(Aug 1, 2011)
A May ruling by the U.S. Supreme Court could potentially lead to the termination of consumer class actions. What is a consumer class action, you may be asking? It is basically a lawsuit where multiple plaintiff’s combine their cases to sue a company due to that company’s actions.
This ruling now gives companies the ability to include arbitration clauses in their contracts, forcing consumers to take up cases individually, as opposed to filing class actions. Although the U.S. District Court and the 9th Circuit ruled that waivers that barred class actions were unconscionable (unreasonably excessive). However, the Supreme Court reversed this ruling.
Critics do not like the outcome of this ruling because large corporations can just avoid accountability by incorporating arbitration clauses. This means that if a consumer wants this product, they will either comply with the written contract, or they can choose not to purchase the product or service. With no negotiating powers, consumers’ rights take a major blow.
There is still some hope, though. Hours after the Supreme Court made their decision, lawmakers said that they would try to reincorporate class actions into the system. Many times these lawmakers have tried to pass the Arbitration Fairness Act, yet it never makes it out of committee. This Act would ban mandatory arbitration clauses so consumers could participate in class action suits if needed.
We should all hope that these lawmakers get the Arbitration Fairness Act, because – as the name suggests – it is what is fair. These large corporations have the money and resources to hire their attorneys, whereas individuals will not have that same luxury. The discovery process – arguably the most important process in finding incriminating evidence on your opponent – is virtually impossible when one small plaintiff has the burden of bringing down a huge corporation.
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