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Wednesday, February 22, 2012

The Corporate Court: Making New Laws from Thin Air

The Roberts Court's troubling pro-business bias has long been evident in the cases it chooses to hear and in the decisions it renders. But one aspect of the Court's tendency to overreach in favor of corporate interests is its penchant for crafting new laws out of thin air, without the apparent need to do so.

For example, the dispute in AT&T Mobility v. Concepcion arose after AT&T offered customers a "free" phone but charged a sales tax of up to $30. When customers discovered the scheme and asserted their rights in court, AT&T sought to enforce a contract provision banning class actions and requiring all disputes to be settled in arbitration.

Applying California contract law, the Ninth Circuit Court of Appeals invalidated the provision as unconscionable because it allowed AT&T to defraud many consumers out of an amount of money so small that victims were unlikely to arbitrate individually. California law applied the same unconscionability principles to class arbitration prohibitions as it did to class litigation prohibitions.

Nonetheless, the 5-4 majority held that California law conflicted with the Federal Arbitration Act because California “disfavored arbitration.”

In his dissent, Justice Breyer stated that the Court should, “think more than twice before invalidating a state law that does just what §2 [of the FAA] requires, namely, puts agreements to arbitrate and agreements to litigate upon the same footing.”

The conservative majority in AT&T v. Concepcion rewrote the FAA to favor business-friendly arbitration over litigation, and prevent states from protecting consumers.

For more on the Roberts Court's history of overreaching, download AFJ's special report: How the Corporate Court Bends the Law to Favor the 1%.

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