U.S. Supreme Court to Decide If Class Actions May Be Banned by Arbitration

AARP's Brief

AARP joined with other consumer advocates in filing a brief in support of the Concepcion's position that the Federal Arbitration Act ("FAA") does not prohibit class action relief in arbitration. The brief argues that contracts are traditionally interpreted under state law, and that the federal law favoring arbitration does not preempt these state laws. The brief, filed by attorneys with AARP Foundation Litigation, further argues that the ability of consumers to file class actions is vital to ensure that they will be able to seek remedies for wrongdoing in the marketplace.
 
The brief points out that many of the laws preventing fraud and unfair, abusive and deceptive practices in the marketplace are designed to be enforced primarily through private lawsuits, not by a state or federal enforcement agency paid with taxpayer dollars. But such laws typically are not enforced unless claims can be brought as a class action, because legal fees make the cost of litigation prohibitive for individual claims. The brief provides numerous examples of cases in which consumers would not have been able to recover illegally imposed charges if a class action had been unavailable.

What's at Stake

If the court agrees with AT&T that a class action ban does not make an arbitration provision unenforceable, or that state contract law requiring the availability of class actions is preempted by the FAA, consumers will effectively lose their day in court. Because it is difficult and expensive to arbitrate claims, most people will not seek a remedy to recover small amounts illegally charged. Worse, businesses will have little incentive to avoid cheating their customers.