WASHINGTON-The Supreme Court on Monday ruled a DirecTV arbitration requirement barred customers upset over early- termination fees from filing a class-action lawsuit.
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In March, the Federal Trade Commission filed a complaint in a San Francisco federal court accusing DirecTV of misleading consumers along lines similar to those in the California case.
The justices by a 6-3 vote overturned a state ruling and threw out a class-action lawsuit against DirecTV over its termination fees for customers who canceled its service.
The court agreed to hear the case after a California appeals state court ruled that a clause in the satellite operator’s subscriber contract made arbitration unenforceable.
“The more the U.S. Supreme Court allows big corporations to evade accountability, the less confidence Americans have in the judicial branch and the rule of law”. According to the opinion, “Absent any indication in the contract that this language is meant to refer to invalid state law, it presumably takes its ordinary meaning: valid state law”. The Second District California Court of Appeal rejected DIRECTV’s contentions in April 2014.
Instead, the high court ordered, each consumer must have their complaint adjudicated through a private arbitration system established by DIRECTV (now owned by AT&T).
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Writing for the dissenters, Justice Ginsburg said it had become common for powerful companies to include such no class-action arbitration clauses and said he would have “take[n] no further step to disarm consumers, leaving them without effective access to justice”. Justice Ginsburg (joined by Justice Sotomayor) dissented, while Justice Thomas had a separate dissent. It was the latest in a line of cases where the court has enforced fine-print form contracts requiring disgruntled consumers to pursue their claims through individual arbitration rather than in the courts. The company then petitioned the U.S. Supreme Court, which held oral argument on the case October 6, 2015. Companies have the right to choose arbitrators that they think will unfairly favor the company. Yet again, the Court upheld the ability of a powerful corporation to force consumers to agree to arbitration and sign away their right to engage in class action should the company violate their legal rights.
