Courts Reject Tech Corporation Bans on Class Action Suits

Frosty Piss writes "Class action waivers included in cell phone companies' contracts with customers are invalid in Washington State because they violate the state's Consumer Protection Act, the state Supreme Court ruled Thursday. Five plaintiffs accused Cingular of overcharging customers between $1 and $40 per month in roaming and hidden charges. Cingular had an arbitration clause that required individual arbitration and prohibited class action litigation or class action arbitration. From the article: 'In another class action-related ruling issued Thursday, the high court unanimously ruled in favor of a couple that filed a class action suit against America Online, Inc., claiming the Internet provider created and charged them for secondary membership accounts that they didn't want.'"

Comments

Just a reminder...

[DogDude]

Just a reminder, kids. Just because you put something in a "contract" doesn't make it legal or enforceable. No need to get your panties in a bunch over the fine print in cell phone contracts, EULA's, etc.

Re:Just a reminder...

[pintpusher]

The better thing to remember is: It's a contract, and you can negotiate it before you sign it. I had an interesting adventure with a major corp recently. I was being courted by a major food service vendor who has recently moved into this area. I'm a pretty small fish -- maybe $1,000 a week in wholesale grocery supplies, but their sales rep has a couple major accounts on either side of me and it was easy for him to stop in. So we went through the whole deal of pricing everything out and determined that we could save a reasonable amount by using this company.

So out comes the "application". I've been in the restaurant business for a few years now and have some idea of what standard practice is... anyway, I decided I didn't want credit. I wanted to just purchase COD. It's really easier in the long run in many ways -- less book-keeping, easier to budget money, instant credit, no messing with chargebacks or mystery invoices etc etc etc. So I start reading through the various agreements they expect me to sign. I looked at the salesman and said "you know I want COD only?" He agreed it was ridiculous. So I told him I'd mark it up over the next few days and then he could pick it up.

So there were three agreements. One was a personal guarantee, which I never sign, ever. So a big line through that one. The second was a statement about my legal right to purchase wholesale in the state (no biggie, standard stuff and a tax id number). The third was essentially a credit app with some extra stuff thrown in relating to how to deal with bad product and so forth. So I start lining through stuff that doesn't apply to COD, stuff that puts all of my company's assets on the line for groceries. I rewrite a couple of other bits to make them more palatable to me, like fixing the court of jurisdiction to be my state, not theirs; changing the part about 3 days written notice by certified return receipt if we get bad product; etc etc. When it was all done, I'd probably struck a good 60% of the contract and rewritten another 20%, and then I signed it.

About two weeks go by and we hear from the salesman (you should have seen the look on his face when he picked the thing up). The credit department (I don't want credit) had denied my application, not because of all the stuff in the contract that I'd marked up, but because I hadn't signed the personal guarantee. go figure. So all I can assume is they know their contract is onerous and were willing to let it go so long as I put all my personal crap on the line for a COD account. needless to say, I'm still using my old provider who loves me and gets paid every week for seven years...

I think I'll write a "service provider agreement" and make anyone who wants to provide me a service sign it.... hmmm... that might be fun ;)

Opposite decision just released today in Canada

[shadowspar]

Interestingly, the Supreme Court of Canada just released a decision that cuts the opposite way. The Court upheld the "binding arbitration" clauses that many companies put in their various contracts and agreements. This essentially shields them from class actions, since disputes have to go to arbitration instead of the courts.

Since the matters involved in these cases actually took place, two provinces (Ontario and Quebec) have passed consumer protection laws (probably similar to Washington's) that protect consumers' ability to sue as a class. More jurisdictions need to step up to the plate and do the same.

Re:Do class action suits ever benefit the consumer

[camperslo]

When the class gets paid in vouchers, the lawyers should be paid in vouchers.

Re:Anyone who gets overcharged for anything

[Shakrai]

Is either a fool or a coward.

So, if you sign a cell phone contract, with a 14 day return policy, and on day 20 you get your bill and discover that they've overcharged you, you are a coward? Your options are basically:

1. Cancel and pay the $175-$200 fee. Pay the overcharges or dispute them.
2. Cancel and refuse to pay the $175-$200 fee. Buckle down for a fight over your credit report that you will probably lose and higher interest rates for the next seven years.
3. Sue them.

The game is tilted against the consumer in these scenarios. And I'm glad this ruling came down the way it did. It's not right that a contract can force you to give up your legal right to seek relief in court. And before any wise-ass comes back with "then don't sign it", try living with a cell phone, credit card, phone service, bank account, etc, etc, etc. They are all doing it!