In the latest of a series of decisions closing the courthouse doors on consumers, the US Supreme Court ruled, 6 to 3, that DIRECTV customers in California who were illegally charged “cancellation fees” of up to USD480 cannot join together to sue the company in court.
Instead, the high court ordered, each consumer must have each complaint adjudicated through a private arbitration system established by DIRECTV (now owned by AT&T (NYSE: T)). The case is DirecTV, Inc. v. Imburgia, et al. The opinion is available at: http://www.consumerwatchdog.org/resources/supremecourtdecisiondtvvimburgia.pdf
The Court acknowledged that the arbitration clause drafted by DIRECTV said it would not apply if California state law barred such clauses. But the Court held that the California the California Court of Appeal´s decision applying California law appeared to discriminate against arbitration. This is the first time the US Supreme Court has reversed a state court decision on arbitration on the ground that the state court misapplied state contract law.
Justice Breyer authored the opinion, in which he was joined by Chief Justice Roberts and Justices Scalia, Kennedy, Alito and Kagan. Justices Ginsburg and Sotomayor dissented, as did Justice Thomas.
“This is another troubling day for American consumers who are ripped off by corporate greed and malfeasance, whether it´s a satellite TV system that doesn´t work, unlawful credit card fees, or a defective vehicle,” said Harvey Rosenfield, founder of Consumer Watchdog, and one of the lawyers who represented consumers in the litigation. “The Supreme Court has taken away Americans´ only right to obtain justice: their day in court. The more the US Supreme Court allows big corporations to evade accountability, the less confidence Americans have in the judicial branch and the rule of law.”
The Imburgia, case comprises two consolidated class action cases filed in state courts in California in 2008.
The arbitration systems created by big corporations bear little resemblance to the traditional American system of justice. An arbitrator takes on the role of the judge, jury, and court of appeals. An arbitrator makes final decisions that are nearly impossible to challenge, even if they are obviously wrong and unfair.
Justice Ginsburg dissented to the decision, saying, “It has become routine, in a large part due to this Court´s decisions, for powerful economic enterprises to write into their form contracts with consumers and employees no- class-action arbitration clauses…. Acknowledging the precedent so far set by the Court, I would take no further step to disarm consumers, leaving them without effective access to justice.”
Consumer Watchdog is a non-profit, non-partisan public interest organization established in California in 1985. The organization fights to protect consumer rights in the courts, in the legislature, and through public education. It has offices in Los Angeles and Washington, D.C.
Evans Law Firm, Inc. is a San Francisco-based plaintiff´s firm that has a special interest and focus in litigating class action and consumer fraud lawsuits, as well as elder abuse (financial and physical), and Qui Tam/false claims actions.