[bloomberg] A divided U.S. Supreme Court bolstered the ability of businesses to channel customer and employee complaints into arbitration, ruling that companies can block people from pressing those claims as a group.
Voting 5-4 along ideological lines, the court said an AT&T Inc. (T) unit can enforce a contract provision that requires its wireless customers to press any claims individually in arbitration. The majority said a U.S. arbitration statute trumps a California law that would have invalidated the provision.
The case may affect tens of millions of arbitration agreements in California alone, including provisions in employment agreements, consumer loan applications and cable- television contracts. The ruling will also help companies in at least 18 states where companies now are restricted or barred from requiring consumers to accept class-action bans.
“It changes the law completely” in those states, said Alan Kaplinsky, chairman of the consumer financial services practice at Ballard Spahr LLP in Philadelphia.
Justice Antonin Scalia said in his majority opinion that class actions would interfere with “fundamental attributes of arbitration,” including its streamlined nature.
“The switch from bilateral to class arbitration sacrifices the principal advantage of arbitration -- its informality -- and makes the process slower, more costly and more likely to generate procedural morass than final judgment,” Scalia wrote.
Class Actions Limited as U.S. Supreme Court Supports AT&T