The US Supreme Court, in a split 5 to 4 decision, has ruled that corporations can avoid class action lawsuits by simply including in their standard service or other customer agreement that the consumer must submit all disputes to arbitration. Although in principle, the decision enforces contractual agreements between parties, the real effect is that it will enable corporations to dodge the bullet, because in cases where the damages are nominal to individual consumers, but amount to large numbers when considered as a class, individual consumers would in all likelihood not bother to enforce their rights when, on balance, the costs associated with bring the arbitration action to pursue nominal damages, would far outweigh the benefit of any potential arbitration award. The net result for corporations would be far fewer claims and payouts to redress consumer disputes. Here is a link to the court opinion: AT&T MOBILITY LLC v. CONCEPCION
So, for business owners and senior management, this is a no brainer! Modify your standard form agreement, if you have not already done so, to include arbitration provisions and prohibit class actions. And if you are the average consumer, this is one more right that you are giving away in the fine print of those standard form agreements that you don’t bother to read anyway!
Originally Posted April 28, 2011