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Supreme Court ruling lets companies staunch class-action suits

A recent Supreme Court ruling on a Southern California case allowing companies to force customers to file complaints individually rather than on a class-wide basis is a big victory for wireless carriers and other mobile corporations.

In the past, consumers were allowed to come together as seen in cases such as the ones brought against Twentieth Century Fox, AT&T Mobility and Verizon for false advertising. Having consumers file claims on an individual basis will mean disputes of only a few dollars.

?In AT&T Mobility LLC vs. Concepcion, a class action brought by cellular telephone customers against AT&T mobile, the United States Supreme Court affirmed that the arbitration dispute resolution remedy with a class action waiver set forth in the parties? contract was enforceable,? said Andrew Lustigman, principal attorney and owner of The Lustigman Firm P.C., New York.

?Under the arbitration provision, plaintiffs could not arbitrate their claims on a class-wide basis,? he said. ?Disagreeing with the lower courts who found that such an agreement would be unconscionable under state law, the Supreme Court reversed.  

?Instead, the Court found that the Federal Arbitration Act, which reflects a liberal federal policy in favor of arbitration, trumped state law to the contrary. The Court found that the arbitration provision was enforceable and would bar class-wide relief.?  

Banning class-actions
In the AT&T case a couple from California filed a complaint over a $30 charge on their wireless bill.

California courts said that other consumers with similar complaints could join together to bring a class-action lawsuit against AT&T.

However, the Supreme Court ruled against this on April 27, claiming that the Federal Arbitration Act trumps state laws.

With this decision, companies can require consumers to sign arbitration agreements. These agreements can block class-action claims.

The ruling may mean an end to small claims involving products or services. Think about it: What lawyer would represent a consumer filing a complaint for $30?

?False advertising claims against marketers on an individualized basis typically involve disputes over only a few dollars,? Mr. Lustigman said. ?However, on a potential class basis can result in significant exposure. 

?Given the holding in Concepcion, marketers should consider the availability of alternative dispute resolution procedures with class-action waivers in their contractual agreements with customers,? he said. ?Marketers, however, should not expect that a blanket mandatory arbitration requirement will automatically result in enforcement of the arbitration provision. 

?Rather, marketers should detail consumer-friendly dispute resolution opportunities for a customer to resolve a claim cheaply and expeditiously on an individualized basis and to make sure that an arbitration component is fair and reasonable.?