This is the final story in our three-part series that looks at the extraordinary growth in mandatory arbitration clauses in contracts for everything from jobs to cell phones to medical care. Check out Part Two and Part Three.

Hal Rosner was apoplectic.

The Scripps Ranch lawyer turned ever-darker shades of pink as he outlined what he called the U.S. Supreme Court’s war against consumers. He was brandishing a 28-inch, yellow automobile purchase contract and waving it like a pennant.

“It’s a basic, fundamental attack on the United States Constitution, and it’s why our Supreme Court should walk around with shame,” Rosner said. “Our Supreme Court violated the United States constitutional right to jury trial like a group of little whores.”

Rosner’s a trial lawyer, so it’s fair to chalk up some of his outrage down to the natural theatrics of his profession.

But he’s also got good reason to be mad. And so do consumers.


We Stand Up for You. Will You Stand Up for Us?

In a game-changing 2011 decision, the U.S. Supreme Court dealt a huge blow to consumer advocates. In a 5-4 ruling, the court essentially said that not only is it OK for companies to put clauses in their contracts forcing customers to settle disputes in private arbitration, but they can also bar customers from bringing class action lawsuits against them or even arbitrating their disputes as a class.

The decision in the case, AT&T Mobility v. Concepcion, a class action lawsuit that originated in San Diego, involved customers who had been charged small amounts for phones advertised as “free,” overturned years of law developed in the California Legislature and upheld by its courts to protect consumers against a seemingly unstoppable trend.

For decades, businesses across the country have increasingly been writing their way out of the judicial system. By inserting “mandatory arbitration clauses” into their contracts, companies ranging from auto dealers to cell phone companies to health care providers have cut off their customers’ access to the courts, forcing them instead to settle disputes in private arbitration.

That has long concerned consumer advocates and even some industry insiders, who say arbitration is biased in favor of big business. But, for many observers, those worries are nothing compared with the U.S. Supreme Court’s 2011 decision.

“It’s earth-shattering. It takes away your right to hold companies accountable for transactions that we all engage in every day,” said Deepak Gupta, one of the attorneys who represented the plaintiffs in the Concepcion case before the U.S. Supreme Court. “We all assume that we have a right to hold a company accountable if they’re cheating us. We assume the consumer protection laws will apply. What’s frustrating is the average person doesn’t know that when they take out a contract … they’ve given away their rights.”

The Golden State for Consumer Protection

Historically, California hasn’t been a bad place to be a consumer.

The Legislature in the Golden State has spent the last few decades trying to protect the little guys, and successive big court decisions have upheld consumer rights.

In the 1990s and early 2000s, as mandatory arbitration clauses became all the rage for corporations across the country, the California Legislature pounced, passing a slew of laws in 2002 aimed at protecting consumers from the ever-growing trend toward private justice. (Though one of the key laws has since been widely ignored by much of the arbitration industry).

The activism wasn’t limited to lawmakers. Several high-profile lawsuits concerning arbitration clauses found their way to the California Supreme Court. The granddaddy of these was a case called Discover Bank v. Superior Court, in 2005.

The California Supreme Court ruled in that case that companies couldn’t put blanket bans on class action lawsuits in their contracts. To do so was “unconscionable” in legalese. It wouldn’t fly.

Over the next few years, at least 13 other states ruled that blanket class action bans by companies were illegal, according to a research paper by Myriam Gilles of the Cardozo School of Law and Gary Friedman, a New York attorney.

Then, in 2011, California’s groundbreaking rules were put to the ultimate legal test.

The Concepcion case originated in 2006, when a San Diego couple, Vincent and Liza Concepcion, signed a deal offered by AT&T to receive a “free” phone if they signed a two-year cell phone contract. The couple was later charged $30.22 in sales tax for the phone, and they sued AT&T in a class action.

But AT&T had a mandatory arbitration clause in its contract with the Concepcions and other customers barring them from suing the company in court. The clause also said that each customer had to arbitrate his or her case individually, and that groups of consumers couldn’t come together to fight their cases as a class arbitration.

AT&T asked the U.S. District Court in San Diego to dismiss the class action based on that clause. But the court refused, citing the rule that had been established in the Discover Bank case. AT&T appealed to the 9th Circuit and eventually, the U.S. Supreme Court agreed to hear the case in 2010.

The high court’s ruling — which found that the Federal Arbitration Act trumped individual states’ decisions to forbid class action bans — largely dismantled California’s years of consumer protection efforts.

The impact of the ruling was swift and far-reaching.

A 2012 report by Public Citizen, an advocacy group, and the National Association of Consumer Advocates, found that judges nationwide had struck down 76 potential class action cases since the ruling.

“These cases undoubtedly would have included the claims of thousands — if not hundreds of thousands — of consumers,” the report states.

F. Paul Bland, a senior attorney at Public Justice, a public interest law firm in Washington, D.C., and one of the country’s leading consumer advocates, said the U.S. Supreme Court took away the only method by which consumers can get justice when they’ve been bilked out of small amounts of money.

Companies are now free to scam their customers out of small amounts, Bland said, and even if the customers realize they’re being scammed, they’re almost certainly not going to bother fighting the company in an individual arbitration.

And, even if they wanted to challenge the company, few lawyers would be willing to take on such small cases, he said.

[rtb-pushquote]”Concepcion is being interpreted in a way that lets corporations get away with cheating people, in complicated ways, out of sums of money that aren’t that big to the individual, but add up to hundreds of millions of dollars to the company,” Bland said.[/rtb-pushquote]

Creating a Better System

Andrew Pincus, the attorney who argued the Concepcion case on AT&T’s behalf, said the shift away from class actions is actually good for consumers.

Pincus said AT&T’s mandatory arbitration clause provides excellent remedies for consumers who have been legitimately wronged. Consumers can recoup bonuses from the company worth thousands of dollars more than their claim, he said, and lawyers have impetus to fight arbitrations, since they’re entitled to double their fees if they win.

Mandatory arbitration clauses like AT&T’s are a much better way to filter out frivolous claims against companies, Pincus said.

Pincus’ arguments would have more merit in a world where every business has an arbitration clause that provides legitimate, generous bonuses to successful plaintiffs, Gupta countered. But many arbitration clauses don’t, and only allow wronged consumers to recoup the small amounts of money they have lost, he said.

And Gupta argued there’s no incentive for companies to provide such bonuses in their contracts.

The End for Consumer Class Actions?

Jeremy Robinson, a class action attorney at San Diego firm Casey Gerry, said the Concepcion decision has undoubtedly had a dampening effect on his firm’s class action business.

But that doesn’t mean consumer class actions are dead, Robinson said. His firm’s lawyers still look closely at all potential class actions brought to them, even if the consumers have signed a contract that bars class actions.

That’s because the U.S. Supreme Court left another door for consumers open just a crack.

At its core, the Concepcion case was all about the legal concept of “unconscionability.” The key question was whether it was unconscionable for companies to flat-out bar class actions in their contracts. The U.S. Supreme Court said no, it wasn’t.

But in the same decision, the court left open the possibility that mandatory arbitration clauses in consumer contracts can be found unconscionable for other reasons.

There are all sorts of ways that mandatory arbitration clauses can, and are, struck down by the courts. A company is unlikely, for example, to get away with a mandatory arbitration clause that includes a $10,000 bill to consumers for arbitrating the case.

That’s where Rosner, in Scripps Ranch, comes in.

Rosner currently has a big case pending before the California Supreme Court. The lawsuit hinges on that long, yellow contract that Rosner is fond of waving about.

Rosner’s case, Sanchez v. Valencia Holding Co. LLC, argues that the standard-issue contract long used by California car dealerships is unconscionable for a number of reasons, including the fact that the mandatory arbitration clause is printed on the back of the form.

The lawsuit is significant because it’s an opportunity for the California Supreme Court to further define what is allowable in a contract, Bland said.

But it’s also limited — if the court finds that the specific form of contract the car dealers were using was not allowed, they can simply rewrite the contract, he said.

To avoid class action lawsuits, then, all big companies need to do is to bar customers from bringing such lawsuits in their contracts, and make sure the contracts are otherwise legally airtight, Bland said.

Rosner’s case illustrates the remarkable sea change that’s taken place in consumer laws in California: Not long ago, California was pioneering measures that enshrined consumers’ rights. Now consumer attorneys must pore through corporate contracts, picking apart clauses or insertions that might be unfair and asking courts to toss them out in a piecemeal attempt to regain some of those rights.

All Eyes on Washington

For consumer advocates, this issue has pretty much hit a dead end in the judicial branch of the American political system.

Unless the U.S. Supreme Court makes a U-turn on arbitration clauses, advocates like Bland are only going to get incremental help from the court system.

That leaves the legislative branch and executive branches.

“Until something comes out of Washington, D.C., consumers, workers, patients, investors, are in a lot of trouble,” said San Francisco attorney Cliff Palefsky, a longtime opponent of mandatory arbitration.

On the legislative side, Sen. Al Franken (D-Minn.) re-introduced legislation he wrote in response to the Concepcion ruling. But several consumer advocates said the Arbitration Fairness Act is dead in the water, given that the Republican House majority is unlikely to even consider the bill.

That leaves the executive branch.

Last year, President Obama’s newly minted Consumer Financial Protection Bureau launched a public inquiry into arbitration clauses.

That was more than a year ago, and there’s been little movement from the agency since.

Without action from the very top, Californians will just have to live with the fact that a longtime remedy against the companies they spend their money on is rapidly disappearing.

Follow @WillCarlessFollow @voiceofsandiego

Like VOSD on Facebook.

Voice of San Diego is a nonprofit that depends on you, our readers. Please donate to keep the service strong. Click here to find out more about our supporters and how we operate independently.

    This article relates to: Arbitration, Investigations, News, Share

    Written by Will Carless

    Will Carless is the former head of investigations at Voice of San Diego. He currently lives in Montevideo, Uruguay, where he is a freelance foreign correspondent and occasional contributor to VOSD. You can reach him at will.carless.work@gmail.com.

    29 comments
    Maura Larkins
    Maura Larkins subscriber

    I believe that the goal of class action suits is to discourage large corporations from harming consumers, or, as in the tobacco cases, harming the public. The hope is that the suits will cause corporations to behave differently, even if no consumer gets rich in the process. AT&T's "free" phone isn't the issue here. The case wouldn't be interesting if the court had simply ruled on whether or not AT&T committed fraud. Instead, the court changed the rules in a way that allows corporations to get away with wrongdoing.

    nyknicks8
    nyknicks8

    Yeah their case makes no sense. Don't they have to pay for the phone before they take it from the store and hence walked out of the store paying the sales tax. At least that's how it works when I used to buy phones at the store in those days. So basically these clowns are admitting they paid sales tax on the phone and signed the credit card slip (or paid cash) and they didn't know what it was for. To me even if a class action was brought against AT&T, the claim should be dismissed as I see no wrong that AT&T did. They collect sales tax on behalf of the state, and California law states that sales tax is charged on the full price of the phone before discounts. AT&T never made that law. And this is coming from a guy that hates corporations and I am willing to go the distance to make sure any corporation that defrauds me will pay for their "mistake". So not only these clowns have a stupid case, they caused everyone else to lose out on class action avenues. Now I agree with what others said, that class actions get the consumers nothing. I remember a case where they lawyer were paid millions but the consumers got some stupid coupon or gift card. In that case why weren't the lawyers paid in coupons or gift cards? Only an idiot would accept a coupon as compensation for being defrauded.

    Maura Larkins
    Maura Larkins

    I believe that the goal of class action suits is to discourage large corporations from harming consumers, or, as in the tobacco cases, harming the public. The hope is that the suits will cause corporations to behave differently, even if no consumer gets rich in the process. AT&T's "free" phone isn't the issue here. The case wouldn't be interesting if the court had simply ruled on whether or not AT&T committed fraud. Instead, the court changed the rules in a way that allows corporations to get away with wrongdoing.

    Jim Jones
    Jim Jones

    It's funny that, with all the SCOTUS has done over the years, including Wickard v. Filburn and Kelo v. New London, this lawyer is upset over AT&T vs. Concepcion. Is he losing lawyers fees because of it perhaps? The legal system is broken, it only moves when there is money involved. Heck, even in criminal law we only see movement when the victim is affluent, and the law turns to molasses in winter if the perpetrator is affluent. We need real tort reform, including making courts much cheaper and more accessible, removing legalese from the process and streamlining it, but that will never happen because it removes $$$ from lawyers, and power from the entrenched bureaucracy. Business found it's out with arbitration. There is no out, no justice for the common man, and no solution.

    Jim Jones
    Jim Jones subscriber

    It's funny that, with all the SCOTUS has done over the years, including Wickard v. Filburn and Kelo v. New London, this lawyer is upset over AT&T vs. Concepcion. Is he losing lawyers fees because of it perhaps? The legal system is broken, it only moves when there is money involved. Heck, even in criminal law we only see movement when the victim is affluent, and the law turns to molasses in winter if the perpetrator is affluent. We need real tort reform, including making courts much cheaper and more accessible, removing legalese from the process and streamlining it, but that will never happen because it removes $$$ from lawyers, and power from the entrenched bureaucracy. Business found it's out with arbitration. There is no out, no justice for the common man, and no solution.

    Sam Ollinger
    Sam Ollinger

    Is it possible to link to the Part 1 and 2 at the bottom of the post (above Will's byline)? And do that for all investigative series? Thank you.

    Dagny Salas
    Dagny Salas

    Hi Sam, Shawn: You can see all three parts here: http://voiceofsandiego.org/category/arbitration/ We're still fixing bugs, etc., after our website transition, so just let us know if there's something not working. Thanks for your patience. Cheers. Update: Shawn, I added parts one and two the investigations page.Voice of San Diego " Arbitration - http://voiceofsandiego.orgCalifornia consumers are fast losing their right to take businesses to court when they believe they've been wronged. Our three-part series, Justice For Sale, looks at the extraordinary growth in mandatory arbitration clauses in contracts for everythi...

    shawn fox
    shawn fox

    I agree. In fact, I clicked on the investigations category, and parts 1&2 don't even show up in the history of investigative articles. At this point, I'm not sure how you would even find parts 1&2.

    Sam Ollinger
    Sam Ollinger subscriber

    Is it possible to link to the Part 1 and 2 at the bottom of the post (above Will's byline)? And do that for all investigative series? Thank you.

    Dagny Salas
    Dagny Salas memberadministrator

    Hi Sam, Shawn: You can see all three parts here: http://voiceofsandiego.org/category/arbitration/ We're still fixing bugs, etc., after our website transition, so just let us know if there's something not working. Thanks for your patience. Cheers. Update: Shawn, I added parts one and two the investigations page.Voice of San Diego " Arbitration - http://voiceofsandiego.orgCalifornia consumers are fast losing their right to take businesses to court when they believe they've been wronged. Our three-part series, Justice For Sale, looks at the extraordinary growth in mandatory arbitration clauses in contracts for everythi...

    shawn fox
    shawn fox subscriber

    Thanks, I see that now.

    shawn fox
    shawn fox subscriber

    I agree. In fact, I clicked on the investigations category, and parts 1&2 don't even show up in the history of investigative articles. At this point, I'm not sure how you would even find parts 1&2.

    Chris Brewster
    Chris Brewster

    There is another aspect to all this. I can't count the number of times I've been notified by mail that I am a member of a class that is being represented in a class action lawsuit. I am given the opportunity to opt out, but rarely do. I think maybe once I received a check for over $10. More typically much less than that or I got a discount coupon to buy a new version of the same product. Pretty meaningless outcomes. Meanwhile, I read from time to time that class action attorneys have claimed huge fees to litigate on behalf of a class of plaintiffs. It leaves you wondering whether they are primarily acting on behalf of the class or themselves. Class action is a legal tool that should not be nullified, but it is not a bed of roses for consumers.

    David Hall
    David Hall

    I certainly don't wonder what the motivation is for the class action attorney. Class actions are cash cows. If the arbitration process has tilted too far in the other direction, blame the unethical lawyer and the greedy/stupid client, not the big bad corporation.

    Chris Brewster
    Chris Brewster subscribermember

    There is another aspect to all this. I can't count the number of times I've been notified by mail that I am a member of a class that is being represented in a class action lawsuit. I am given the opportunity to opt out, but rarely do. I think maybe once I received a check for over $10. More typically much less than that or I got a discount coupon to buy a new version of the same product. Pretty meaningless outcomes. Meanwhile, I read from time to time that class action attorneys have claimed huge fees to litigate on behalf of a class of plaintiffs. It leaves you wondering whether they are primarily acting on behalf of the class or themselves. Class action is a legal tool that should not be nullified, but it is not a bed of roses for consumers.

    David Hall
    David Hall subscriber

    I certainly don't wonder what the motivation is for the class action attorney. Class actions are cash cows. If the arbitration process has tilted too far in the other direction, blame the unethical lawyer and the greedy/stupid client, not the big bad corporation.

    Omar Passons
    Omar Passons

    I almost don't know where to begin. A 3-part series and you dedicate 3 sentences in the final part of the series to the opposing view? Wow. $30.22 is enough to buy food for almost a week, so it's nothing to shake a stick at. But the ATT Mobility case is the paradigmatic example of why we need class action reform. You left out that the Concepcions only had to fill out a 1-page form to have their issues heard. And you left out that their MINIMUM recovery if they were right on their $30 claim as $7500. And you left out that they had the option to pursue their $30 claim in small claims court, where there are no lawyers and the judges are very relaxed with the rules, if they didn't want arbitration. You also left out that class action cases can very easily cost more than $100,000 before you even address whether anyone did anything wrong. The "liability" portion of a class action doesn't even really get going until a judge certifies a class. I get it, your a journalist, not a lawyer, but as I mentioned previously there are plenty of lawyers around town who would give you a more fair picture. Or, for that matter, call any in-house lawyer for any large company. Or better, call the CFO. These cases are huge sources of awards for attorneys, not so much for the little guy or woman you claim is being so wronged by class waivers. Your article also fails to acknowledge that there is no requirement that people actually have been wronged to bring a class action suit. They just need a few plaintiffs to be willing to stand in as the named plaintiffs and then a very expensive fishing expedition can begin to attempt to find people who are actually wronged. And put all this aside for a moment. The whole reason class actions exist is to create a way to make people whole when there is no incentive for them to bring the suit on their own. Here, where the barrier to getting your rights vindicated is a one-page form and a telephone call, there is almost no fear of it not being worth someone's time to file. In fact, with a recovery of more than 1000 times their actual harm I'm surprised everyone who bought an AT&T phone didn't try to use their more than generous dispute resolution procedure. I'm not even a particular supporter of the system of arbitration, it is frequently patently unfair. But this journalism isn't even an attempt to give people enough information to make an informed decision about the topic.

    Maura Larkins
    Maura Larkins

    Omar, I found that I disagreed with a number of your statements. Here are those statements with my responses: "$30.22 is enough to buy food for almost a week, so it's nothing to shake a stick at." [Maura Larkins' response: Most people, particularly the people to whom the $30.22 is most critical, do not have the time and/or skill to pursue these issues.] But the ATT Mobility case is the paradigmatic example of why we need class action reform. ["Paradigmatic"? Why didn't you just say it's a good example? And are you really sure that there is only one paradigmatic example? I doubt that very much. I'm sure many people consider other examples to be more significant in arbitration reform.] You left out that the Concepcions only had to fill out a 1-page form to have their issues heard. [That's just the start, Omar. Then they have to deal with the big corporation for heaven knows how long.] And you left out that their MINIMUM recovery if they were right on their $30 claim as $7500. [Since when did arbitration decisions depend on who was "right"? Did you look at the graphic in part 2 of this series? No matter how right the Concepcions might be, they are almost certainly going to lose.] And you left out that they had the option to pursue their $30 claim in small claims court, where there are no lawyers and the judges are very relaxed with the rules, if they didn't want arbitration. [That would require serving a subpoena on a huge corporation (AT&T) after they discover who it AT&T's agent for service. Then AT&T's lawyers would probably contest everything, including whether service was proper. Then the Concepcions would have to prepare documentation and arguments and go to court. And that still wouldn't guarantee that the judge would side with the little guys against a big corporation.] You also left out that class action cases can very easily cost more than $100,000 before you even address whether anyone did anything wrong. [That's why you need a big class of people, Omar. So that the payoff will be bigger than the cost.] The "liability" portion of a class action doesn't even really get going until a judge certifies a class. I get it, your [sic] a journalist, not a lawyer, but as I mentioned previously there are plenty of lawyers around town who would give you a more fair picture. [Don't be patronizing. I think Will got a very fair picture of the situation. And I think there are plenty of lawyers around town who would be happy to give Will an unfair picture.] Or, for that matter, call any in-house lawyer for any large company. Or better, call the CFO. [We already know AT&T's position. It's in the case pleadings, and in the Supreme Court decision. It's the OTHER side of the story that we need, and Will did a good job on that.] These cases are huge sources of awards for attorneys, not so much for the little guy or woman you claim is being so wronged by class waivers. [But the little guy usually can't represent himself effectively. That's why we need lawyers who will represent consumers and make sure that the powerful respect the legal rights of the powerless. Plaintiff lawyers wouldn't have to work so many hours and collect so much pay if there weren't lawyers on the other side being paid big bucks to come up with one reason after another to slow down the case.] Your article also fails to acknowledge that there is no requirement that people actually have been wronged to bring a class action suit. They just need a few plaintiffs to be willing to stand in as the named plaintiffs and then a very expensive fishing expedition can begin to attempt to find people who are actually wronged. [We all know what planet we're on, Omar. Yes, people make false claims all the time. Big corporations are among the worst offenders, making claims that they are owed money when they are not owed anything at all.] Here, where the barrier to getting your rights vindicated is a one-page form and a telephone call, there is almost no fear of it not being worth someone's time to file. [You know very well that you have to do a lot more than fill out one page and make a phone call to get your rights vindicated. And you must have a lot of time on your hands, Omar. Most people go to bed every night wishing they had had time to do things plenty more important than trying to get $30.22 back from AT&T.] In fact, with a recovery of more than 1000 times their actual harm I'm surprised everyone who bought an AT&T phone didn't try to use their more than generous dispute resolution procedure. [If this surprises you, Omar, then you must walk around in a continual state of shock as you observe the incomprehensible behavior of the ordinary people you meet. But I get the feeling that you rarely find the actions of corporations to be anything other than completely reasonable.]

    Omar Passons
    Omar Passons subscribermember

    I almost don't know where to begin. A 3-part series and you dedicate 3 sentences in the final part of the series to the opposing view? Wow. $30.22 is enough to buy food for almost a week, so it's nothing to shake a stick at. But the ATT Mobility case is the paradigmatic example of why we need class action reform. You left out that the Concepcions only had to fill out a 1-page form to have their issues heard. And you left out that their MINIMUM recovery if they were right on their $30 claim as $7500. And you left out that they had the option to pursue their $30 claim in small claims court, where there are no lawyers and the judges are very relaxed with the rules, if they didn't want arbitration. You also left out that class action cases can very easily cost more than $100,000 before you even address whether anyone did anything wrong. The "liability" portion of a class action doesn't even really get going until a judge certifies a class. I get it, your a journalist, not a lawyer, but as I mentioned previously there are plenty of lawyers around town who would give you a more fair picture. Or, for that matter, call any in-house lawyer for any large company. Or better, call the CFO. These cases are huge sources of awards for attorneys, not so much for the little guy or woman you claim is being so wronged by class waivers. Your article also fails to acknowledge that there is no requirement that people actually have been wronged to bring a class action suit. They just need a few plaintiffs to be willing to stand in as the named plaintiffs and then a very expensive fishing expedition can begin to attempt to find people who are actually wronged. And put all this aside for a moment. The whole reason class actions exist is to create a way to make people whole when there is no incentive for them to bring the suit on their own. Here, where the barrier to getting your rights vindicated is a one-page form and a telephone call, there is almost no fear of it not being worth someone's time to file. In fact, with a recovery of more than 1000 times their actual harm I'm surprised everyone who bought an AT&T phone didn't try to use their more than generous dispute resolution procedure. I'm not even a particular supporter of the system of arbitration, it is frequently patently unfair. But this journalism isn't even an attempt to give people enough information to make an informed decision about the topic.

    Maura Larkins
    Maura Larkins subscriber

    Omar, I found that I disagreed with a number of your statements. Here are those statements with my responses: "$30.22 is enough to buy food for almost a week, so it's nothing to shake a stick at." [Maura Larkins' response: Most people, particularly the people to whom the $30.22 is most critical, do not have the time and/or skill to pursue these issues.] But the ATT Mobility case is the paradigmatic example of why we need class action reform. ["Paradigmatic"? Why didn't you just say it's a good example? And are you really sure that there is only one paradigmatic example? I doubt that very much. I'm sure many people consider other examples to be more significant in arbitration reform.] You left out that the Concepcions only had to fill out a 1-page form to have their issues heard. [That's just the start, Omar. Then they have to deal with the big corporation for heaven knows how long.] And you left out that their MINIMUM recovery if they were right on their $30 claim as $7500. [Since when did arbitration decisions depend on who was "right"? Did you look at the graphic in part 2 of this series? No matter how right the Concepcions might be, they are almost certainly going to lose.] And you left out that they had the option to pursue their $30 claim in small claims court, where there are no lawyers and the judges are very relaxed with the rules, if they didn't want arbitration. [That would require serving a subpoena on a huge corporation (AT&T) after they discover who it AT&T's agent for service. Then AT&T's lawyers would probably contest everything, including whether service was proper. Then the Concepcions would have to prepare documentation and arguments and go to court. And that still wouldn't guarantee that the judge would side with the little guys against a big corporation.] You also left out that class action cases can very easily cost more than $100,000 before you even address whether anyone did anything wrong. [That's why you need a big class of people, Omar. So that the payoff will be bigger than the cost.] The "liability" portion of a class action doesn't even really get going until a judge certifies a class. I get it, your [sic] a journalist, not a lawyer, but as I mentioned previously there are plenty of lawyers around town who would give you a more fair picture. [Don't be patronizing. I think Will got a very fair picture of the situation. And I think there are plenty of lawyers around town who would be happy to give Will an unfair picture.] Or, for that matter, call any in-house lawyer for any large company. Or better, call the CFO. [We already know AT&T's position. It's in the case pleadings, and in the Supreme Court decision. It's the OTHER side of the story that we need, and Will did a good job on that.] These cases are huge sources of awards for attorneys, not so much for the little guy or woman you claim is being so wronged by class waivers. [But the little guy usually can't represent himself effectively. That's why we need lawyers who will represent consumers and make sure that the powerful respect the legal rights of the powerless. Plaintiff lawyers wouldn't have to work so many hours and collect so much pay if there weren't lawyers on the other side being paid big bucks to come up with one reason after another to slow down the case.] Your article also fails to acknowledge that there is no requirement that people actually have been wronged to bring a class action suit. They just need a few plaintiffs to be willing to stand in as the named plaintiffs and then a very expensive fishing expedition can begin to attempt to find people who are actually wronged. [We all know what planet we're on, Omar. Yes, people make false claims all the time. Big corporations are among the worst offenders, making claims that they are owed money when they are not owed anything at all.] Here, where the barrier to getting your rights vindicated is a one-page form and a telephone call, there is almost no fear of it not being worth someone's time to file. [You know very well that you have to do a lot more than fill out one page and make a phone call to get your rights vindicated. And you must have a lot of time on your hands, Omar. Most people go to bed every night wishing they had had time to do things plenty more important than trying to get $30.22 back from AT&T.] In fact, with a recovery of more than 1000 times their actual harm I'm surprised everyone who bought an AT&T phone didn't try to use their more than generous dispute resolution procedure. [If this surprises you, Omar, then you must walk around in a continual state of shock as you observe the incomprehensible behavior of the ordinary people you meet. But I get the feeling that you rarely find the actions of corporations to be anything other than completely reasonable.]

    David Hall
    David Hall subscriber

    The Concepcion suit never should have been filed in the first place. ATT didn't collect the sales tax, the state did. So to suggest that ATT scammed anybody out of their money is false. It's no wonder companies want to reduce the possibilities of lawsuits when lawyers can talk simple-minded people into filing class actions based on false premises. Carless wants to paint business as the bad guy because that's what he fundamentally believes: that business is bad. Power to the people and all that nonsense. But the sad fact is that if it wasn't for lawyers of questionable moral value hooking up with simpletons, the courts wouldn't be full of bogus lawsuits and our ladders wouldn't have a dozen stickers telling us not to do stupid things. If the lawyers were so worried about the Concepcion's thirty dollars, they should work to rewrite the state law that says the state can collect sales tax on something a company is willing to give away for free.

    shawn fox
    shawn fox subscriber

    Well stated. Give me a break Maura. Why should AT&T pay someone's sales taxes? I agree with Dave, the concepcion case seems like a frivolous lawsuit.

    Maura Larkins
    Maura Larkins subscriber

    AT&T could have, and should have, paid the sales tax on the "free" phone. Or at least it should have let the Concepcions know how much tax it was going to collect from them to pay to the state.

    Maura Larkins
    Maura Larkins subscriber

    Shawn: AT&T decided to make an offer to attract customers. It certainly has no obligation to give away phones or anything else. But as I said above, the AT&T phone offer isn't the issue here. Even if we assume for the sake of argument that this was a frivolous case, that doesn't mean we should thrown the baby out with the bathwater and stop all such lawsuits, including meritorious ones.

    David Hall
    David Hall

    The Concepcion suit never should have been filed in the first place. ATT didn't collect the sales tax, the state did. So to suggest that ATT scammed anybody out of their money is false. It's no wonder companies want to reduce the possibilities of lawsuits when lawyers can talk simple-minded people into filing class actions based on false premises. Carless wants to paint business as the bad guy because that's what he fundamentally believes: that business is bad. Power to the people and all that nonsense. But the sad fact is that if it wasn't for lawyers of questionable moral value hooking up with simpletons, the courts wouldn't be full of bogus lawsuits and our ladders wouldn't have a dozen stickers telling us not to do stupid things. If the lawyers were so worried about the Concepcion's thirty dollars, they should work to rewrite the state law that says the state can collect sales tax on something a company is willing to give away for free.

    Maura Larkins
    Maura Larkins

    AT&T could have, and should have, paid the sales tax on the "free" phone. Or at least it should have let the Concepcions know how much tax it was going to collect from them to pay to the state.

    Maura Larkins
    Maura Larkins

    Shawn: AT&T decided to make an offer to attract customers. It certainly has no obligation to give away phones or anything else. But as I said above, the AT&T phone offer isn't the issue here. Even if we assume for the sake of argument that this was a frivolous case, that doesn't mean we should thrown the baby out with the bathwater and stop all such lawsuits, including meritorious ones.

    shawn fox
    shawn fox

    Well stated. Give me a break Maura. Why should AT&T pay someone's sales taxes? I agree with Dave, the concepcion case seems like a frivolous lawsuit.