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AT&T Mobility v. Concepcion

AT&T Mobility v. Concepcion

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Published by Public Citizen
Editorial board / reporter memo for AT&T v. Concepcion, which the U.S. Supreme Court will hear Nov. 9. The case has frightening implications for consumers. Learn more at http://wp.me/pauxl-1o7
Editorial board / reporter memo for AT&T v. Concepcion, which the U.S. Supreme Court will hear Nov. 9. The case has frightening implications for consumers. Learn more at http://wp.me/pauxl-1o7

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Published by: Public Citizen on Oct 28, 2010
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Oct. 28, 2010 Contact: Angela Bradbery (202) 588-7741Dorry Samuels (202) 588-7742
Will the U.S. Supreme Court Allow Corporations to Rub OutConsumer and Employee Class Actions?
We may be facing the death of class actions. The U.S. Supreme Court will soon hear a case that couldallow companies to eradicate consumer and employee class actions simply by inserting a provision inthe fine print of their take-it-or-leave-it contracts. The case,
 AT&T Mobility v. Concepcion
, could allowcorporations to bar individuals from banding together in class actions to pursue claims against them. If the court agrees with AT&T, then corporations effectively will be immune from accountability in courtfor a wide range of illegal or unfair practices they commit against customers and employees.The case, which is scheduled for oral argument on Tuesday, Nov. 9, has broad implications for civilrights, employment practices and consumer protection. The plaintiffs’ side is supported by 15 amicus briefs representing 24 consumer, employment rights and civil rights groups, several state attorneysgeneral and groups of leading law professors. The briefs are available athttp://pubcit.typepad.com/clpblog/concepcion/.Vincent and Liza Concepcion sued AT&T in 2006, alleging that the wireless carrier defrauded millionsof customers in California by advertising phones as “free,” then tacking on an undisclosed $30 chargefor the phone. If multiplied across millions of AT&T California customers, the $30 charge wouldamount to tens or hundreds of millions of dollars in allegedly wrongful gains. The vast majority of consumers will not initiate a formal legal action to recover $30. If AT&T can block class actions over this type of conduct, it can pocket hundreds of millions each year in unlawful gains from its customersnationwide.The Concepcions sought to bring a class action on behalf of consumers affected by AT&T’s practice.AT&T sought to dismiss the case by invoking an arbitration clause and class-action ban that it had placed in the Concepcions’ contract. The court rejected AT&T’s request, holding that the class-action ban was unconscionable under California law because it would exculpate the company fromaccountability for wrongdoing. Courts applying the contract law of 20 states have struck down class-action bans for the same reason – because they would function as a “get out of jail free” card for corporate wrongdoing.The Federal Arbitration Act (FAA) overrides state contract law that is hostile to or discriminatory
toward arbitration. Seeking to evade state contract law, AT&T inserts its class-action ban in a clausethat requires disputes to be resolved in binding arbitration. In this way, AT&T attempts to launder itsotherwise unenforceable class-action bans. The company wants the Supreme Court to break with all of the lower courts and hold that the class-action bans are protected by the FAA.
We urge you to editorialize against AT&T’s effort to eliminate class actions. Class actions must be preserved, especially for consumers and employees with claims too small to pursue individually.
Consumers and Employees Need Class Actions to Remedy Corporate Wrongdoing
Class actions often provide the only way for groups of people with similar, small-dollar claims to holdcorporations accountable for wrongdoing.● Many consumers and employees suffer losses from business misconduct that are smaller than thecost of litigating the claims, making it impractical or impossible to pursue the cases individually. Classactions enable consumers to pursue their small claims by sharing resources and spreading the costs of litigation.● Class actions give consumers notice of corporate wrongdoing that many never would havediscovered. Class actions then vindicate the rights of consumers and employees.● Class actions reduce retaliation and intimidation against individuals because most class members can benefit from the litigation without each individual having to openly challenge her employer or another corporate entity.● Class proceedings can expose wrongful institutional practices and remedy them for all individualsrather than a single one. Class actions have uncovered and forced an end to instances of widespreaddiscrimination in employment, fair housing, mortgage lending, automobile financing, insurance andother areas. Class actions also have compensated workers deprived of statutory rights such as overtime pay required by wage and hour laws.● Class actions supplement government efforts to protect consumers and employees from fraud,deceptive practices, and violations of their employment and civil rights. Government agencies lack theresources to police all corporate misconduct adequately. Class actions help fill the enforcement gap, providing a benefit to the public and reducing the strain on federal and state budgets.
AT&T Incorrectly Claims Its Arbitration Clause and Class-Action Ban are Consumer Friendly
Despite its efforts to block customers from taking it to court,
AT&T claims that its arbitration processis “consumer friendly.” The company’s arbitration clause offers attorneys’ fees and a “premium” payment of $7,500 to a consumer who wins more in arbitration than AT&T offers as a settlement. Thisargument is a sham for two reasons:(1) Very few consumers pursue claims in arbitration. One court found that of AT&T’s 70million-plus customers, only an “infinitesimal” number nationwide had pursued the company inarbitration or small claims court. In a five-year period, 2003-2007, fewer than 200 consumers brought
See, e.g.
Ting v. AT&T 
, 319 F.3d 1126 (9
Cir. 2003).

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