The United States Supreme Court last week ruled on a case that will have an effect on consumer rights across the country. In what Deepak Gupta, an attorney for Public Citizen called "a crushing blow," the Supreme Court ruled in a 5-4 decision that companies can ban class action lawsuits in a contract's fine print.

Many of us have received a small check from a class action lawsuit, which is a way that a large group of customers can take action against a company when they have a grievance (for instance unfair fees, discrimination, errors in billing, etc). By presenting themselves as a large group, the lawsuit has a greater impact than if a single individual were suing, and the overall impact on a company is great enough to impact change.

The Supreme Court case was called AT&T v. Concepcion, and involved customers of AT&T who were suing over the cost of sales tax on AT&T wireless phones that had been advertised as free. Justice Scalia wrote the majority opinion, which was also backed by Justices Roberts, Kennedy, Thomas and Alito.

The result of the decision, according to Public Citizen's attorney Deepak Gupta:

"Now, whenever you sign a contract to get a cell phone, open a bank account or take a job, you may be giving up your right to hold companies accountable for fraud, discrimination or other illegal practices. Class actions are an essential tool for justice in our society. Brown v. Board of Education was a class action. The fate of class actions should not be decided through the fine print of take-it-or-leave-it contracts."

The Washington Post reported the decision by saying that "large corporations won a substantial victory", and consumer groups are concerned over the impact. The issue has garnered the attention of a group of legislators, who will be introducing legislation that would restore the right of consumers to seek justice in the courts. Senator Al Franken (MN) is introducing the bill, called the Arbitration Fairness Act, joined by Senator Blumenthal (CT) and Rep. Hank Johnson (GA).

Further Reading

• Supreme Court rules for AT&T in arbitration case. Reuters Canada, 04/27/11.
• In AT&T v. Concepcion, U.S. Supreme Court Deals Crushing Blow to Consumers. Public Citizen, 04/27/11.
• U.S. Supreme Court will decide fate of class-action consumer suits in AT&T v. Concepcion. Public Citizen, 11/09/10.
• Another 5-4 Supreme Court win for corporations- the end of class action lawsuits. Daily Kos, 04/28/11.
• Supreme Court says arbitration agreements can ban class-action efforts. Washington Post, 04/27/11.
• Sens. Franken, Blumenthal, Rep. Hank Johnson Announce Legislation Giving Consumers More Power in the Courts against Corporations. Press release, Senator Franken's office, 04/27/11.