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American Consumers Could Lose Access to Courts in Certain Contract Claims

Published on Sep 17, 2010 at 5:47 pm in General Blogs.

The Supreme Court will hear argument in the case of AT&T Mobility v. Concepcion and could potentially put an end to the American consumer’s ability to bring class action lawsuits against telephone companies, banks, telecom corporations, credit card companies, and others.

At issue is a federal law, the Federal Arbitration Act, and whether this law pre-empts, or trumps, state laws which permit class actions lawsuits despite the language in consumer contracts which mandates arbitration as the only remedy for consumers who are the victims of scams and predatory lending by companies such as lenders, cell phone companies and the like. Currently, even if the contract signed by the consumer states that the customer must submit his or her dispute to an arbitrator, who will ultimately decide the outcome of the dispute, most states have enacted laws which provide that if the contract is “unconscionable”, the agrieved consumer may file or participate in a class action lawsuit against the company. This is an important right for consumers because historically, each individual claim is worth relatively little, but when hundreds or thousands of consumers band together in a class action suit, these large, well- funded, predatory companies are likely to take notice and in most cases, will enter into a meaningful settlement to compensate the victims. More importantly, these corporations change their business practices so that other citizens are not victimized in the future.

If the Supreme Court rules in favor of AT&T in this case, it could effectively prevent individual states from providing this valuable “loophole” to its citizens, and individual consumers would be forced to arbitrate their disputes, often in a state of the corporation’s choosing. These predatory companies would be much less likely to settle with an individual and since these companies has unlimited funds at their disposal, would fight each claim tooth and nail.

Oral arguments in the case will be heard in November.

Belsky, Weinberg & Horowitz have been fighting for their clients who are the victims of negligence for many years. Call us at 410-234-0100 or email us for a free consultation and let us help you.

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