Before going into the details of this disturbing case, the reader will need to understand what the legal term adhesion contract means. An adhesion contract is a contract that is prepared by one party and which the other party has no opportunity to negotiate or change. The most common adhesion contracts, as in this case, occur when large companies prepare contracts that their customers are required to sign, without negotiation or alteration.
Here’s what happened. AT&T Mobility conducted a promotion offering free phones to customers. As part of the free phone promotion, customers had to sign a contract. The contract was an adhesion contract that required, among other things, that all disputes be resolved by arbitration. AT&T provided free phones but then billed customers “sales tax” on the retail value of the phones. The average customer likely received an unexpected $5 or $10 on his/her bill as a result. A class action suit was initiated alleging false advertising and fraud on the part of AT&T.
Adhesions contracts are generally not favored in the law. Following that reasoning, the California Supreme Court, in the Discover Bank case, found that arbitration clauses in adhesion contracts can be unconscionable if such provisions disallow class proceedings.
The U. S. Supreme Court, in a 5-4 decision along the usual lines, tossed the reasoning of the California Supreme Court, turned the adhesion contract doctrine on its ear, and held that arbitration clauses in such cases are enforceable. Then they went even further. Not only can parties not maintain class action lawsuits in such cases, they cannot even bring class action arbitration claims. Kennedy wrote the majority opinion. Breyer wrote the dissent.
At a practical level this means that each individual affected must demand and pursue separate arbitration. Arbitration, for those who have never been involved in one, usually necessitates the hiring of a lawyer, the payment of often thousands of dollars in arbitration fees, and enormous amounts of personal time and effort to work through the process. In a class proceeding, the individual commitment of time and money is removed. Where each individual’s damage is relatively small, as in this case, class action is often the only realistic way to right a wrong.
By forcing individual arbitration through the device of adhesion contracts, the vast majority of people will opt not to pursue their remedies resulting in a windfall to companies like AT&T Mobility for their illegal conduct. How many of us would go through the legal, personal and financial commitments required for arbitration over $5 or $10 that we were wrongfully billed?
The Robber Barons win again. And, once again, the Roberts Court turns a blind eye to the people, consumers, and to justice.
Do you know who Nicholas Merrill is? You should. He’s an American hero. Not the kind who died on a battlefield for his country. The kind who, as an average citizen, fought for his rights, and yours, against the full weight of the United States government, and won. Nicholas Merrill is an Internet entrepreneur who, in 2004 ran a startup company called Calyx. He is also the John Doe in John Doe v. Ashcroft who successfully challenged the FBI’s right to issue “National Security Letters”. Why haven’t you heard of him? Because, for six years, he has been under and obeyed a court gag order that he not reveal his identity. Eleven days ago that gag order was partially lifted, and Nicholas Merrill can now speak.
“NOT the whiteman’s bitch” is the candidate’s phrase Ieshuh (eye-ee-sha) Griffin wants to use on the ballot in her Independent run for the Wisconsin State Assembly.
Last Wednesday, Senator Lindsey Graham (R-SC) announced that he was considering offering a Constitutional Amendment to end birthright citizenship. Since then Senate Minority Leader Mitch McConnell (R-KY), Jon Kyl (R-AZ) and John McCain (R-AZ) have said that they believe hearings should be held on the subject. Well, fine. If you believe that birthright citizenship is a problem worthy of your attention, a Constitutional Amendment is the proper way to address it. But, that’s not the way prominent liberals are portraying Graham’s proposal or the agreement of others that hearings are appropriate.
In April, the United States Supreme Court, in an 8-1 decision, found unconstitutional the 1999 law seeking to outlaw crush videos. Crush videos depict a sexual fetish that involves killing animals, often with stiletto heels. The prior law sought to make it a criminal offense to produce, sell, distribute or own such videos.
When I say “comment here” in the headline, I don’t mean Elijah’s Sweete Spot. I have something much more “dangerous” in mind. Today is the first day of the Federal Register’s new website, a little bit of wonk heaven online.