U.S. Chamber Of Commerce Paying People $2,000 To Pretend Binding Arbitration Is Good

from the tilted-playing-field dept

For years, AT&T worked tirelessly to erode its customers' legal rights, using mouse print in its terms of service preventing consumers from participating in lawsuits against the company. Instead, customers were forced into binding arbitration, where arbitrators, chosen and paid by the companies under fire, unsurprisingly rule in favor of companies more often than not. Initially, the lower courts derided this anti-consumer behavior for what it was, noting that however brutally flawed the class action is, binding arbitration, at least the way we let companies design it, in many ways made things worse.

But these lower court roadblocks quickly evaporated when the Supreme Court ruled in 2011 (Mobility v. Concepcion) that what AT&T was doing was perfectly OK. While lower courts saw this as an "unconscionable" abuse of consumer rights and the law, the Supreme Court bought into the ongoing myth that binding arbitration is a hyper-efficient, modern alternative to class actions. In reality, it shifted things to a form of binding arbitration that was costly, lopsided, and cumbersome for consumers, and less transparent for those used to visiting Pacer to dig up legal histories.

Fast forward to a few years ago, when a growing number of companies and services (like Fairshake) began streamlining the arbitration process, making it easier and less expensive for consumers (and yeah, class action lawyers). This shifted the balance of power back toward consumers, and starting in 2018 or so companies like Uber, AT&T and Comcast began to complain they were being swamped with arbitration feuds.

So now we're seeing another sea change. Now, even giants like Amazon are being forced to take consumer complaints back to the courtroom, in part because a system they constructed to dodge accountability is no longer helping them do that.

At the same time, company lobbyists are firing up their opposition to the Forced Arbitration Injustice Repeal (FAIR) Act, which would (as the name implies) prohibit the practice in several sectors. The bill has already passed the House, and to prevent it from passing in the Senate companies have been busy cultivating phony "grass roots" (astroturfed) opposition to the bill. That usually involves using some proxy org (in this case the U.S. Chamber of Commerce) to throw money at people to write (or just support) op-eds in papers around the country insisting how wonderful binding arbitration is:

"The pro-arbitration op-ed was already written and included in the body of the email. The op-ed calls arbitration “a relatively cheap and fast process” in a “much more relaxed” environment than a courtroom, which “could soon be eliminated if plaintiffs’ lawyers have their way.” The last line makes its objective clear: “Arizona’s workers and consumers can’t afford for Senators Sinema and [Mark] Kelly to allow [the FAIR Act] to happen."

As with most campaigns of this kind (they're pretty common in telecom), it involves reaching out to credible people to see if they'd willing to sell their principles downstream for some cash:

"Late last week, David Chami, an Arizona attorney who specializes in consumer protection, received an email from Drew Johnson, who identified himself as working with the U.S. Chamber of Commerce. Johnson offered Chami $2,000 if he could get one of his clients to sign their name to an op-ed opposing the Forced Arbitration Injustice Repeal (FAIR) Act, a bill in Congress."

You know you have a sound argument when you have to pay people to support it. There's so much valid disdain against the class action process (which usually provides lawyers a new boat and plaintiffs a $20 gift certificate to Arby's if they're lucky), it's not hard to lean on that to nab support for binding arbitration. But that in and of itself doesn't mean binding arbitration is good.

While conceptually the idea of binding arbitration isn't terrible, the way it has been implemented in the United States is an incomprehensible mess. It reduces the chance of a fair hearing of consumer grievances and makes it as annoying as possible for consumers to challenge corporate power. That's why surveys tend to suggest broad, bipartisan support for eliminating the practice. Yeah, the traditional class action system is also a hot mess. But replacing it with something less effective and more annoying was never quite the solution many companies pretended it was. And now that awareness of this fact is growing, they're getting a bit nervous.

Filed Under: arbitration, arizona, astroturfing, binding arbitration, class action lawsuits, opeds
Companies: us chamber of commerce

Corporations Are Being Forced To Take Consumer Complaints Back To Court After Arbitration Push Backfires Spectacularly

from the the-devil-you-know dept

For years, AT&T worked tirelessly to erode its customers' legal rights, using mouse print in its terms of service preventing consumers from participating in lawsuits against the company. Instead, customers were forced into binding arbitration, where arbitrators, chosen and paid by the companies under fire, unsurprisingly rule in favor of companies more often than not. Initially, the lower courts derided this anti-consumer behavior for what it was, noting that however brutally flawed the class action is, binding arbitration, at least the way we let companies designed it, in many ways made things worse.

But these lower court roadblocks quickly evaporated when the Supreme Court ruled in 2011 (Mobility v. Concepcion) that what AT&T was doing was perfectly OK. While lower courts saw this as an "unconscionable" abuse of consumer rights and the law, the Supreme Court bought into the ongoing myth that binding arbitration is a hyper-efficient, modern alternative to class actions. In reality, it shifted things to a form of binding arbitration that was costly, lopsided, and cumbersome for consumers, and less transparent for those used to visiting Pacer to dig up legal histories.

Fast forward to a few years ago, when a growing number of companies and services (like Fairshake) began streamlining the arbitration process, making it easier and less expensive for consumers (and yeah, class action lawyers). This shifted the balance of power back toward consumers, and starting in 2018 or so companies like Uber, AT&T and Comcast began to complain they were being swamped with arbitration feuds. Now, a year later, even giants like Amazon are being forced to take consumer complaints back to the courtroom, in part because a system they constructed to dodge accountability is no longer helping them do that:

"With no announcement, the company recently changed its terms of service to allow customers to file lawsuits. Already, it faces at least three proposed class actions, including one brought May 18 alleging the company’s Alexa-powered Echo devices recorded people without permission.

The retail giant made the change after plaintiffs’ lawyers flooded Amazon with more than 75,000 individual arbitration demands on behalf of Echo users. That move triggered a bill for tens of millions of dollars in filing fees, according to lawyers involved, payable by Amazon under its own policies."

To be very clear, the existing class action system is broken as well, usually doling out relatively pathetic payouts to impacted consumers, while class action lawyers get new boats. But the premise that the binding arbitration system (at least as implemented) was somehow better, at least in the way we implemented it in the States, has never been true. If you ask lawyers that represent companies like Amazon and AT&T, the fact that folks developed new systems that shifted the balance of power ever so slightly back toward consumers and class action lawyers is seen as terribly unfair:

"It has the potential to be pretty unfair to the company,” said Patrick Bannon, an employment lawyer at Seyfarth Shaw LLP who has represented clients facing mass arbitrations. The arbitration fees put intense pressure on businesses to settle, he said, “whether the claim is valid or not."

But if you ask the folks actually fighting for consumers (and not all of them are ambulance chasers), they see it as fair play:

"Companies thought they were getting out of liability altogether,” by adding arbitration clauses, said Chicago lawyer Travis Lenkner, whose firm filed the majority of the Amazon claims. “Now they’re seeing exactly what they bargained for, and they don’t like it."

In short, corporations (beginning with AT&T) spent the better part of the last decade fighting for an arbitration system that resulted in fewer payouts, fewer successful complaints, and less overall transparency. And while happy about that initially, the second the internet and technology shifted the balance of power in the other direction, they were eager to flee back to the devil they knew. It should be curious to see if other giants like AT&T also begin stripping binding arbitration out of their end user agreements, or if this is just a temporary setback on the path toward less accountability.

Filed Under: arbitration, binding arbitration, class action, class action lawsuits, consumer rights, consumers

Corporations Not Happy Innovators Have 'Hacked' The Crappy U.S. Binding Arbitration System

from the dysfunction-junction dept

For years, AT&T worked tirelessly to erode its customers' legal rights, using mouse print in its terms of service preventing consumers from participating in lawsuits against the company. Instead, customers were forced into binding arbitration, where arbitrators chosen and paid by the companies under fire unsurprisingly rule in favor of the party likely to hire them again a huge percentage of the time. Initially, the lower courts derided this anti-consumer behavior for what it was, critics highlighting that however brutally flawed the class action system can be, binding arbitration, at least the way we let companies design it, in many ways made things worse.

But these lower court roadblocks quickly evaporated when the Supreme Court ruled in 2011 (Mobility v. Concepcion) that what AT&T was doing was perfectly OK. While lower courts saw this as an "unconscionable" abuse of consumer rights and the law, the Supreme Court bought into the ongoing myth that binding arbitration is a hyper-efficient, modern alternative to class actions. The Supreme Court reiterated its position in 2015, and now most companies employ similar language in their terms of service fine print. Thanks, AT&T.

Shockingly, despite the telecom industry being a clear and obvious train wreck rife with endless examples of clear billing fraud, users aren't finding arbitration provides an effective path to justice. Despite having a combined 330 million video, voice, and broadband customers, just 30 people took AT&T and Comcast to arbitration last year. Driven in part by this, folks in recent years have been trying to find ways to help simplify the complicated process for pissed off consumers and employees, launching services like Radvocate and Fairshake.

As the NY Times notes, these systems are unsurprisingly driving up arbitration complaints as the process is streamlined and made more affordable for participants (consumers and employees often can't afford to take on corporations individually):

"Mr. Lidow, a Silicon Valley entrepreneur with a law degree, figured there had to be more people upset with their cable companies. He was right. Within a few months, Mr. Lidow found more than 1,000 people interested in filing arbitration claims against the industry. About the same time last year, Travis Lenkner and his law partners at the firm Keller Lenkner had a similar realization. Arbitration clauses bar employees at many companies from joining together to mount class-action lawsuits."

While the original arbitration idea may have been sound, corporations designed their vision of it with an eye on minimizing costs, tap dancing around accountability, and making it a costly uphill climb for employees and customers to battle them. And now that folks are actually trying to use the system, they're unsurprisingly not excited about it:

"There is no way that the system can handle mass arbitrations,” said Cliff Palefsky, a San Francisco employment lawyer who has worked to develop fairness standards for arbitration. “The companies are trying to weasel their way out of the system that they created."

AT&T, which helped kick this whole shift off with its sneaky bullshit mouse print, has been one of several corporations to hype binding arbitration as a more efficient alternative to class actions. Yet once folks actually began using the process thanks to these new services, companies like AT&T were caught flat footed:

"The companies were caught off guard. It took six months for many of the claims to move through arbitration. And some were still making their way through the system two years later. To Mr. Lidow, that seemed like a long time for two of the nation’s largest companies, with ample legal resources, that have vouched publicly for the efficiencies of arbitration over court."

Again yes, the class action system is broken, more often than not delivering new boats to attorneys and very little to those who are treated unfairly. But class actions most certainly have driven substantive change over the years (such lawsuits stopped cellular carriers from charging you long term contract early termination fees, for example). And the replacement system corporations built to replace the justice system is proving, as many predicted, to be decidedly worse.

Filed Under: arbitration, binding arbitration, class action lawsuits, lawsuits
Companies: at&t

AT&T Uses Binding Arbitration Mouse Print To Kill Throttling Class Action

from the legal-tap-dancing dept

For years, AT&T used contract fine print to prohibit its customers from suing it. Instead, users were forced to participate in binding arbitration, a system whereby company-employed arbitrators weigh the evidence -- and unsurprisingly rule in favor of the company employing them a dramatic majority of the time. Initially, lower courts repeatedly derided this behavior as an "unconscionable" curtailing of consumer rights and abuse of the law. But in 2011 the Supreme Court's AT&T Mobility v. Concepcion ruling declared that what AT&T was doing was perfectly ok, resulting in countless companies now following AT&T's lead.

However screwed up the class action process may be, the practice of binding arbitration is notably worse. But AT&T's pioneering in the space continues to pay notable dividends. Last month, for example, U.S. District Court Judge Edward Chen dismantled a class action lawsuit filed against AT&T for the company's practice of misleadingly advertising "unlimited" wireless broadband service, then throttling customers after just a few gigabytes of consumption:

"U.S. District Court Judge Edward Chen said in his ruling that the wireless consumers who are suing AT&T all signed contracts that call for arbitration of disputes on an individual basis. Chen's ruling, quietly issued last week, means that AT&T won't face a class-action for allegedly duping people by selling them "unlimited" data plans, but throttling them after they hit a monthly cap. The consumers can still proceed with individual arbitrations, but doing so often is prohibitively costly."

While AT&T may have dodged a class action, it's still being held accountable, though in a notably less expensive fashion. The company has already faced a $100 million fine from the FCC, and is currently trying to fend off an ongoing lawsuit by the FTC. In that case, AT&T continues to ironically argue that because the FCC reclassified AT&T as a common carrier under Title II last year, the FTC no longer has authority over AT&T. That's something the courts, including Chen, continue to deny:

"AT&T is arguing that the FTC has no jurisdiction to proceed, because broadband is now classified as a "common carrier" service. The FTC has no authority over common-carrier services. Chen rejected AT&T's position, ruling that broadband wasn't considered a common carrier service until the Federal Communications Commission enacted net neutrality rules in 2015. “Once the Reclassification Order of the Federal Communications Commission ... goes into effect, that will not deprive the FTC of any jurisdiction over past alleged misconduct as asserted in this pending action,” he wrote."

You'll recall that AT&T fought tooth and nail against the FCC's reclassifying of ISPs under Title II. Now AT&T's trying to argue that it's that very reclassification that means the FTC can't hold it accountable for throttling. This is after AT&T successfully used a few paragraphs of fine print to prevent customers from directly holding the company accountable via class action. AT&T now makes it clear that its "unlimited" users will be throttled after 22 GB of consumption, but the sheer volume of billable hours and paperwork AT&T's generating just to defend past false advertising practices remains downright staggering.

Filed Under: arbitration, binding arbitration, class action, throttling
Companies: at&t

Supreme Court Again Makes It Clear: Companies Can Erode Your Legal Rights Via Mouse Print

from the idiotic-precedent dept

For years, AT&T worked tirelessly to erode its customers' legal rights, using mouse print in its terms of service preventing consumers from participating in lawsuits against the company. Instead, customers were forced into binding arbitration, where arbitrators employed by the company unsurprisingly rule in their employer's favor a huge percentage of the time. Initially, the lower courts derided this greasy behavior for what it was: an attempt by AT&T to eliminate customer legal rights and save a buck. And with AT&T's massive history of fraud, you can imagine AT&T was looking to save quite a bit.

But in 2011 the Supreme Court's AT&T Mobility v. Concepcion ruling declared that what AT&T was doing was perfectly ok. While lower courts saw this as an "unconscionable" abuse of consumer rights and the law, the Supreme Court bought into the ongoing myth that binding arbitration is a hyper-efficient, modern alternative to class actions. And again this week, the highest court in the land again proclaimed that this kind of sleazy fine-print is perfectly ok.

For a few years now DirecTV (ironically now owned by AT&T) customers have been trying to sue the satellite provider over its early termination fee (ETF) policies. A California court had invalidated the binding arbitration clause in DirecTV's contract with customers, since DirecTV's contract language stated that such a provision was unenforceable if the "law in your state" contradicted it. Unsurprisingly, this week's 6-3 ruling in DirecTV Inc. v. Imburgia (pdf) reiterated the 2011 federal ruling trumps all:

"No one denies that lower courts must follow this Court’s holding in Concepcion. The fact that Concepcion was a closely divided case, resulting in a decision from which four Justices dissented, has no bearing on that undisputed obligation. Lower court judges are certainly free to note their disagreement with a decision of this Court. But the “Supremacy Clause forbids state courts to dissociate themselves from federal law because of disagreement with its content or a refusal to recognize the superior authority of its source."

If you're solely looking at the precedent set by Concepcion, that of course makes legal sense. Breyer (who dissented on the original ruling) is simply telling lower courts they must adhere to the federal ruling, even if they don't agree with it. Of course that doesn't magically make the original ruling good, nor does it obfuscate the fact that the Supreme Court is just as polluted as Congress when it comes to partisan patty cake and corporate influence.

In short, the Supreme Court bought into the myth that arbitration is a hyper-efficient alternative to the greed of class action lawsuits, even though there's an endless ocean of data highlighting how that's simply not the case. Class action lawsuits are indisputably obnoxious for all the usual reasons (I got $1 and the lawyer got a new boat!). But occasionally class actions do benefit consumers and force change (especially on the telecom front), and until the people complaining construct a better mouse trap, class actions are often the best bad idea we've got.

The Supreme Court's alternate-reality belief that arbitration is a sane alternative is notably worse. Since AT&T's original win, countless companies from banks to video game vendors now foist binding arbitration upon consumers, forcing them into a rigged apparatus where consumers lose the vast majority of the time, companies pay smaller amounts then ever before, and there's less meaningful change than ever. Thanks to the Supreme Court, that's something we'll all get to enjoy for many, many years to come.

Filed Under: arbitration, binding arbitration, class action, supreme court
Companies: directv

The Judicial System May Be Bad, But The Privatized Judicial System Of Arbitration Is Worse

from the bad-news-all-around dept

Back in 2011, we wrote about a troubling ruling in the Supreme Court in AT&T Mobility v. Concepcion, the case which basically said that it's perfectly fine for businesses to put in place "binding arbitration" clauses, that take away people's rights to take a company to court over some sort of wrongdoing. As I noted at the time, ever since taking a series of classes on arbitration in college, I've been fascinated with the process, which sounds like a good idea. But it's yet another case where theory and reality don't necessarily match up.

The theory is that arbitration is a cheaper and more efficient way to deal with disputes between two private parties. Rather than submitting yourself to an overburdened, slow court system, with tons of rules and limtiations, you bring in a "neutral" arbitrator who can help go through both sides of the story and decide who is right. The problem is in the reality. In cases between businesses and individuals, businesses win nearly 97% of the time. Think about that for a second. It's not hard to see why: arbitrators are usually chosen jointly by both parties, but the companies are the ones who are going to be going back for more arbitration over and over again, and if an arbitrator rules against them, they won't even be on future lists at all. It doesn't take a genius in game theory to recognize that the arbitrator will be under tremendous pressure to side with the company, and the stats support that.

This weekend, the NY Times took a deep dive into the mess that has become this private judicial system known as binding arbitration, demonstrating horror story after horror story of how the system has failed ordinary people to the benefit of large corporations. Basically, the fears I wrote about four and a half years ago have become true. As we noted at the time, we agree that the class action judicial system in the US is broken, but replacing it with private arbitration is quite clearly a much worse solution that would certainly lead to companies regularly being able to get away with horrific behavior, leaving individuals with basically no recourse.

The Times story further supports the idea that arbitrators are under pressure to side with companies, even getting a few to admit that:

But in interviews with The Times, more than three dozen arbitrators described how they felt beholden to companies. Beneath every decision, the arbitrators said, was the threat of losing business.

Victoria Pynchon, an arbitrator in Los Angeles, said plaintiffs had an inherent disadvantage. “Why would an arbitrator cater to a person they will never see again?” she said.

The article is full of story after story after story of crazy things happening in arbitration situations that would never be allowed in real courts.

Behind closed doors, proceedings can devolve into legal free-for-alls. Companies have paid employees to testify in their favor. A hearing that lasted six hours cost the plaintiff $150,000. Arbitrations have been conducted in the conference rooms of lawyers representing the companies accused of wrongdoing.

Winners and losers are decided by a single arbitrator who is largely at liberty to determine how much evidence a plaintiff can present and how much the defense can withhold. To deliver favorable outcomes to companies, some arbitrators have twisted or outright disregarded the law, interviews and records show.

In one of the key examples (though there are many) in the article, this story is revealed:

For Ms. Pierce, the most astounding moment came when her lawyers asked Mr. Kalogredis to impose sanctions on the defense for breaking the rules of discovery and destroying evidence. He fined the defense $1,000 after investigating the matter, then billed Ms. Pierce $2,000 for the time it took him to look into it.

There's a lot more craziness as you read through the article. Again, I'm no fan of class action lawsuits, generally speaking. The vast majority of them tend to be boondoggles to help lawyers cash out, rather than actually help the members of the class. But that problem can be dealt with in other ways rather than forcing people to give up their right to petition a court in a dispute through a "binding arbitration agreement" in a clickthrough terms of service no one actually reads.

As one lawyer in the article notes, the whole arbitration process is corrupt because it's forced on people. If two parties willingly agree to go to arbitration, that's one thing. But that's not what's happening.

And this is a problem that isn't just about companies and individuals. As we've been discussing, trade agreements like the TPP and TTIP have a thing we've been calling corporate sovereignty, and which is officially called "Investor State Dispute Settlement" (ISDS). In reality, it's just an "arbitration" system for disputes between companies and countries -- where the arbitrators will often face the same pressures to side with the companies over the countries (at least one hopes that countries will have slightly more bargaining power). As the NY Times article details, companies have learned to play this game pretty well over the last few years, and they must be excited about the possibilities to do it on a wider scale:

Unfettered by strict judicial rules against conflicts of interest, companies can steer cases to friendly arbitrators. In turn, interviews and records show, some arbitrators cultivate close ties with companies to get business.

Some of the chumminess is subtler, as in the case of the arbitrator who went to a basketball game with the company’s lawyers the night before the proceedings began. (The company won.) Or that of the man overseeing an insurance case brought by Stephen R. Syson in Santa Barbara, Calif. During a break in proceedings, a dismayed Mr. Syson said he watched the arbitrator and defense lawyer return in matching silver sports cars after going to lunch together. (He lost.)

Other potential conflicts are more explicit. Arbitration records obtained by The Times showed that 41 arbitrators each handled 10 or more cases for one company between 2010 and 2014.

The court system is far, far, far from perfect. But a secretive, private judicial system that is rigged to companies? That's much, much worse.

Filed Under: arbitration, binding arbitration, private judicial system, tilted scales

General Mills Says If You 'Like' Cheerios On Facebook, You Can No Longer Sue

from the likewrap dept

Three years ago when the Supreme Court ruled in AT&T Mobility v. Concepcion, basically allowing binding arbitration clauses in contracts to exclude class action suits, we noted that it was an unfortunate pitting of a broken class action system against a broken arbitration system. Both arbitration and class action lawsuits may have some good features -- and the concepts behind each sound good, but both have been abused to extreme levels. On the class action side, often these lawsuits have little to do with righting wrongs, and very much to do with big paydays for lawyers (and some companies even turn class action lawsuits into marketing opportunities).

On the arbitration side, while the theory of having a neutral third party settle the dispute without having to go through an expensive litigation process certainly sounds good, the reality is quite different. Since arbitrators are hired, and large companies are frequent employers, arbitrators have very strong incentives to side with those companies, in order to make sure they'll be hired in the future. When you have one party who is likely to be a frequent employer, and another who will only engage in the transaction once, guess where the bias is going to fall. And, indeed, multiple studies have shown that's exactly what happens. In one case 94% of rulings went against consumers. Another study showed that companies that regularly use arbitration get higher awards.

So neither side in that fight necessarily could be said to "represent the good guys." However, as we noted when the Supreme Court ruling came out, it seemed likely that this would lead to companies putting arbitration clauses absolutely everywhere. At the time, we suggested a simple fix: have Congress make it clear that you can't give up your right to go to court based on a non-negotiated contract. And that still seems to make sense, but of course, nothing has actually been done.

It should come as little surprise, then, that the prediction of seeing companies put arbitration clauses absolutely everywhere is happening -- and to ridiculous levels. The NY Times has an article about how General Mills, makers of Cheerios, Chex and lots of other cereals, has updated some legalese on their own website to basically say if you do absolutely anything related to its cereals -- including liking them on Facebook, or buying them -- you give up your right to go to court and are agreeing to arbitration:

General Mills, the maker of cereals like Cheerios and Chex as well as brands like Bisquick and Betty Crocker, has quietly added language to its website to alert consumers that they give up their right to sue the company if they download coupons, “join” it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways.

Instead, anyone who has received anything that could be construed as a benefit and who then has a dispute with the company over its products will have to use informal negotiation via email or go through arbitration to seek relief, according to the new terms posted on its site.

In language added on Tuesday after The New York Times contacted it about the changes, General Mills seemed to go even further, suggesting that buying its products would bind consumers to those terms.

While one might argue that you get what you deserve when you "like" a cereal on Facebook, this still seems ridiculous and excessive. I can almost see the sense of saying if it's in a binding contract you sign as a subscriber (e.g., mobile phone service) such a clause can be considered legit, but something like this, which isn't even "clickwrap" but more "likewrap" can't possibly be legally binding. Not only has the person probably not read the details, from what's being said, this "binding arbitration" clause may appear on a website they've never visited at all. I can't see how that can or should be considered a true contract in any sense of the word.

Filed Under: arbitration, binding arbitration, binding terms, cheerios, class action, liking
Companies: general mills

Once Again, Court Says Telco Can't Force Arbitration Over A Lawsuit

from the been-there,-done-that dept

This is hardly the first time we've seen such a case. In fact, the issue of whether or not companies can force their consumers to go to binding arbitration (which sides with the company somewhere around 95% of the time) over filing a class action lawsuit has been decided in favor of the consumers' rights to file the lawsuits over and over and over again. So, it shouldn't come as a huge surprise that a court has told AT&T that it cannot force customers into binding arbitration rather than a class action lawsuit over bogus fees it charged.

Filed Under: arbitration, binding arbitration, class action
Companies: at&t

Who Do You Side With? Telco Lawyers And Binding Arbitrators Or Class Action Lawyers?

from the pick-a-side-and-hold-your-nose dept

There are times when you hear of lawsuits and you really don't know who to favor. In the latest such case, the Supreme Court has turned down an appeal from T-Mobile on an appeals court decision that said that T-Mobile's contract terms requiring "binding arbitration" are unenforceable if those contracts also ban class action lawsuits against the company. This doesn't mean the Supreme Court totally agrees with it, but it didn't find it worth getting involved at this point (often the Supreme Court will wait for different circuits to disagree on a point of law before weighing in -- but in the meantime, it appears that the Supreme Court is not upset by the lower court ruling).

As you probably know, many of the contracts you sign these days require binding arbitration, rather than the ability to go to court over a dispute. Companies like to claim this is because binding arbitration is faster and simpler, but it's really because arbitrators (who are hired by the company) side with the company over 95% of the time. At the same time, the companies also try to block you from being a part of any class action lawsuit, and it's this combination that the court found problematic.

The real issue here is pretty straightforward: companies are trying to get you to give up most of your rights contractually -- but not through any sort of negotiation. They're basically trying to ram through agreements in the fine print that you'll never read that take away any sort of remedy you might have against the company in case the company does something wrong. While a fair contract is one thing, these contracts are not fair; they are not negotiable, and they're often not at all clear. It seems that companies are taking them too far, often depriving customers of perfectly reasonable rights -- so it seems like a good thing that the courts are pushing back a little.

Filed Under: binding arbitration, class action, supreme court
Companies: t-mobile