Emerald City May Hold Answer to Future Class Action Lawsuits

Monday, April 28, 2008
Contributed by: Nick Nevarez Jr.

A lawsuit filed in Seattle against AT&T/Cingular may hold the answer to future class action lawsuits. Public Justice, a non-profit public advocacy group, is asking the Federal Court to set aside a provision in old AT&T wireless contracts that prevents consumers from banding together and filing class action lawsuits against the company. The contracts contained a clause phrased as:

"You and (AT&T) agree that each may bring claims against the other only in your or its individual capacity and not as a Plaintiff or Class Member."

In March 2008, Public Justice filed a Motion asking U.S. District Judge Ricardo Martinez to set aside what it calls a "class action ban." According to Public Justice lawyer, Leslie Bailey, the damages for each individual victim are small - ranging from $5 to $175 - thus, few would bother to file an individual case against AT&T, and only by banding together in a class action case could victims get their compensation. Bailey further states:

"These people (AT&T customers) are affected by what we allege is deception, but it is unlikely that any of these individuals would take on this huge corporation by themselves."

AT&T denied misleading its customers and rejected the idea that the binding arbitration clause is unfair. In an email statement, it said that consumers are better served by filing individual arbitration cases or small claims court cases. AT&T states:

"We continue to believe the consumer is better off pursuing a claim under the arbitration clause rather than pursuing a class action. Arbitration is typically a fast, cost effective, and pro-consumer way to address disputes, and AT&T's arbitration agreement is among the most consumer-friendly in the nation."

While judges have previously set aside contract language that would effectively ban all class action cases, Public Justice said lawyers for U.S. corporations are continually revising contract language to create a class action ban that will withstand scrutiny.

Bailey admits that class action cases haven't always served consumers' interests. In notorious "coupon" settlements, millions of victims get near worthless service credits or discounts, while lawyers who file the cases get millions in fees.

This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.