Sens. Introduce The Consumer Mobile Fairness Act To Counter Concepcion

There has been an abundance of coverage regarding the April 27, 2011 decision by the U.S. Supreme Court in AT&T Mobility LLC v. Concepcion, et ux. In a divided opinion, the Supreme Court held that class action waivers in consumer contracts are enforceable under the Federal Arbitration Act.  The decision was a major victory for corporations and a blow to the rights of consumers.  In essence, the Concepcion ruling allows companies to force consumers to sign contracts that require disputes to proceed in arbitration but prohibits them from banding together in court through a class action lawsuit or class-wide arbitration.

Many lawyers and commentators have agued that Concepcion spelled the death-knell for consumer and employment class actions.   Despite this commentary, during the last six months numerous federal and state courts have wrestled with the applicability of the Concepcion decision.  See attached link to a “Concepcion Scorecard.”

Back in May, we reported that in response to Concepcion, Senators Al Franken (D-Minn.), Richard Blumenthal (D-Conn.), and Rep. Hank Johnson (D-Ga.) got together and introduced the Arbitration Fairness Act of 2011 (S. 987 and H.R. 1873).  The proposed legislation would eliminate forced arbitration clauses in consumer, employment and civil rights cases and would permit consumers and employees to choose arbitration after a dispute has occurred.

Sens. Franken and Blumenthal must be working some serious overtime because we have more positive legislative news to report for consumers.  On October 4, 2011, Sens. Franken and Blumenthal introduced the Consumer Mobile Fairness Act, designed to ban mandatory arbitration clauses in cellphone and mobile data service contracts.  A copy of the text of the Bill can be found here.  Sens. Blumenthal and Franken explained in a press release that the purpose of the new legislation is “an effort to remedy the Supreme Court’s decision to uphold the use of mandatory arbitration clauses by allowing for litigation when mediation and arbitration offer inadequate protection. These clauses are particularly inappropriate in contracts for cellphone and mobile data service plans, as these contracts are often the source of numerous consumer disputes.”

Sen. Franken also stated that, “Consumers should never be forced to give up their rights in order to purchase a cell phone or get a new data plan. This bill makes sure that Minnesotans have the ability to hold their mobile service providers accountable if they are cheated. It also ensures that any dispute resolved through arbitration is truly voluntary, and that consumers are not being forced into it.”  Sen. Blumenthal added, “Smartphone users deserve their day in court for legitimate complaints against abuses. Consumers should have rights to access to appropriate avenues  – enforceable in court – for recourse in order to hold cell phone companies accountable for poor service or excessive fees. For consumers relying on smartphones – growing in number – the shield to accountability enjoyed by companies can lead to unfair contracts and unacceptable costs.”

Here at Abbey Spanier, we support the implementation of the Arbitration Fairness Act and the Consumer Mobile Fairness Act which we hope will serve to protect the rights of employees and consumers throughout the country.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.