The United States Supreme Court recently indicated in DirecTV vs. Imburgia, that business have a right to impose arbitration on consumers in company contracts, wiping out the consumer’s right to sue. Forced arbitration is favorable to large companies as it gives them the power to call the shots, and many consumers don’t find the “justice” that can be obtained through arbitration to be worth the effort, time, and money that it takes to go through completing the arbitration process. The consumer gets taken advantage of while the company remains in control, and able to bypass consumer protection laws by hiding behind a forced arbitration contract clause.
Background Of DirecTV v. Imburgia
In 2007, Amy Imburgia was charged a hefty early termination fee by DirecTV, in compliance with her service contract with DirecTV. The contract also stated that all disputes would be resolved through arbitration and that she could not join a class action concerning any disputes with DirecTV. However, Imburgia sued through a consumer class action lawsuit because in the state of California at the time the class action was brought forced arbitration clauses were considered by California consumer protection laws to be unconscionable, and thus unenforceable.
While the case was pending in state court, the U.S. Supreme Court issued a ruling in AT&T Mobility LLC v. Concepcion, holding that the Federal Arbitration Act provides for honoring arbitration agreements that are written into company contracts, despite state laws that may be more favorable to consumers.
The Supreme Court Holds Firmly To Their Position from Concepcion
Normally, when consumers are being mistreated by corporations in such a way that the loss to each customer is too small to address individually in court, a group of consumers can band together and file a class action lawsuit. Filing a class action as a group of consumers is a more efficient and effective means for individual consumers to address their grievance against the corporation.
However, the Supreme Court’s ruling in Concepcion, and now in DirecTV v. Imburgia, specifically prevents such action when companies have a contract in place requiring forced arbitration. The High Court’s position centers on how federal laws like the Federal Arbitration Act is the law of the land, and as such it is binding on all state courts. Since there is a strong federal policy in place that supports arbitration, state courts are required to enforce forced arbitration clauses in business contracts.
Consumers are the ones that will be hurt by this decision, and until some other entity, such as legislators or regulatory agencies can intervene and place restrictions on the actions large companies are able to take against consumers, forced arbitration is something that consumers will just have to deal with.
Contact A New York Consumer Class Action Lawyer
Not all companies are able to impose forced arbitration on consumers, especially corporations who do not or cannot require consumers to sign a contract forfeiting the consumer’s right to sue. As such, consumer class action lawsuit are still a viable means for addressing consumer losses, for instance when a product defective or was falsely advertised. Contact a class action lawyer at the Bromberg Law Office, P.C. today to schedule an appointment.