U.S. Supreme Court Allows Companies to Ban Class Actions
This morning, the Supreme Court dealt a crushing blow to American consumers and employees.
In a 5-4 decision , the Justices held that corporations may use arbitration clauses in the fine print of contracts to cut off consumers' and employees' right to band together through class actions to fight fraud, discrimination, and other illegal practices.
Before the Supreme Court, Public Citizen represented the consumer-plaintiffs in a class action against AT&T. At the argument last November, we urged the court to leave in place lower court rulings that class-action bans in contracts are unfair and should not be enforced under state contract law. AT&T argued that the courts must enforce the class-action ban in its standard cell phone contract because the ban is embedded in an arbitration clause and federal law favors arbitration.
The Court's decision turns the Federal Arbitration Act of 1925, a law that was intended to facilitate arbitration between sophisticated companies, into a shield against corporate accountability to consumers and employees. The decision will make it harder for people with civil rights, labor, consumer, and other kinds of claims that stem from corporate wrongdoing to join together to obtain their rightful compensation.
Public Citizen is committed to fighting against corporations' use of forced arbitration and will continue to pursue justice for consumers and employees in every branch of government, including by urging Congress to pass the Arbitration Fairness Act.
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Sincerely,
Allison M. Zieve
Director, Public Citizen Litigation Group