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Court Rules Against AT&T's Service Agreement
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."
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Isn't AT&T's service agreement just as silly? The judge in the case appears to think so.
I'm a big tall mofo.
As the FTA mentions, these arbitration clauses are widely-used elsewhere. AT&T will appeal to federal court, and win.
This really is an activists' decision -- modern legal theory is far more supportive of arbitration than the class action process. Many states don't even have class action anymore. They're a racket; only the head, and the attorneys make money.
Thank you Judge Skywalker.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
The modern abuse of arbitration clauses reminds me of the "right to contract" cases. Contracts are often little more than legal cudgels, designed to exploit the difference in power between the two parties to the benefit of stronger party. The arbitration system is a perversion of justice and should be eliminated.
Mea navis aericumbens anguillis abundat
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.
They're using their grammar skills there.
These arbitration clauses are also widely-overturned. This is hardly news--courts have been striking them down left and right for a decade now. Binding arbitration agreements are among the most common provisions stricken from agreements, including EULAs (in fact, it's the most common violation stricken down in software licenses).
The basic premise is that choosing ADR should be preserved as an option, but waiving your rights to contest actions in order to get service is wrong. It is. It has little to do with class actions--it's about litigating your individual grievances with the company.
Contrary to the editorializing in the summary, however, it has nothing to do with anything other than the fact that binding arbitration is disfavored as a lopsided provision offering no advantage to the customer.
Binding arbitration clauses can be fine, even in adhesionary contracts, and the court even mentions this:
We emphasize that these provisions have nothing to do with arbitration. Arbitrators supervise class actions, conduct open hearings, apply appropriate statutes of limitations, and award compensatory and punitive damages, as well as attorney fees, where appropriate.
The issue is where they are substantively unconscionable, as here, where ATT has also stricken out the availability of class actions:
A&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.
Because any party's foreseeable claims would be very small, by removing the ability to file a class action, ATT was essentially immunizing themselves from suits - no lawyer is going to take a case, even on contingency, that's worth only $10 or $15... But if it's $10 or $15 to fifty-thousand customers, now you're talking.
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.
Because they are far more draconian than At&T's ever was.
Just saying, most Game Company EULAs actually state that you don't even get a service in return for your payments and that your payments are non-refundable and you have no expectations of privacy and your computer is for all intents and purposes the property of the gaming company for as long as their software resides on your computer...
I wish I was making this up but as you can see here (the most popular online game in the world):
http://www.worldofwarcraft.com/legal/eula.html
http://www.worldofwarcraft.com/legal/termsofuse.shtml
I'm not. And as an even more negative note this EULA actually stood up in court of law.
http://virtuallyblind.com/2008/07/14/blizzard-wins-sj-mdy/
Your RAM is actually Blizzards. You have no right to sue. You have no right to a refund. You have no right to class action. You have no right to communicate to anyone about what Blizzard communicates to you. Because, it is all copyright. That is a huge legal determination.
This brings us back to the topic at hand, AT&T. Because in all honesty, "waive the right to class actions, require confidentiality, shorten the Washington Consumer Protection Act statute of limitations, and limit availability of attorney fees." these things have already been ruled as legal in several gaming company cases and RIAA cases (which for brevity I did not touch on).
To tell AT&T (and every other company on the planet)that they are breaking the law because they are not using copyright as the rational for their arguments makes absolutely no legal sense whatsoever.
Because the end result is that all company claims against their consumers will be twisted in to copyright claims and therefore automatically upheld...
Thanks to eating disorders most chicks are reasonably good looking these days.
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.
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)