AT&T Arbitration Clause Ruled Unconscionable 261
Tech.Luver writes to tell us the Consumerist is reporting that a small clause in AT&T contracts has been ruled "unconscionable" by the 9th circuit court of appeals. The clause in question stated that if you use AT&T service you surrender your right to class action lawsuits and instead have to participate in mandatory binding arbitration.
Isn't this is most or all credit card agreements? (Score:5, Interesting)
Out of hand (Score:5, Interesting)
I keep asking myself, what the f$*k is going on in America lately?
Where's the FTC? (Score:5, Interesting)
This won't change until campaign contributions are limited to registered voters.
Re:Out of hand (Score:3, Interesting)
The old joke about Russia was "we pretend to work, they pretend to pay us". Here, it's, "we pretend to agree to it, they pretend it will be enforced."
I first wanted to blame lack of competition, but you have to realize, the overly-broad, extremely-detailed contract persists even in areas where there is more than enough competition, like internet portal registration.
Does anyone know if Europe has this problem?
Re:Out of hand (Score:2, Interesting)
Re:all fine print (Score:5, Interesting)
With AT&T, you're buying a service; it amounts to a work for hire, in essence. As such, they can require you to agree to certain terms, but not ones which would restrict you from certain rights, e.g., if they work with the government to subert your constitutional rights (e.g., engaged in wiretapping without a warrant), engage in fraud and charge you for services you do not receive, or falsely advertise their services (advertising them as unlimited), and so forth, it is unreasonable for a court to accept that waiver of such rights is valid or even possible.
Re:9th Circuit == Pretty Liberal (Score:5, Interesting)
Regardless of the 9th CC's viewpoint; a class action lawsuit is neither liberal or conservative; rather it adds a level of certainty to the legal landscape. Rather than face potentially hundreds of expensive lawsuits all around the country; class actions allow corporations to resolve liability issues once and in a final manner; while allowing individuals to sue when it would be too expensive to try to sue individually. I would expect the business community to prefer class actions suits to the alternative of defending themselves everywhere over small amounts; even though the likelihood of such cases is much smaller since the payouts probably
wouldn't cover the lawyers fees. Still the certainty of class actions is better than uncertainty of individual actions since you at least have some control over teh cost of defense and ultimate liability.
Re:...and in Canada (Score:1, Interesting)
Yes, you are correct, the Canadian Supreme court did make that ruling.
But the largest provinces (Ontario & Quebec) have already amended their consumer protection legislation to make these clauses null and void.
The other provinces will likely follow, making this court decision irrelevant.
Re:Where's the FTC? (Score:2, Interesting)
In short, this is exactly what you are looking for in terms of curtailing abuse by corporations.
The system is more than the President and Congress, it is also the Judiciary, and the courts are supposed to provide the check on their power. In this case, it appears to be working. Read the decision, you will be impressed. (And the 9th Circuit seems to be on track on this one, even including a URL in their decision that shows class arbitrations currently listed on the American Arbitration Association website!)
Link to the court's decision. [uscourts.gov] (PDF)
Comment removed (Score:5, Interesting)
Re:all fine print (Score:3, Interesting)
Funny you say that. AT&T committed fraud against me just this week. They are "Cramming" my phone bill. I signed up for a basic flat rate service at $10.95 a month (+all of the various taxes). Two months into it and I already have a $125 bill! To be fair, I did make 3 minutes worth of long distance calls and dialed local number to connect to my ISP on this line while I was waiting for my DSL connection. Nothing after that though, as I use my cell and Vonage for all of my calls.
Re:Simple solution... (Score:3, Interesting)
What carrier doesn't have such a clause in their contract? I ask because I was actively trying to avoid arbitration clauses, but have given up hope... I can no longer find a credit card without one, for instance.
Re:all fine print (Score:2, Interesting)
Re:all fine print (Score:5, Interesting)
Considering this is AT&T we're talking about, I'm sure this is also a win for civil liberties groups looking to actually take AT&T to court for their warrantless wiretaps.
Re:Old news (Score:3, Interesting)
Actually, 100% of contracts are a waiver of some rights by one or both parties. That's what a contract is: an exchange of negotiated consideration ("consideration" here is a legal term, meaning either detriment or benefit to one or both parties, depending on which jurisdiction you're in).
Re:Old news (Score:2, Interesting)
Re:9th Circuit == Pretty Liberal (Score:3, Interesting)
From what I can tell, the fundamental question was whether the contract was fair - in particular whether the two parties to the contract had equal bargaining power.
Since conservatives are supposedly all about the free market. I would think that conservatives would be extremely concerned about situations where the market was not free. I would also think that conservatives would realize that a free market is not simply the absence of government intervention - that without government intervention the free market rapidly becomes unfree with all kinds of monopolistic and anti-competitive behaviors.
If I want to buy a phone from ATT, can I show up with a contract that I've written that is of similar length to ATT's standard contract. Would ATT seriously consider the terms of the contract that I brought to the table? Could I even modify the terms of ATT's own contract? If not, what does that say about my bargaining power? I mean, you'd think that if ATT and I were negotiating as equals then either of us could bring a contract to the table.
The problem here is that large organizations inherently have more power than single individuals. Libertarians always go on about how it's a battle between the government and the non-government but they're missing the fundamental point - it's actually a battle between the individual and the organization. The government happens to be the most powerful organization but it's not the only game in town either.
I really don't consider myself to be a liberal but when caring about the rights of the individual gets me dismissed as a liberal then I sure don't feel like a conservative.
Re:Old news (Score:2, Interesting)
Re:Old news (Score:3, Interesting)
Serious effort needs to be made to ensure that those companies that attempt to implement clauses in contracts that infringe the law and the rights people should face criminal penalties, especially when the clauses are in the contract specifically to attempt to deny a persons their rights.
Their needs to be some serious reform of the civil court system, where a judge could not simply look at the contract on the first day, see that it infringes a persons legal rights, and penalise the writer of the contract.
Re:all fine print (Score:4, Interesting)
Speaking as an attorney,
Don't be silly. The plaintiff's each get $10-$100 in coupons (for which their lawyers get 10x that).
You misspelled "ambulance chaser."
Please understand that attorney advertising was an ethical violation in all 50 states until the bizarre Supreme Court ruling that it was an issue of "commercial free speech," and understand that attorneys are overwhelmingly opposed to it and embarrassed by the ambulance chasers who have destroyed our profession.
hawk, esq.
Re:Out of hand (Score:5, Interesting)
Enclose a photocopy of the postcard with your bill and without a check and send it in with a note.
"Please contact me regarding the rejection of your new rate offer, my contract and payment of this bill."
See what happens.
Re:all fine print (Score:4, Interesting)
The ambulance chasers are only one symptom of the omnipresent rot in the legal profession. That your industry has escaped much needed regulation and oversight is a testament to just how much undue power and influence lawyers have on our society, laws and governments.
In a country where anyone can, without qualification, defend themselves in court, the entire concept of a bar associations is a joke to begin with. They exist for one purpose; to line the pockets of their members. How many US bar associations really protested against Guantanamo? How many stand against illegal wiretapping? Shouldn't the legal profession be at the forefront in defending the attack on legal rights. Instead they're more likely to be found in positions of power, leading that same attack.
Your profession is pretty much rotten to the core. Personally, I would just get rid of bar associations and the like and subject the whole lot of you to the harsh winds of the free market and watch your tear yourselves apart. But that's never going to happen is it? You're the ones that end up drafting all the laws after all.
Re:Old news (Score:4, Interesting)
You do have the right to give up rights, but the right to sue is generally not one of the rights you can give up, provided that the other party did something bad enough. The line is, however, very fuzzy.
The standard statement "by participating in this program, you agree not to sue us" is called an exculpatory clause, and it IS binding under most circumstances.
I would not go so far as to say "most circumstances". It is binding if it is reasonable. Generally, "reasonable" includes clauses like "you agree not to sue us for anything out of our control", a.k.a. the "acts of God" clause. It also includes clauses that protect companies from liability caused in part by the actions of the other party---if you twist your ankle while skiing, you can't sue the ski lodge for renting you the skis, for example. It is sometimes upheld in cases of negligence on the part of the protected party, but is not generally upheld in cases of gross negligence, and is almost never held up in cases of actual intentional harm caused by the protected party.
For example, as long as AT&T runs their business legitimately, that clause is probably okay. The second they overcharge somebody for service, though, the clause is likely out the window because AT&T (or another agent acting on their behalf) took action that directly resulted in harm to the other party. Thus, if it can be proven that AT&T's direct actions caused harm, no contract will cover their backsides. This is also generally the case for gross negligence (failing to exercise even the least amount of care in preventing harm to the other party).
The primary purpose of these clauses isn't really to protect the company, as a company probably would probably not lose a case for most of the types of harm that these clauses can legitimately address. The primary purpose is to make the layman reader of the contract believe that he/she has no case, and thus prevent that person from ever contacting a lawyer to find out that he/she actually does.