Supreme Court: Big Business Can Strip You of Right to Sue

Photo (cc) by Pets4Dawn

You win some, you lose some.

Win: The Supreme Court recently made a ruling that could lead to cheaper drugs and more generics.

Lose: The same court just made it easier for big business to force you into arbitration, thus stripping you of your right to sue.

In a 5-3 decision on American Express v. Italian Colors Restaurant, the court ruled it’s OK for big corporations to use contracts forcing consumers and small business into arbitration rather than allowing the option of court. Arbitration clauses eliminate one of the biggest weapons the public has to change bad corporate behavior: class-action lawsuits.

In fact, the companies can just write contracts in such a way that they can completely skirt existing antitrust laws. Mother Jones quotes Justice Elena Kagan in her dissenting opinion:

If the arbitration clause is enforceable, Amex has insulated itself from antitrust liability—even if it has in fact violated the law. The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse. And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad.

What arbitration means

When you go to arbitration, instead of your case being heard by a judge or jury of your peers, it will instead be decided by an arbitration panel — one that many consumer advocates argue is more likely than a court to be stacked in favor of the business. We recently wrote about how more companies are taking this route, and the dangers:

  • History suggests arbitration panels tend to favor business over consumers.
  • While arbitration is less expensive than court, with arbitration you shoulder all the costs, because you’re on your own. When you join a class action lawsuit, the costs are spread. In fact, the costs are often absorbed by the attorneys representing the class.
  • Without the big judgments offered by class action suits, changing systemically bad corporate behavior becomes much more difficult.

Justice Clarence Thomas, who voted with the majority, argued that signing such contracts is voluntary, Mother Jones says. Guess he’s like most of us who thoroughly read our cell phone, credit card and other contracts, then successfully negotiate with company lawyers to have the unfair provisions removed. Right.

We think this is a big deal, and a bad deal for consumers. What do you think? Tell us on our Facebook page!

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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