Supreme Court Rules That Companies Can Block Customers' Class-Action Suits

UPDATE: AT&T explains how this decision is actually all for the benefit of the consumer.

In a huge blow to peeved consumers, the Supreme Court ruled earlier today that companies can block customers from joining together in a class-action suit by forcing each complaint into arbitration.

The ruling came about as a result of a lawsuit filed against AT&T by a consumer in California who alleged that the company acted deceptively by advertising discounts on cell phones but charged taxes on the full retail price.

When the suit sought class-action status, AT&T argued that a clause in the company’s contract requires that the incident be resolved by arbitration and thus could not move forward as a class-action suit.

A district court and circuit court both sided against AT&T in the matter, but the Supremes decided with a vote of 5-4 that companies can include such mandatory binding arbitration clauses in their contracts.

“Arbitration is poorly suited to the higher stakes of class litigation,” wrote Justice Antonin Scalia in the court’s decision.

Arguing for the dissent, Justice Stephen G. Breyer wrote that allowing a company to require arbitration in order to block class-action suits gives that business the ability to insulate itself “from liability for its own frauds by deliberately cheating large numbers of consumers out of individually small sums of money.”

Class-Action Lawsuits Filed Against Apple, AT&T Over iPhone
Washington Upholds ATT Customer’s Right To Class Action

Companies can block customers’ class-action lawsuits, Supreme Court rules [L.A. Times]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.