Vincent and Liza Concepcion purchased a cell phone plan from AT&T, signing a two year contract, a contract that also provided for arbitration of all disputes between parties. This contract came with cell phones that AT&T advertised as free, but the Concepcions were charged $30.22 in taxes. The Concepcions then sued the company for fraud. Their case was consolidated with another as a class action suit.
The LA Times reports, “AT&T moved to compel arbitration under the terms of the contract. The Federal Court of Appeals, however, rejected this because California law is clear that such a provision is not enforceable since arbitration between two parties is no substitute for a class-action remedy.”
But in a 5-4 vote the Supreme Court reversed the decision and upheld the arbitration clause in the customer agreement. Justice Antonin Scalia, writing for the majority, said that “class arbitration sacrifices the principle advantage of arbitration – it’s informality – and makes the process slower, more costly, and more likely to generate procedural morass than final judgment.”
Justice Stephen Breyer said in dissent, “What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.33 claim?” He made clear that many rational people would try their own case for that amount if it meant “filling out many forms that require technical legal knowledge or waiting at great length while a call is placed on hold.”
The LA Times reiterates this, saying that “the practical reality is that no such claim is ever likely to be brought…The notion that an injured person has a right to his or her day in court is deeply ingrained in American culture. But the proliferation of arbitration agreements, and the Supreme Court’s aggressive enforcement of them, means that it is increasingly a myth that an injured person can sue.”
