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AT&T Arbitration Clause Ruled Unconscionable
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.
Well, this is nothing new. Most "contracts" are just waiving the consumer's rights. On the other hand, I'm glad somebody finally called them on it, since this is so blatantly obvious.
No, binding arbitration is NOT of benefit to both sides of this particular contract, nor of many similar contracts.
For most consumer services, such as those offered by AT&T, the amount of any dispute is likely to be too small to make it worth anybody's while to go to arbitration. Yes, it would cost even more to go to court, but the fact is that the consumer isn't going to recover enough to cover the costs of arbitration, any more than she would recover the costs of litigation.
Therefore, even if a consumer can afford it, the only way she is going to bring up such a dispute is as a matter of principle... and there's not even any incentive to do THAT, because the point of bringing up a matter of principle is to punish somebody for wrongdoing, and the amount recovered by arbitrating a single dispute would mean nothing to a huge player like AT&T unless many, many people went to arbitration, which everybody knows they won't... especially since AT&T's costs for arbitrating thousands of nearly identical cases are far lower than consumers' costs for arbitrating those same cases one-by-one.
Forcing everything to be arbitrated on a case-by-case basis would mean that the cost to consumers of recovering whatever they've been screwed out of was hundreds or thousands of times the amount recovered. Which means that nobody would actually get compensated, nor would AT&T (or whoever) ever suffer enough costs to deter bad behavior.
That's why there are class actions... they're there so that the larger party in this sort of situation can't just change the rules at will, ignore the other terms of the contract, screw over the other parties, and suffer no consequences whatsoever.
So, basically, to be opposed in principle to class actions is to say that people screwed over by large corporations should get no recourse at all. Maybe the corporation has to worry about its reputation, but it will never be FORCED by law to live up to its contracts the way you or I would be.
That is unconscionable. It puts large players above the law, it is basically a return to feudalism, and it is repugnant to any decent person.
Fuck you, you corporate cocksmoker.
Allowing monopolists to force consumers to give up their rights is obviously wrong and subverts centuries of jurisprudence.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
I've also heard the critique that arbitrators may not be completely impartial. I think they are not randomly assigned, like judges can be, but instead are hired by the parties. Now consider: big companies try to use arbitrators a lot, while any given individual will rarely if ever use one. If you're an arbitrator who rules against a big company, how much business is that company going to give to you in the future? If you rule against an individual, how much does that hurt you?
Therefore in the arbitration system, there is an incentive for arbitrators to rule against individuals and in favor of big corporations.
This is the way Bi-Coloured Python-Rock-Snakes always talk.
I assume we're talking about the situation only in the US here. This problems has been addressed, reasonably successfully, in various other jurisdictions.
For example, in the UK we have a legal requirement that a shop advertising a typical returns policy also has to state clearly that shoppers' statutory rights are not affected. That and things like the Sale of Goods Act and Distance Selling Regulations guarantee shoppers some basic protections regardless of anything a vendor might like to say at sale time.
From a different angle, we have the Unfair Contract Terms Act, which basically says that certain types of contractual clause (things like disclaiming liability even in the case of obvious negligence) are not enforceable.
As a third approach, there is also the point that you have to go into a contract with both sides understanding what's happening and getting something out of it. If you have a contract that is basically a standard issue piece of legalese prepared by the legal department of the big guy, and not effectively negotiable by the little guy, then the courts can strike parts of it if they determine that the imbalance in bargaining power meant the basic properties of a binding contract weren't met.
So through a combination of requiring that those being given information about Ts and Cs also be told that they have other rights, and statute law that renders certain kinds of gross disclaimer explicitly impotent, and the ability for courts to cancel out parts of a contract that weren't negotiated on an equal basis, we have a reasonable degree of protection against the sort of thing you're talking about.
I don't know what the situation is here regarding binding arbitration, though. I've heard of it being used, but from an ethical perspective I tend to think that such terms should automatically be considered unfair in law. We have a legal system to resolve our differences, and allowing a contract to specify that one party may not avail themselves of that system without jumping through hoops is just undermining the legal system. The only reason someone could possibly have for that is if they wanted to pull a fast one that the legal system would not let them get away with. I do appreciate that for two large organisations with effectively equal bargaining power this might not be the case, but I think with things like this it's always best to err on the side of caution.
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.