Court allows contracts forbidding class-action arbitration

Businesses may use standard-form contracts to forbid consumers claiming fraud from banding together in a single arbitration, the Supreme Court ruled on Wednesday in a 5-to-4 decision that split along ideological lines. “The decision basically lets companies escape class actions, so long as they do so by means of arbitration agreements,” Brian T. Fitzpatrick, a law professor at Vanderbilt University, said. “This is a game-changer for businesses. It’s one of the most important and favorable cases for businesses in a very long time.”

Having recently finished Scorpions (Black, Douglas, Jackson, Frankfurter) and  Justice for all (Earl Warren), and just started reading an Abe Fortas biography, the Court is particularly of interest to me (now; for long it has been of interest for me).

A couple filed a lawsuit against AT&T Mobility seeking class-action treatment. The company, relying on the contract, responded that the case could neither proceed in court nor as a class action in any forum. But lower federal courts refused to enforce the arbitration agreement and allowed the case to go forward. They relied on a 2005 ruling from the California Supreme Court that barred class waivers as unconscionable.

The Gang of 5 (Scalia, Roberts, Alito, Thomas, and, alas, Kennedy, handed business a victory. Predictably. Just as predictably, AT&T in a statement on Wednesday, said the decision was “a victory for consumers.”

 A consumer loses, and the company calls it a victory for consumers. Surely the Gang of 5 would agree.