I Can Has Class Actions?

During the Supreme Court’s last term, Dukes v. Wal-Mart Stores, Inc. received a lot of attention. The case threw out a class action discrimination suit because the class members’ injuries weren’t common enough. Most of America was rightfully horrified that one of the world’s largest corporations might get away with systematic discrimination simply because the class members couldn’t show that they were all discriminated against in the same way.

But while we concerned ourselves with Dukes, an even more sinister ruling flew under the radar. It’s terrible that the women from Dukes couldn’t prove a commonality of injury, but what if they, and the rest of us as well, were foreclosed from ever filing a class action at all?

That’s where we’re headed, thanks to AT&T Mobility v. Concepcion.

Concepcion dealt with systematic and possibly intentional tax overcharges, but to the trivial tune of $15 per person. Even though the plaintiffs’ contract with AT&T contained a mandatory binding arbitration clause that foreclosed the use of the class action tool, California law permitted a state class action suit to override an arbitration clause.

Well, it used to, anyway. The Supreme Court, invoking the Federal Arbitration Act of 1925 (FAA), ruled that an arbitration clause that disclaims class actions is always enforceable, in perpetuity, throughout the universe, no matter what state law says. Preemption, you know.

It’s only arbitration, right? Arbitration supposedly takes trifling cases out of our over-burdened court system, and that’s a good thing. Except when it’s not, as the former Chief Justice of the West Virginia Supreme Court found out during his very short stint in the arbitration business. Arbitration costs are much higher than court fees (and if the corporation wins, it will ask that the loser also pay the winner’s arbitration costs). Arbitration is also exceedingly unfair: an arbitrator finds for the party paying him or her far more often than for the other party. This arrangement benefits corporations; after all, they’re paying for the arbitration. It also puts more than a few thumbs on the scale of justice, as arbitration settlements are just as enforceable, and just as res judicata, as the ruling of a regular court, but without the court’s impartiality, at least according to Chief Justice Neely.

Onlookers criticizing Concepcion also criticized the FAA, the law responsible for this situation. Congress passed the FAA in 1925 to encourage the use of binding arbitration in contracts. Now we’ve swung in the opposite direction: arbitration is invoked at every turn, even in situations that weren’t intended by the FAA. Following the Concepcion decision, two senators and one representative announced they would introduce the Arbitration Fairness Act (H.R. 1873 and S. 987), which would permit class actions in civil rights, employment, or consumer disputes, no matter what the arbitration agreement says. This legislation had better get passed fast; otherwise, when that Coca-Cola bottle explodes in your hand, you’ll be staring down an arbitrator paid by Coca-Cola, no matter how many other people experienced the same exploding-bottle problem.