Posts Tagged ‘Supreme Court’

Companies can block customers’ class-action lawsuits, Supreme Court rules

Justices rule in a Southern California case that firms can force customers to arbitrate their complaints individually. The ruling is seen as a major victory for corporations

By David G. Savage, Los Angeles Times April 28, 2011

The Supreme Court dealt a blow to class-action lawsuits that involve small claims affecting thousands or even millions of people by ruling that corporations may use arbitration clauses to block dissatisfied consumers or disgruntled employees from joining together.

In a 5-4 decision, the justices said Wednesday the Federal Arbitration Act of 1925, originally aimed at disputes over maritime and rail shipments, trumps state laws and court rulings in California and about half the states that limit arbitration clauses deemed to be “unfair” to consumers.

The ruling was “the biggest ever” on class actions, said Vanderbilt University law professor Brian Fitzpatrick, an expert on such litigation.

“It gives companies a green light to exempt themselves from all class actions from their customers or from their employees,” Fitzpatrick said. “Companies can basically escape from the civil justice system. And why wouldn’t a company take advantage of that?”

It has become routine now that when someone opens a bank account, subscribes to a cable TV service, buys a cellphone, a computer or a new car or makes a purchase online, he or she agrees to let disputes go to arbitration.

Many employers include the same kind of fine print for new hires, blocking class-action suits for employees with discrimination or wage complaints.

These arbitration clauses typically require individuals to bring claims on their own, not as a group.

Nonetheless, the California Supreme Court in 2005 said companies should not be allowed to “deliberately cheat large numbers of consumer out of small amounts of money” by shielding themselves from being sued.

But on Wednesday, the court’s conservative majority overruled those state judges and said arbitration clauses must be enforced even if they may be unfair.

Justice Antonin Scalia said companies like the “streamlined” arbitration proceedings because they are faster and cheaper.

Deepak Gupta, the Public Citizen lawyer who represented a California couple who sued over what was purported to be a free cellphone but cost about $30.22, agreed that the ruling in their case would have a broad effect.

It allows companies to use “the fine print of take-it-or-leave it contracts” as a “shield against corporate accountability,” he said.

Not all products or services come with arbitration clauses, but many do, he said. Some products, such as appliances, come with a box that includes fine-print contracts and an arbitration clause. These have been upheld as binding, even if the consumer did not sign the agreement, legal experts said.

Several business lawyers said class-action claims rarely work to the benefit of consumers anyway.

“I think this decision will help consumers, not hurt them,” said Alan Kaplinsky, a Philadelphia lawyer for the American Bankers Assn. “The only people who do well in the class-action suits are the lawyers. The attorneys get millions in fees, and the consumers get a worthless coupon. For them, it’s better to go through arbitration.”

Still pending before the court is a major dispute over class-action suits involving job discrimination.

Lawyers for Wal-Mart Stores Inc. have asked the justices to throw out a sex-discrimination claim brought on behalf of 1.5 million current and past female employees. Though the Wal-Mart case has attracted far more attention, Wednesday’s ruling on arbitration contracts could have a greater effect in blocking future class-actions suits on behalf of employees.

The decision is in line with a series of pro-arbitration rulings from the high court since the 1980s. They are all based on an obscure 1925 law that speaks of “maritime transactions.” It was passed to protect shippers and dealers who exchanged goods across the country. It said that if they agreed to arbitrate disputes, those deals would have to be enforced.

But in recent years, the court’s conservative majority has wielded that law to knock down objections to unfair arbitration clauses involving consumers.

Vincent and Liza Concepcion, who live in the San Diego area, were charged $30.22 in sales tax for what was promoted as a free cellphone. They tried to join a class-action suit against AT&T Mobility, but the company said the they would have to go to arbitration as individuals. Their cellphone contract prohibited class-action claims, the company said.

Judges in California — both federal and state — agreed with the Concepcions and ruled that the company could not enforce its ban on class-action claims. The Supreme Court reversed that decision in AT&T Mobility vs. Concepcion.

“Arbitration is poorly suited to the higher stakes of class litigation,” Scalia said. He was joined by Chief Justice John G. Roberts Jr. and justices Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito Jr.

The dissenters said a practical ban on class actions would be unfair to cheated consumers.

Justice Stephen G. Breyer said the California courts have wisely insisted on permitting class-action claims. Otherwise, he said, it would allow a company to “insulate” itself “from liability for its own frauds” by denying consumers a practical remedy.

Breyer added that a ban on class actions would prevent lawyers from representing clients for small claims.

“What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim,” he wrote. Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan joined his dissent.

The court itself divided along partisan lines. All five Republican appointees formed the majority, while the four Democratic appointees dissented.



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March 11, 2010

Supreme Judicial Court Rules Against Warrantless Search of Homeless Shelter

ACLU of Massachusetts applauds state Supreme Court decision prohibiting police searches of homeless shelters without occupants’ consent or a warrant.

BOSTON — Residents of homeless shelters must be protected against unreasonable searches and seizures under a ruling issued today by the Supreme Judicial Court of Massachusetts, in which the ACLU of Massachusetts filed a friend of the court brief. The case, Commonwealth v. Porter P., affirms that constitutional protections against unreasonable searches and seizures apply to residents of homeless shelters, just as they do to renters or students in dormitories.

The case resulted from the prosecution of a juvenile based on evidence obtained by police during a 2006 search of his locked room in a homeless shelter. The shelter manager gave consent to the search, but the occupants of the room — one of whom, a juvenile, was in the room at the time — did not.

In finding that the search violated the rights of the shelter’s occupants, the Court rejected the claim that there was less protection for transitional housing or that the shelter manager could consent to the search.

“Although transitional, the Court concluded that the room at the shelter was the family’s home and therefore entitled to the full protection of the state constitution. And, while recognizing that the shelter manager retained the right to enter the room to inspect the premises, she could not consent to a police search. That, the Court found, could only be done with a warrant,” said John Reinstein, legal director for the ACLU of Massachusetts.

The ACLU, along with the Committee for Public Counsel Services and other groups, filed a friend of the court brief arguing that endorsement of the search would consign the homeless to second-class status under the constitution.

“The Court has ruled today that homeless citizens are entitled to no less protection than those in our country who have housing,” said Carol Rose, executive director of the ACLU of Massachusetts. “Especially in today’s tough economic times, which have driven more people into poverty, we must remember that the homeless still enjoy the same constitutional protections against unreasonable searches and seizures as everyone else. The Constitution does not distinguish between rich and poor.”

For a copy of the SJC decision, see: http://www.aclum.org/legal/commonwealth_v_porter_p/sjc_decision.pdf

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Friday, June 4th
Eureka Courthouse

A rally and march to speak out regarding Governor Arnold Schwarzenegger’s proposed state budget cuts to programs/services, will be held from 5 p.m. to 6:30 p.m., Friday, June 4 in front of the Humboldt County Courthouse in Eureka.

Organized by Tri-County Independent Living (TCIL), the focus of the event will be on cuts to Medi-Cal, In-Home Support Services (IHSS), mental health services, Medi-Cal, SSI recipients, Calworks, and Regional Centers as well as education and other programs that directly affect people with disabilities, seniors, children and infants, students, and other California residents. Another focus will be on legitimacy of the Governor’s anti-fraud measures aimed at IHSS care providers and recipients.

“People with disabilities, including seniors, veterans, students and others, have already been affected by extensive budget cuts that were passed last year, points out Chris Jones, Executive Director for TCIL. “Now the Governor is targeting these citizens once again, which will put a further strain on local resources and cost us all more in tax dollars, reduced safety, independence and quality of life for thousands, and in lost lives.”

“The Governor and certain legislators continue to ignore the ramifications of these cuts and refuse to even consider alternative revenue options for helping to balance the budget,” says Cindy Calderon, Systems Change Advocate at TCIL. “They also continue to demonize IHSS providers and recipients through anti-fraud measures that were enacted without input by program participants, were based on unsubstantiated claims by the Governor of “massive fraud” in the IHSS program, and which impose an unwieldy process on IHSS care providers, while greatly compromising the privacy of often vulnerable IHSS recipients.”

This rally is also being held in June to help mark the 11th anniversary of the U.S. Supreme Court’s Olmstead Decision, which affirmed the rights of people with disabilities, seniors and others to live in their own homes instead of institutions.

“Once again the Governor has shown a complete disregard for the spirit of the Olmstead Decision,” adds Calderon. “Further state cuts are a clear indication of the lack of commitment by the State of California to this Supreme Court ruling because they greatly reduce the ability of people with disabilities, seniors and others to live independently at home. This makes no sense, because the cost of keeping a person in their own home using an IHSS care provider is far less than having that person in an institutionalized setting. Cuts to the IHSS program, Medi-Cal, SSI recipients, mental health services and other programs will continue to force many people out of their own homes, into the streets, into hospital emergency rooms, and into nursing homes where there may not even be enough beds to accommodate them,” Calderon further pointed out. “In fact, if the Governor has his way with cutting about half of the IHSS program, then tens of thousands of more Californians will end up losing jobs! ”

The June 4 rally and march will include short speeches from several area social service program recipients as well as care providers, and representatives from the local offices of Assemblyman Wes Chesbro and Senator Pat Wiggins. Chesbro has been invited to speak and may be able to attend if he’s not required to be in Sacramento on that day. There will also be an opportunity to sign letters to local elected officials, including a thanks to District Assembly Member Wes Chesbro, for his ongoing support for the IHSS program, and petitions regarding the budget cuts.

The local chapter of the renowned “Raging Grannies,” as well as a contingent of the marching, performing brass band known as “Bandemonium,” will be on-hand to provide some entertainment. Attendees are encouraged to bring signs and be ready to chant, and to march about two blocks.

For further information about the march/rally, contact Cindy Calderon or Glenn Reed at Tri-County Independent Living, (707) 445-8404 or TTY: (707) 445-8405.

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