go forward.

    The legalese is summarized at http://www.slaw.ca/2017/06/28/... [www.slaw.ca] and the full case is https://www.canlii.org/en/ca/s... [canlii.org]

    It's primarily an arguement about choice of forum (country) in a contract.

    • I'm voting with my wallet! Hang on, I'm just gonna unplug my only internet option... wai

      • by davecb ( 6526 )
        Hey, move to Canada, you have the choice of Bell Helliphone or Rogers (;-)) But you can sue them.
        • by PPH ( 736903 )

          I was thinking that we (US customers) could sue AT&T in Canadian courts. After all, it's possible to sue foreign entities for committing alleged bad deeds overseas in US courts. And US courts can serve warrants overseas. In Ireland, for example.

          Turnabout is fair play.

          • by davecb ( 6526 )
            If you're serious, physically visit a lawyer in Canada and demonstrate the unlawfull action in the presence of witnesses the lawyer may nominate. They'll tell you if you can sue the pants off ATT (;-))
  • by Cyberpunk Reality ( 4231325 ) on Tuesday July 04, 2017 @08:31AM (#54741369)
    AT&T has sued cities to prevent competition. This is part of the broken pattern here in America. Powerful companies openly flout the law, and then find some technicalities to hide behind. Everyone knows it's BS, and the only question is how long it can go on before the public breaks out the guillotines and starts setting things on fire. Those profiting are betting the answer is "long enough to flee and live like kings in Patagonia".
  • AT&T doesn't offer any way to opt out of the arbitration/small claims provision, so the only other option is not buying service from AT&T.

    When our $50/mo POTS line went down, ATT told us that it was going to be six weeks to get it fixed. And that's when we stopped using ATT. Now it's just cells from T-Mobile. They already didn't bother to offer DSL at this address, in spite of the fact that it's offered at both ends of the loop road I live on, and the fact that We The People actually paid the telcos hundreds of millions of dollars to push DSL to the last mile, which they gave away as executive bonuses.

    ATT is a criminal enterprise.

  • Hobson's Choice (Score:2, Interesting)

    by Anonymous Coward

    Philosophers call this sort of "choice" a Hobson's choice. See

    https://en.wikipedia.org/wiki/Hobson%27s_choice [wikipedia.org]

  • by Opportunist ( 166417 ) on Tuesday July 04, 2017 @08:44AM (#54741415)

    Not on someone physically pressing you to do it. You're not forced to cheer on li'l Kim in North Korea. You can always opt for the lengthy stay in one of the reeducation camps where you get taught why you want to cheer on him. You're not forced to take a job in a country where welfare doesn't exist, you can always freely opt to starve to death.

    Whether you are forced to do (or not do) something is not dependent on someone pointing a gun at your head but on the alternatives you have. And internet access has become pretty much a necessity these days, certain services are either hard to get or entirely unavailable to you if you do not have internet access.

    A century ago, you would have argued that access to power or telephone was, if not a luxury, then at the very least far from something that was to be expected. Try, just TRY, to apply for a job today and not offer a phone number where the prospective employer can reach you. You wouldn't even be considered for a burger flipper job if I can't get a hold of you NOW, not in the 3-4 work days it takes for a letter to reach you and your reply to reach me.

    And no later than any office job, you better have some way to get email from your prospective employer. I cannot think of any job I had in the past 2 decades that didn't require me to have an email address and a way to check it frequently.

    • Try, just TRY, to apply for a job today and not offer a phone number where the prospective employer can reach you. You wouldn't even be considered for a burger flipper job if I can't get a hold of you NOW

      Then where is someone supposed to get the money to buy his first phone service subscription to get his first job?

  • IANAL, but I seem to recall there was a lawsuit over mandatory arbitration clauses in stockholder/security broker contracts.

  • by slazzy ( 864185 ) on Tuesday July 04, 2017 @08:49AM (#54741449) Homepage Journal
    Where I live for example, there's also carrier pigeon and smoke signals...
    • by colinwb ( 827584 )

      Where I live for example, there's also carrier pigeon and smoke signals...

      Luxury - where we live we have to use runners with cleft sticks, who only work every other Tuesday. And that's if we're lucky!

  • by l0n3s0m3phr34k ( 2613107 ) on Tuesday July 04, 2017 @08:50AM (#54741457)
    There is no other service available. Someone long ago went to each cable box and cut off the coax right at the top of each incoming pipe. Fox Cox to bring in service, there would need to be some major work done to re-run, or at least fix, all the connections. So, if I want any internet service, I am forced to go through AT&T.
  • It won't happen with the Orange Piece of Shit in the White House, and the Money Grubbers controlling Congress, but we desperately need Internet access to be a public utility in the US. The current state of affairs with ISP's is ridiculous.
    • by Ash-Fox ( 726320 )

      we desperately need Internet access to be a public utility in the US.

      Done, wish has been granted. 14k dial up Internet is now considered a public utility. The minimum standard has been set.

      • If a particular data rate becomes a standard, then site operators are going to have to either make their sites practical to use at the standard rate or be shamed for not complying with standards. This means no reliance on a megabyte of jQuery. It also means transcripts of videos.

        • by Ash-Fox ( 726320 )

          If a particular data rate becomes a standard, then site operators are going to have to either make their sites practical to use at the standard rate or be shamed for not complying with standards.

          Didn't happen when a similar rule was implemented in Poland, Czech Republic or Hungary. Can't imagine it working in the US either, where companies really seem to do a lot of bad jobs considering government legislation. It's not like most US government sites would struggle to comply though... A lot of them feel like

  • You buy a mobile phone, you pay $50-100/month. If you don't like it, you go somewhere else. What exactly are you planning on suing AT&T for?

    • by tepples ( 727027 )

      If AT&T is the local DSL provider in your area, and no DOCSIS (cable Internet) provider serves your address, then who provides Internet access suitable for an entire household? Or would you recommend moving in such a situation?

  • The only reason ATT is the only choice or one of a limited choice is because jackasses at the Fed, and in particularly at the State and Local level mandate it to be. STOP giving communication companies monopolies and holy shit you might have some more choice.
  • AT&T, Comcast/Xfinity, and others need to be broken up into smaller companies. Not the first time this has been necessary and likely won't be the last, either. They're all getting too big for their britches and need to be taken down several notches. Of course that's going to be damned hard to make happen with the Trump administration around. They don't give a flying fuck about citizens, only making the rich richer, and monopolies that demand their 'customers' serve them rather than the other way around
  • That no one chooses to offer a competing service doesn't force AT&T to change it's TOS.

  • Kind of like how people are "forced" to give their money to AT&T in the form of payments for services? Or "forced" to use phones compatible with AT&T's networks?

    Give me a break.

    Arbitration is just another form of using neutral third parties to settle disputes, one that can be less expensive and more practical than resorting to US courts, so these contracts specify that means of settling any disagreements that come up.

    It's just a feature of the service AT&T is offering here, and customers can tak

    • There exist localities where the only affordable internet service is from AT&T. My hometown is one of them. Comcast pulled out a little more than a decade ago because they didn't want to spend the money upgrading their inadequate infrastructure.

      There are many other small towns around the area that I live in that have similar situations in regards to Internet access.

      Internet access has become necessary to function in our modern world, so I can see an argument being made that forced arbitration is an abus

  • by eddeye ( 85134 ) on Tuesday July 04, 2017 @05:56PM (#54743997)

    It's true, US allows private arbitration when many countries don't. It's a by-product of our legal system.

    Litigation in the US is both more expensive and more common than in most other countries. It has been designed to be more forgiving, permit broader latitude in developing a case. The idea is to allow greater access to the courts for poor and disadvantaged groups.

    US courts allow more discovery (forcing opposing party to turn over documents) than most countries. Some cases are very hard to prove, particularly discrimination cases. So we give plaintiffs ample time and opportunity to compel discovery and uncover documents to prove their case.

    Discovery is very expensive. All documents have to be reviewed by attorneys before being handed over, and reviewed by attorneys after they're received. This adds up to many many billable hours.

    Further, each party typically pays their own legal costs in the US. In other countries, the loser of the litigation pays all the legal costs. This discourages frivolous litigation. The US system permits and in some ways encourages such behavior.

    All this means that litigation is both more costly and more frequent in the US than elsewhere. US companies are tired of dealing with frivolous litigation and "nuisance suits", designed to get a quick payout settlement. Companies use the Federal Arbitration Act (FAA) to alleviate these problems by "opting out" of federal courts.

    That's not how it was supposed to be. The FAA was originally intended as a way for businesses to resolve disputes among themselves more quickly and cheaply with arbitration, since the federal courts are clogged as a result of permissive litigation rules. It was never meant to be a weapon for companies to immunize themselves against suits from their customers.

    But that's why we have arbitration in the US when many other countries wouldn't stand for it. Frankly they never needed it, because litigation is less frequent, less expensive, and the loser usually pays the entire cost. Hooray for freedom. :/

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