Court Rules Against AT&T's Service Agreement 97
The Seattle Post-Intelligencer is running a story about a recent ruling from the Washington State Supreme Court, which decided that AT&T's service agreement was not capable of waiving a customer's right to file a lawsuit against the company. The full opinion (PDF) is also available. From the conclusion:
"AT&T's Consumer Services Agreement is substantively unconscionable and therefore unenforceable to the extent that it purports to waive the right to class actions, require confidentiality, shorten the Washington Consumer Protection Act statute of limitations, and limit availability of attorney fees. ... Courts will not be easily deceived by attempts to unilaterally strip away consumer protections and remedies by efforts to cloak the waiver of important rights under an arbitration clause."
Right to Contract (Score:5, Insightful)
score 1 for common sense (Score:5, Insightful)
You cannot sign away your rights. They're guaranteed.
AT&T's clause is unconstitutional as are every similar company's clauses.
The right to bring legal action cannot be signed away. That's like saying that these companies are above the law.
Next to be tested in court, the clause stating "we reserve the right to change the terms of this contract at any time without notice".
If the terms are flexible, it's not a contract. It's like signing a blank check and something we aren't doing.
Re:Right to Contract (Score:5, Insightful)
Re:Road to overturn (Score:1, Insightful)
Class actions are often the only way some people can afford the attorney's fees to bring suit. The winners may end up giving half of their spoils to the lawyers, but the losers still lose.
Arbitration is a pay-per-judgment scheme. An arbitrator will be more likely to side with the party that will most likely hire him again in the future, which would be the big company.
Re:score 1 for common sense (Score:4, Insightful)
Next to be tested in court, the clause stating "we reserve the right to change the terms of this contract at any time without notice".
They sort of do have the legal right to do that. They give a new agreement out, and you, should you continue with service and pay, have given them consideration and voila. New contract of adhesion.
It's just another line item in why I disagree with the very concept of the contract of adhesion. No contract should be permissable that doesn't obey the rules of ordinary contracts ("meeting of the minds," etc).
Business wants the ability to enter into contracts without going through the due dilligence. This is, and always has been, ethically lopsided. For the consumers, there is no real fairness.
C//
Great news--if you live in Washington state (Score:1, Insightful)
The ruling explicitly applies Washington state law (not New York law, as the agreement originally called for), under a theory that appears settled. The decision relies heavily on the strongly pro-consumer slant to Washington state's consumer protection statutes.
Reading the decision, there are a number of places where the justices make conclusions of law specifically based on legal tests that pass under Washington state law, where they acknowledge those same tests might fail under other state law (for example, they note that New York courts have upheld arbitration agreements that would be struck down in Washington).
Overall point--the value of this decision as a precedent for those of us who live in the other 98% of US States may be somewhat limited. IANAL, YMMV, EIEIO.
Re:score 1 for common sense (Score:3, Insightful)
"I am altering the deal. Pray I do not alter it further."
Re:score 1 for common sense (Score:4, Insightful)
That should be common sense, I'm amazed that it doesn't work that way. Wait... on second thought, no I'm not.
Re:Road to overturn (Score:3, Insightful)
As the FTA mentions, these arbitration clauses are widely-used elsewhere. AT&T will appeal to federal court, and win.
No, they won't. This was a state case filed on the basis of the laws of Washington state. Federal courts have no jurisdiction.
You can't make contracts with illegal clauses! (Score:4, Insightful)
I remember commenting about this in an earlier post (about Telus) I believe.
You have to love any company's balls as they write their contract stipulations, and yet, often, write them in such a way that they contradict local/state/province or country laws.
And AT&T right now is a fine example of a company inserting clauses into their contracts that are not legal to begin with, thus non-binding.
And I'm sure that if I knew enough about laws and clauses, etc.. that most companies out there have many non-binding clauses, but we just don't know. It's too complicated to read.
Another example are the games and their EULAs, all these "thou shall not and this isn't and so on and so forth", I would bet that it's all bluster and very little substance, that if anyone had a bit of money and time to blow and a good lawyer to partner with, they could blow holes in those EULAs.
Try again. (Score:3, Insightful)
Binding arbitration clauses can be fine, even in adhesionary contracts, and the court even mentions this:
No. The court mentions that there is nothing wrong with arbitration. Binding arbitration, where the right to bring suit is summarily waived, is and has been subject to the court's disdain for quite a while.
Any situation in which forced arbitration is a non-negotiated requirement of an agreement, which tends to disproportionately favor one side over the other, is evaluated quite carefully.
There is nothing wrong with arbitration. Courts love it when parties go to mediation and arbitration, because it gets them out of their hair. On the other hand, when it is loaded into an adhesive contract and puts the Offeree in a situation where they have lost their right to take action without having any foreseeable benefit to doing so. This is especially true in certain classes of agreements, like rental agreements, employment contracts, and service agreements, like we have here.
There's a whole litany of cases on the subject. These types of agreements utilize the unequal bargaining power to enact an unconscionable waiver of rights.
So, again, this decision does not say all arbitration clauses are unconscionable, and even goes out of its way to say they could be fine... but only "could" be fine - the issue is what other clauses are present.
Arbitration clause != binding arbitration clause without option to bring suit. As I've already said, both in this post and the earlier one, preserving arbitration as an option is important, but forcing it in a non-negotiated contract is very commonly unconscionable and has been part of the consumer rights movement of the past decade.
Tried, and succeeded. (Score:4, Insightful)
Binding arbitration clauses can be fine, even in adhesionary contracts, and the court even mentions this:
No. The court mentions that there is nothing wrong with arbitration. Binding arbitration, where the right to bring suit is summarily waived, is and has been subject to the court's disdain for quite a while.
Quite a while?
Such as Graham v. Scissor-Tail, Inc., 623 P.2d 165, where the California Supreme Court said in 1981 that binding arbitration clauses are enforceable, as long as they're not substantively unconscionable (in that case, the arbitrator was the defendant's board of directors).
Or Armendariz v. Foundation Health, 6 P.3d 669, where the California Supreme Court restated in 2000 specifically that mandatory arbitration clauses were not unconscionable in a contract, where the arbitration was fair and impartial.
Or Henningsen v. Bloomfield Motors, 32 N.J. 358, where the New Jersey Supreme Court (lest you think I was California-biased) said that adhesionary contracts, such as those with binding arbitration provisions, can be just fine.
Or Carnival Cruise Lines v. Shute, 499. U.S. 585, where even SCOTUS said, yes, mandatory arbitration clauses with impartial arbiters are not unconscionable.
Have you found a single case in which any court said that binding arbitration is unconscionable on its face, without requiring any substantive unconscionability?
'cause if you have, the American Arbitration Association might be interested.
Any situation in which forced arbitration is a non-negotiated requirement of an agreement, which tends to disproportionately favor one side over the other, is evaluated quite carefully.
There is nothing wrong with arbitration. Courts love it when parties go to mediation and arbitration, because it gets them out of their hair. On the other hand, when it is loaded into an adhesive contract and puts the Offeree in a situation where they have lost their right to take action without having any foreseeable benefit to doing so. This is especially true in certain classes of agreements, like rental agreements, employment contracts, and service agreements, like we have here.
Yes, but what you're missing is that there needs to both procedural unconscionability - an adhesionary contract, for instance - and substantive unconscionability. Otherwise, it's perfectly fine, due to the freedom to contract.
I can make a horribly unconscionable contract, with full knowledge and understanding of my rights... Courts won't protect me, because though the agreement is unfair, I entered into it freely and with full knowledge (see Lucy v. Zehmer).
I can also sign a boilerplate contract, with no ability to negotiate, take it or leave it, and if the contract isn't substantively unfair, it's binding (see many of the above references).
There's a whole litany of cases on the subject. These types of agreements utilize the unequal bargaining power to enact an unconscionable waiver of rights.
You missed the requirement of the unconscionable waiver of rights. Binding arbitration isn't necessarily unconscionable.
Arbitration clause != binding arbitration clause without option to bring suit. As I've already said, both in this post and the earlier one, preserving arbitration as an option is important, but forcing it in a non-negotiated contract is very commonly unconscionable and has been part of the consumer rights movement of the past decade.
And, as you've said earlier and here, you're wrong. Arbitration, even binding arbitration without option to bring suit, has been upheld by SCOTUS. The issue is that the arbitration must be unfair, too, not merely the fact that you're forced into it.
(4 cases with cites... your turn)