The potential impact of AT&T Mobility LLC v. Concepcion.

Class actions level the playing field between employees and big business. Unlike individual lawsuits and complaints, class actions are likely to force companies to halt wide spread illegal, fraudulent or deceitful practices.  Class actions provide an effective and efficient means of providing compensation to a large group of harmed individuals.

The class action’s “historic mission of taking care of the smaller guy” has been widely recognized.   The United States Supreme Court itself has observed that the drafters of the federal class-action rule sought to vindicate “the rights of groups of people who individually would be without effective strength to bring their opponents into court at all.”

However, consumer, employee and civil rights groups are now fearful that the Supreme Court may lock the courthouse doors to many small plaintiffs claiming widespread injustice. Yesterday the Court heard oral arguments on whether or not state courts have the power to strike down as “unconscionable” mandatory arbitration clauses in standard-form consumer, employee and similar agreements that prohibit the individual subject to the agreement (which is prepared by the company and as a practical matter is imposed on the individual party as a non-negotiable condition of obtaining a product, service or employment) from commencing or participating in a class action or class arbitration involving the terms of the agreement. Such anti-class action “waiver” provisions are becoming more common in the small print of the agreements that large companies impose on customers in mass market consumer transactions like cell phone subscriptions or in standard employment agreements.  The Court will decide this issue in AT&T Mobility LLC v. Concepcion, No. 09-893.

While the Concepcion case arises in the consumer context, the Court’s decision could decide the fate of labor and employment class actions for years to come.

If the Supreme Court accepts AT&T’s position that such anti-class waivers are mandated by the Federal Arbitration Act and therefore cannot be limited by state courts, consumers and employees will effectively be stripped of their right to pursue small claims on a class wide basis.