DIRECTV v. Imburgia, et al., (14-462, decided December 14, 2015) is a six to three U.S. Supreme Court (SCOTUS) decision holding, essentially, that if the nation’s largest retailers (purveyors of cable TV, cell phone service, rental cars and the like) attempt to prohibit class actions in their contracts, then no matter what state codes and court cases may have to say, business gets what it wants.
DIRECTV tried to force individual arbitrations upon its California subscribers, in the place of class arbitrations or class action court cases, because large companies know that “only a lunatic or a fanatic sues for $30.” Dissent, at 9-10. SCOTUS gave DIRECTV exactly what it asked for, effectively erasing the economic feasibility of pursuing damage claims for a large swath of the American public.
The majority opinion by Justice Breyer (11 pages), and the dissent of Justice Ruth Bader Ginsburg joined by Justice Sotomayor (24 pages), read like the arcade game of Whack-a-Mole; each argument favoring the consumer is smacked down by a counter-argument, no matter how unsupported or far-fetched.
This is not a law review article, so I dispense with the need for a careful, footnoted delineation of points and retorts. You really do not need details, because ultimately it makes no difference what a tangled thicket the contract language, state law, court decisions and federal law managed to create. Big business knew they would come out winners if they reached the Supreme Court.
The majority opinion says the “law of your state” clause in the agreement is ambiguous. The dissent said it is not. The majority asserts that applicable California law protecting consumers got struck down by a court decision [AT&T Mobility LLC v. Concepcion, 563 U. S. 333 (2011)], and that in any event the subject matter is preempted by a federal law (the Federal Arbitration Act, or “FAA”, 9 U. S. C. §2.). The dissent says “Not so,” on both counts. You get the idea.
After our highest court declares that the FAA takes precedence over state laws concerning mandatory arbitration, the only way to re-empower the states is to amend the FAA. Modifying Federal law requires a majority in both houses of Congress. Big business has too much lobbying muscle and PAC money for FAA to be revised, under current conditions.
In my opinion, the overwhelming, pervasive power of adhesion contracts to deprive consumers of meaningful judicial recourse will only decline when we have national campaign finance reform.
Recently, mandatory arbitration clauses are appearing in pre-marital agreements of parties with a substantial disparity in wealth. I expect such clauses to survive court challenge in all family law areas except custody, visitation and child support. In those three domains, the parens patriae interest of the state cannot be usurped by private contract.