Class Actions Limited as U.S. Supreme Court Supports AT&T

Wednesday, 27 Apr 2011 02:01 PM

 

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A divided U.S. Supreme Court reinforced the ability of businesses to channel customer complaints into arbitration, ruling that companies can block consumers from pressing those claims as a group.

The court, voting 5-4 along ideological lines, sided with an AT&T Inc. unit in a fight with two customers whose contract requires them to press any claims individually. The majority said that part of the contract can be enforced because a federal arbitration statute trumps a California law that would have invalidated the provision.

“Arbitration is poorly suited to the higher stakes of class litigation,” Justice Antonin Scalia said for the court.

The case could affect tens of millions of arbitration agreements in California alone, according to court documents. The ruling may also help companies in the 20-plus states that either restrict or bar companies from including class-action bans in consumer arbitration accords.

Businesses say class-action requirements undermine the cost savings that arbitration offers. Amazon.com Inc., Earthlink Inc., DirecTV Inc., Comcast Corp., Dell Inc. and the U.S. Chamber of Commerce all filed briefs supporting AT&T.

The case is AT&T Mobility v. Concepcion, 09-893.

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