Big Business Thwarts Another Class Action Attempt

The U.S. Supreme Court fairly predictably sides with corporations in their clashes with consumers, but the business-friendly rulings often come in unpredictable packages.

Consider the latest high court decision reinforcing the ability of companies to fend off class-action lawsuits and funnel consumer complaints into arbitration. In a 6-3 ruling, the justices prevented customers from suing AT&T’s DirecTV via a class action complaining about penalties imposed for early cancelation of satellite-television service.

The majority opinion was written by a typically liberal justice, Democratic appointee Stephen Breyer, who said that a lower state court in California had failed to follow U.S. Supreme Court precedent and congressional policy favoring arbitration as a way of settling commercial disputes. When a provider of goods or services imposes an arbitration requirement, such arrangements deserve the same respect as any other contract, Breyer concluded.

Consumer advocates counter that arbitration, conducted outside of courtrooms with less formal rules of evidence, tends to favor businesses over individuals.

Justice Ruth Bader Ginsburg, also a reliable liberal in ideologically charged cases, filed a forceful dissent. She accused the Breyer-led majority of “further degrading the rights of consumers and further insulating already powerful economic entities from liability for unlawful acts.”

Providing helpful context, Greg Stohr, the Supreme Court correspondent for Bloomberg News, observed that the DirecTV victory “butresses a 2011 ruling that said companies can use arbitration agreements to block class actions, even if state law requires them to be an option.”

Justice Sonia Sotomayor joined the Ginsburg dissent. Justice Clarence Thomas, the most consistently conservative member of a right-leaning court, also dissented but on different grounds. Thomas said he would have favored a states’ rights argument holding that the Federal Arbitration Act doesn’t apply to state-court cases such as the one concerning DirecTV.