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U.S. Supreme Court

AT&T Case to Be Argued Today Could Doom Class Actions

Posted Nov 9, 2010 10:07 AM CDT
By Debra Cassens Weiss

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The U.S. Supreme Court is hearing a case today that could “end class-action litigation in America as we know it,” according to a law professor who studies the subject.

Writing in the San Francisco Chronicle, Vanderbilt law professor Brian Fitzpatrick says the case has a low profile, but it could be one of the court’s most important cases in years.

The case was brought by cell phone customers Vincent and Liza Concepcion, who are suing AT&T for advertising discounted cell phones but charging sales tax on the full retail price. AT&T contends their suit can’t be maintained as a class action because of provisions in their cell phone contract requiring arbitration and banning class actions.

AT&T maintains the contract provisions are enforceable under the Federal Arbitration Act and a Supreme Court ruling interpreting the law, Stolt-Nielson v. Animal Feeds, the Washington Post reports.

But the Concepcions argue Stolt-Nielson doesn’t apply because all the parties in that case had benefit of legal counsel. They want the court to uphold California court rulings finding the contract provisions were unconscionable as applied to consumers.

According to Fitzpatrick, now a visiting professor at Fordham Law School, a ruling for AT&T could have “staggering” consequences. “It could be the end of class action litigation,” he writes. Most class actions involve suits by consumers, employees or shareholders in transactional relationships with corporations that will likely ban class actions in their contracts if the court rules for AT&T.

The Post says a ruling for AT&T could doom a class action against Hooters restaurants over alleged labor law violations in Washington, D.C. The plaintiffs contend the restaurants require them to arrive early without pay, buy expensive uniforms and give portions of their tip money to other employees.

Hat tip to the Wall Street Journal Law Blog.

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