Supreme Court limits class actions

MSNBC's Bob Sullivan this morning wrote that "fine print in everyday consumer contracts can include provisions that require Americans to surrender their rights to file class-action lawsuits," according to a U.S Supreme Court ruling this past Wednesday, possibly having almost immediate impact on consumers' ability to fight against companies when they feel their rights have been violated.

The Associated Press, too, yesterday said the 5-4 ideological split, which evolved out of a dispute between AT&T Mobility and a California couple objecting to being charged around $30 in sales tax for what they were told was a free cell phone, is being called a crushing blow by consumer advocates.

"Businesses commonly require arbitration clauses in consumer contracts to protect them from facing their customers in court," the Associated Press article said. "The Supreme Court's decision – which holds that federal arbitration law trumps state laws that invalidate contracts banning class actions -- means that corporations now won't need to worry about consumers, shareholders or even employees banding together and fighting them using lawsuits or arbitration."

"The Federal Arbitration Act (FAA) was enacted in 1925 in response to widespread judicial hostility to arbitration agreements," the Court explained. "… Section 2, the 'primary substantive provision of the Act,' … We have described this provision as reflecting both a 'liberal federal policy favoring arbitration,' [ Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U. S. 1, 24 (1983)], and the 'fundamental principle that arbitration is a matter of contract,' [Rent-A-Center, West, Inc. v. Jackson, 561 U. S. ____ , ____ (2010) (slip op., at 3).] In line with these principles, courts must place arbitration agreements on an equal footing with other contracts, [Buckeye Check Cashing, Inc. v. Cardegna, 546 U. S. 440, 443 (2006), and enforce them according to their terms, [ Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 468, 478 (1989)] ….. Because it 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,' California's Discover Bank rule is preempted by the FAA [ Hines v. Davidowitz, 312 U. S. 52, 67 (1941)].

AT&T v. Concepcion, 09-893