Upholding Class Action Waivers and why you should care

Why the Supreme Court’s Decision Upholding Class Action Waivers is Wrong and Why You Should Care

By Sean Carnathan

In the recent decision AT&T Mobility LLC v. Concepcion, Slip Op. No. 09-893, 563 U.S. ___ (April 27, 2011), the U.S. Supreme Court drove a big wooden stake right through the heart of class action arbitration, effectively putting an end to them under existing law.

The holding of the majority opinion is that because the Federal Arbitration Act (“FAA”) requires enforcement of agreements to arbitrate, the well-established California law that most collective-arbitration waivers are unconscionable is preempted by federal law. But the majority’s reasoning is premised on a total fallacy, namely that “[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.”

That is just plain not so. The Court is allowing the FAA to be used as a Trojan horse to engraft other terms, onerous to consumers, onto arbitration clauses.

Why should you care? Because legal proceedings are expensive, and there are many wrongful acts that no one can afford to prosecute individually. That’s the whole point to a class action — to band together many small claims into one big claim worth fighting about. Are they subject to abuse? Of course, any powerful tool is. But that doesn’t mean that the solution is to eliminate the tool altogether.

After the AT&T decision, you can safely bet that class-action waivers in arbitration clauses will multiply like bunnies in all kinds of contracts.

O’Connor, Carnathan and Mack LLC is a commercial litigation law firm located in Burlington, Massachusetts that helps companies and individuals resolve complex business disputes, insurance coverage disputes, and personal injury claims. Our legal team includes top-flight commercial litigation attorneys as well as dedicated personal injury lawyers. Our clients include Fortune 500 companies as well as closely-held businesses and astute individuals. We believe every client deserves the finest representation possible for a fee they can afford. Accordingly, we offer our services at rational hourly rates and on a contingency fee basis, devise our strategies to fit the amount at stake, and are open to creative alternative fee arrangements as well. Our attorneys serve clients in Middlesex County and Suffolk County, as well as throughout Massachusetts and New England. Contact us to learn more.