Who Do You Side With? Telco Lawyers And Binding Arbitrators Or Class Action Lawyers?

from the pick-a-side-and-hold-your-nose dept

There are times when you hear of lawsuits and you really don't know who to favor. In the latest such case, the Supreme Court has turned down an appeal from T-Mobile on an appeals court decision that said that T-Mobile's contract terms requiring "binding arbitration" are unenforceable if those contracts also ban class action lawsuits against the company. This doesn't mean the Supreme Court totally agrees with it, but it didn't find it worth getting involved at this point (often the Supreme Court will wait for different circuits to disagree on a point of law before weighing in -- but in the meantime, it appears that the Supreme Court is not upset by the lower court ruling).

As you probably know, many of the contracts you sign these days require binding arbitration, rather than the ability to go to court over a dispute. Companies like to claim this is because binding arbitration is faster and simpler, but it's really because arbitrators (who are hired by the company) side with the company over 95% of the time. At the same time, the companies also try to block you from being a part of any class action lawsuit, and it's this combination that the court found problematic.

The real issue here is pretty straightforward: companies are trying to get you to give up most of your rights contractually -- but not through any sort of negotiation. They're basically trying to ram through agreements in the fine print that you'll never read that take away any sort of remedy you might have against the company in case the company does something wrong. While a fair contract is one thing, these contracts are not fair; they are not negotiable, and they're often not at all clear. It seems that companies are taking them too far, often depriving customers of perfectly reasonable rights -- so it seems like a good thing that the courts are pushing back a little.

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  • identicon
    Anonymous Coward, 27 May 2008 @ 6:24pm

    What sort of binding

    You may not be legally able to take them to court for the issue indispute .... but it does not remove your rights to blab to the world about how the crooks stole your loot. You can post to every website you can find. Maybe they will take you to court for telling on them - and then you have them by the balls.

    reply to this | link to this | view in chronology ]

  • identicon
    Alex Hagen, 27 May 2008 @ 7:09pm

    Don't know who to favor

    "There are times when you hear of lawsuits and you really don't know who to favor."

    Um, are you on drugs Mike? It's not even a contest. Greedy corporations and their corrupt arbiters, or the only people who give any power at all to the the general public. Yeah, that's a tough choice.

    All forced arbitration should be illegal. And class action lawsuits, instead of being a joke that big corporations like this laugh at, should be beefed and actually be allowed to really hurt them when they break the law and injure consumers.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 27 May 2008 @ 7:58pm

      Re: Don't know who to favor

      Class action lawyers tend to be pretty scummy bastards who are only interested in the cash, and will pocket 90% of the damages in the Class Action.

      Still, this story doesn't even MENTION a class action lawsuit in place. Just that the contract tries to bar you from joining one.

      Mike what happened!? Normally your above sensationalism.

      reply to this | link to this | view in chronology ]

      • identicon
        Cranky Old Bastard, 27 May 2008 @ 8:41pm

        Re: Re: Don't know who to favor


        Belonging to you = "your"

        You are = "you're"

        (Don't thank me, I do this for the sheer enjoyment of it.)

        reply to this | link to this | view in chronology ]

  • icon
    Derek Kerton (profile), 28 May 2008 @ 11:31am

    Ever Been In A "Class"

    RE #2,

    Alex, have you ever been included in a Class for a Class Action Lawsuit (CAL)? I have been a few times. It's easy to get in one, because the CAL lawyers recruit furiously to try to make the Class as large as possible, so that they can increase the overall scale of the damages they may claim.

    Then, if the Class wins, a settlement occurs that, to you, sounds like a lot of money, say $15M. Great, with 100,000 people in the Class, you stand to get $150. That is probably what the telco/utility/gym ripped you off for. Great! Except that $15M needs to have some expenses taken off, making it $10M. Then The lawyers need to take their 90% cut, leaving $1M. OK, you get ten bucks!

    BUT the defendants argue that it is just too much of a hassle to send everyone a $10 check, so they request that each person in the Class should come into one of their retail locations to pick up a $10 voucher, which can be used for any of their goods and services. The Class' lawyers don't really care, so long as they get their check for $9M, so they agree.

    Now, only a very small portion, say half, of the people in the Class actually bother to go to the retail location to pick up their $10 voucher. And while there, some of them are convinced by the sales staff to upgrade to the latest phone/service plan/tennis court membership.

    Net result, one big news headline, many Class members people get nothing, some get a lousy $10 voucher that they apply to their bill, some get duped into actually spending MORE money with the company, and the CAL lawyers take their $9M, and happily move on looking for the next CAL.

    On the upside, the corporation has been taught a lesson. On the other hand, the people who were wronged get pretty much nothing. The only winners are the CAL lawyers.

    Now do you understand Mike's quote, "There are times when you hear of lawsuits and you really don't know who to favor."?

    reply to this | link to this | view in chronology ]

  • identicon
    JB Weld, 21 Oct 2008 @ 10:29am

    White collar crime is a growth industry and binding arbitration is a tactic they employ to rape the masses.

    Pardon the unabomber !!!!

    Ted had the right idea, he just needed a little help with target selection. Larceous executives won't have much use for the millions they steal without their fingers, arms or heads.

    reply to this | link to this | view in chronology ]

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