Comcast can’t use their mandatory arbitration clause to keep its Georgia customers from obtaining class-action status in a lawsuit that alleges Comcast inappropriately collected too many franchise fees. The amount that was improperly collected (about $11 a subscriber) isn’t enough to warrant a bunch of individual lawsuits, so Comcast thought it could get away with it by citing its mandatory arbitration clause forbidding class-action lawsuits. It worked at first, but now the 11th Circuit Court is having none of it.
The 11th Circuit Court of Appeals has ruled that the class-action prohibition is “unconscionable,” and therefore it cannot be enforced. From the CL&P Blog:
The court held that as applied to a claim such as the one in this case, the prohibition on class actions is unconscionable because “[w]ithout the benefit of a class action mechanism, the subscribers would effectively be precluded from suing Comcast” for the violations at issue. As the court explained, “[t]he cost of vindicating an individual subscriber’s claim, when compared to his or her potential recovery, is too great.” Permitting Comcast to avoid litigation through the class-action waiver, the court held, would “allow Comcast to engage in unchecked market behavior that may be unlawful. Corporations should not be permitted to use class action waivers as a means to exculpate themselves from liability for small-value claims.” (emphasis added).
Boo mandatory arbitration clauses.
This act follows a ruling by the California Supreme Court that Circuit City could not enforce a clause that prevented its workers from seeking class-action status in a lawsuit against them, and, of course, the recent ruling by the 9th Circuit Court that prevented Cingular from dropping the class-action ban hammer on customers suing them in California.
Unconscionable is officially the word of the day.