AT&T v. Concepcion Supreme Court Ruling Bad News for Future Class Actions

April 28, 2011 -

Yesterday the Supreme Court of the United States ruled on AT&T v. Concepcion, a case that dealt with class action lawsuits. In light of the PlayStation security breach and the first class action suits being prepared, this decision could be bad news for consumers. To find out what impact this could have on any potential class action suits against Sony, we turn to Jennifer Mercurio, Vice President & General Counsel for the Entertainment Consumers Association (ECA). According to Mercurio, the ruling on AT&T v Concepcion is horrible news for consumers in general - and in particular – to PSN users who want to sue Sony as a group:

"AT&T v Concepcion is basically a death knell to class action lawsuits in the US. The 5-4 Supreme Court of the Unites States ruling invalidated a California law that attempted to limit contract arbitration clauses considered unfair to consumers. The decision, however, doesn’t stop disgruntled consumers from 'suing' a company for a real or perceived wrongs – like in the present PSN situation. Basically, the AT&T decision holds consumers to whatever contract they signed. So if there’s an arbitration clause in that contract which says they must arbitrate any issues individually, the AT&T decision holds them to that."

Those interested can read the decision, Justice Thomas' concurrence and the dissent here (PDF).

[Full disclosure: GamePolitics is an ECA publication.]


Comments

Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

Just think of all the money that the corporation would have to spend if even 50% of the affected customers decided to sue.  They would then have to deal with all those customers one at a time, and even if they were successful in their arbitration they still have to pay their lawyers and/or representatives for the time & research spent for each and every session.

While this may be bad for class-action law suits, if done properly it could be REALLY bad for a corporation.  (With the PSN issue going on, even if only 25% of the affected people filed and required arbitration, you're still talking about approximately 19,250,000 arbitration hearings/sessions - as opposed to 1 class action law suit.)

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Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

Unless Sony's EULA had arbitration clauses in them (I'd never own a PS3, for reasons unrelated to PSN, so I don't know what's in their EULA), this case really has nothing to do with them.  Also, those arbitration clauses in the suit make it so you really can't sue.  You have to go to arbitration instead.

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--- With the first link, the chain is forged.

Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

While I knew it was unlikely, I was really hoping there would be some kind of 'arbitration clauses are illegal' decision.   I never liked the idea of being able to sign away legal rights as part of a contract, esp between such massively different bargaining positions.

Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

You don't want to sign your rights away in a contract?  Don't sign the contract.

Why is this very simple principle so hard to grasp?

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With the first link, the chain is forged.

--- With the first link, the chain is forged.

Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

Wow, corporate apologist much?

It shouldn't even be possible to sign away basic human rights (like access to the legal system).

However, even if it is, instant contracts (like EULAs) shouldn't be allowed to exist. When I buy a game, by the time I can actually read the contract, I have already opened the game and now I am stuck with it whether or not I agree with the EULA.

But whatever jedi, you're obviously right. I mean Sony clearly is the victim here, they didn't let hundreds of thousands of people's private information get stolen due to shoddy security. Oh, wait...

Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

Wait, because I demand some personal responsibility from BOTH parties of a contract, and not saying "well, since you don't like the terms of a contract after you've signed it, we'll just let you get away with breaking it," I'm a corporate apologist?

Do you really suggest that it should be so easy for people to knowingly sign a binding contract and then say afterwards that they just didn't like it?  That's not a contract at all.

If you no longer want contracts to be legally binding for one party, it shouldn't be legally binding for any party.  If that's really what you want, you better not think that corporations are bad now, because they'd only get worse.

---

With the first link, the chain is forged.

--- With the first link, the chain is forged.

Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

Well, for starters, we have a serious bargaining power difference, esp when competition is low.   When only one side has an input into the contents of a contract (just try rewriting a contract and handing it back to a carrier, it doesn't work) then that alone represents a problem.  There is also the issue of asymmetric knowledge.  A company with dedicated lawyers is going to have a much better idea of exactly what rights someone is signing away then an average person on the street who does not even know what an 'arbitration clause' is until they have a problem and discover that they are not allowed to access the normal legal system.  Half the time even people who 'think' they understand legalize get a good chunk of it wrong.

But more importantly, the thing about legal rights is you should not have the ability to sign them away in the first place.  This is a fundamental protection against things like fraud, otherwise 'they signed the contract' would be a panacea against all sorts of illegal activity.

Normally this has been upheld, which is what made this case rather confusing.   I have known people who actually tried drafting up slavery contracts and it had to be explained to them that even if a person signs it the contract is not enforceable since the power of contracts is not unlimited.

Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

I was about to argue with you about contracts that you don't sign, EULA's and such (http://xkcd.com/501/). But then if you don't want to sign those you don't buy the product.

 

So yeah, if you don't like that arbirtation clause, then you don't buy that product. If consumers still buy the products that contain those contracts, then clearly it isn't as bad as we want to make it sound.

-Austin from Oregon

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Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

hurray for corporatocracy!  /sarcasm

Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

We're quickly running out of good news for consumers these days. :(

Re: AT&T v. Concepcion Supreme Court Ruling Bad News for ...

I can see every software and game company adding arbitration clauses to their EULAs just so they can evade class action lawsuits as a direct result of this ruling.

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