Supreme Court Lets Corporations Ban Class Actions

"This morning, the US Supreme Court dealt a crushing blow to American consumers and employees, ruling that companies can ban class actions in the fine print of contracts." - Attorney Deepak Gupta.

Supreme Court AFP File image

Stephen Lendman, Contributing Writer
Activist Post

In an earlier article I discussed hurdles ordinary people face before America's High Court.  Saying pro-business rulings aren't new, it suggested the most damaging one occurred in 1886.  In Santa Clara County v. Southern Pacific Railway, the High Court granted corporations legal personhood. Ever since, they've had the same rights as people without the responsibilities. Their limited liability status exempts them.

As a result, they've profited hugely and continue winning favorable rulings. Today more than ever from the Roberts Court, one observer calling its first full (2006-07) term a "blockbuster" with the Court's conservative wing prevailing most often.

Through today, it's been much the same, notably in its January 2010 Citizens United v. Federal Election Commission decision, ruling government can't limit corporate political election spending as doing it violates their First Amendment freedoms. Writing for the 5 - 4 majority, Justice Anthony Kennedy called it legal "political speech," effectively putting a price tag on democracy.

The decision overruled Austin v. Michigan Chamber of Commerce (1990), restricting corporate political spending because their resources unfairly influence electoral politics, and McConnell v. Federal Election Commission (2003), upholding part of the Bipartisan Campaign Reform Act of 2002 (the McCain-Feingold Act), restricting corporate and union campaign spending.

Citizen's United set a precedent, but does it matter given the power of big money and past failures to curb it, Professor John Kozy saying at the time:

"Expecting the Congress, most if not all of whose members reside deep in corporate pockets, to eliminate that influence can be likened to expecting the rhinovirus to eliminate the common cold. Corporate money (in large or smaller amounts) is the diseased life-blood of American politics; it carries its cancerous spores to all extremities."

Kozy also cited Justice Oliver Wendell Holmes' Lochner dissent, saying "the Court has taken its task to be the constitutionalization of a totally immoral, rapacious, economic system instead of the promotion of justice, domestic tranquility, the general welfare, and the blessings of liberty."

Of course, the same judgment applies throughout Court history with past civil libertarians far outnumbered by established order supporters and big money interests that run it. As a result, for every William Brennan and Thurgood Marshall there have been dozens of John Jays (the first chief justice), Roger Taneys, William Howard Tafts, Scalias, Burgers, Rehnquists, and Roberts.

It's why Michael Parenti calls the Supreme Court America's "autocratic branch" of government, affirmed shamelessly in its April 27 AT&T v. Conception decision.

America's Supremes Deny Class Action Redress

After the ruling, Dow Jones Newswires Brent Kendall headlined, "US Supreme Court Blocks Class Action Against AT&T Unit," saying:

The Court blocked "a class action lawsuit alleging AT&T Inc. (T) wireless subsidiary acted fraudulently by charging sales tax on cellphones that it advertised as free. The case was considered a test of the enforceability of arbitration agreements that bar individuals from pooling their claims together in a class action."

Earlier, two California federal courts ruled that AT&T Mobility's wireless contract arbitration agreement was not enforceable because it blocked class actions. On April 27, the Supreme Court overturned them. Writing for the majority, Justice Antonin Scalia said permitting group suits runs afoul of federal law promoting arbitration.

Dissenting, Justice Stephen Breyer said requiring consumers to arbitrate individually forces them to abandon small claims, too costly to litigate.

The case involved Vincent and Liza Concepcion's complaint about the $30.22 sales tax on AT&T's cellphone promoted as free. As a result, Breyer added:

"What rational lawyer would have signed on to represent (them) in litigation for the possibility of fees stemming from" an amount that small, effectively shutting them out entirely from judicial redress.

Still pending before the court is the largest class action in US history - Dukes v. Wal-Mart Stores, Inc. It involves sexual job discrimination, claiming the company violated Title VII of the 1964 Civil Rights Act by denying women equal promotion opportunities as men.

Wal-Mart lawyers now want the case dismissed on behalf of 1.5 million current and past female employees. Doing so, however, will be a crushing blow to aggrieved company employees and millions of others henceforth for redress it appears the ruling now denies.

Public citizen attorney Deepak Gupta represented the Concepcions before the High Court. After the decision he said:

"This morning, the US Supreme Court dealt a crushing blow to American consumers and employees, ruling that companies can ban class actions in the fine print of contracts."

So whenever you "sign a contract" for a cell phone, bank account, credit card, employment, or other purpose, "you may be giving up your right to hold companies accountable for fraud, discrimination or other illegal practices."

In its latest unprincipled decision, the Court ruled 5 - 4 that corporations may use arbitration clauses to prevent consumers and employees from using class actions to hold them accountable, requiring individual litigation instead.

In fact, class actions, like Brown v. Board of Education, are an essential litigation tool. Their fate shouldn't be decided by corporate fine print "take-it-or-leave-it contracts" only lawyers understand.

The 1925 Federal Arbitration Act facilitated private arbitration settlements in state and federal courts, applicable to interstate commerce transactions under the Constitution's Commerce Clause. Henceforth, it will shield corporations from accountability, making it harder for people to litigate "civil rights, labor, consumer, and other (type) claims," resulting from corporate wrongdoing by "join(ing) together to obtain their rightful compensation."

As a result, says Gupta, it's essential for Congress to enact legislation "ending forced arbitration in consumer and employment contracts," but expect no redress from a Republican controlled House and a pro-business president claiming populist credentials.

As a result, expect CEO's from AT&T, Wal-Mart and other corporate predators to sleep comfortably henceforth, knowing America's High Court backs their right rip off consumers and employees with impunity.

Stephen Lendman is the author of How Wall Street Fleeces America and The Iraq Quagmire.   Listen to his cutting-edge Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog site atsjlendman.blogspot.com.


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