Consumer Protection at the Supreme Court.

Stephanie Mencimer and Dahlia Lithwick have excellent roundups of yesterday's dreary but very important oral arguments in AT&T v. Concepcion. The case involved an AT&T customer who was charged more than $30 in taxes on a "free" cellphone. After they were sued, AT&T argued that their customers were bound by the mandatory arbitration clauses written into the fine prints of their contracts.

Some background: Mandatory arbitration is advantageous for companies and disadvantageous to customers for two reasons. First, in arbitration proceedings cases are heard by arbitrators selected by the companies rather than an independent judge (though in some states and in Republican-dominated federal courts, there's less of a distinction between the two than one might hope). Second, these clauses require that consumer claims be brought individually rather than as class actions. That discourages people from speaking up because in many cases it may not be worth the time for individual consumers to pursue redress for being ripped off and in all but the worst cases it's not worth the lawyer's time. In other words, taking class-action lawsuits out of the picture gives companies latitude to rip off their customers.

In AT&T v. Concepcion, two lower courts have held that the mandatory arbitration provisions are unenforceable under California law. AT&T counters that this California law was "preempted" by the Federal Arbitration Act, while the customers contend that California is entitled to determine whether or not the actions of the company were so "unconscionable" that the arbitration clause isn't enforceable.

Given the remarkable success that the Chamber of Commerce (which is, of course, supporting AT&T's right to rip off its customers without facing sanctions in a real court of law) has enjoyed in the Roberts Court, this case would be a depressingly easy win for the phone giant. As both Mencimer and Lithwick point out, however, the issues in this case make it a little more difficult to predict. One key factor is the difference between the court's Republican ideologues, Roberts and Alito, and its conservative ideologues, Scalia and Thomas. There's a large but not perfect overlap between them, because in some cases the larger conservative principles that the latter two but not the former two are interested in conflict with Republican business interests. Thomas, in particular, has sometimes rejected "preemption" arguments, and Lithwick's reporting suggests that Scalia is skeptical of AT&T's arguments as well. On the other hand, some of the Court's more "liberal" members tend to be very pro-business, with Breyer in particular having a poor record in this area. I wouldn't begin to predict how this case will come out, but it may come down to one thing: the essentially unknown views of Elena Kagan.

--Scott Lemieux

You may also like

Advertisement