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JAMS ADR Insights

Arbitration Class Action & Mass Tort

The Growing Influence of AT&T

Richard Birke is a JAMS consultant and has taught dispute resolution for more than 20 years. He is a law school professor and director of the Center for Dispute Resolution at Willamette. Under his leadership, CDR has enjoyed more than a decade of high national rankings in the US and is the 2012 winner of the Ninth Circuit ADR Education Award. Mr. Birke is a two-time award‑winning author, as well as an ADR neutral, consultant and trainer. 

In 1982, the U.S. Justice Department reached a settlement in an antitrust case with the telecommunications giant that required AT&T to break up into one company called AT&T and seven smaller “baby Bells.”  The influence of AT&T seemed to be on the wane.

Fast forward and the influence of AT&T seems to be on the rise again because of the United States Supreme Court case that bears the AT&T name – AT&T Mobility v. Concepcion.

In 2006, Vincent and Eliza Concepcion sued AT&T, alleging that the company had engaged in deceptive advertising regarding just how free their “free” cellphones were.  The Concepcions filed their suit as a class action and AT&T moved to dismiss the suit because the Concepcions’ contract (and all the other consumers’ contracts) contained a clause requiring individual arbitration of their complaints.  The Federal District Court for the District of Southern California denied the motion to dismiss, finding that to do so would allow companies like AT&T to escape responsibility for bad acts that caused large numbers of people small amounts of pain.   The law applied by the district court was meant to allow plaintiffs to band together to bring lawsuits that would otherwise be economically silly.  Who would sue a global giant if the total damages were under $100 and the cost of filing the complaint was higher than that?  What lawyer would take a case with expected damages that would amount to less than one percent of the lawyer’s fee?

In 2009, the U.S. Court of Appeal for the Ninth Circuit agreed with the district court, but AT&T was not ready to roll over and accept the outcome.  The U.S. Supreme Court granted certiorari and the case was argued in November of 2010.  In April of 2011, the Court issued a 5-4 decision authored by Justice Scalia (and joined in by Chief Justice Roberts and Justices Thomas, Alito and Kennedy) that "[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration."

Many people disagree.  In the past year-and-a-half, scholars have criticized AT&T as the “end of consumer arbitration” and as an “impediment to justice.”  In his dissent, Justice Breyer wrote “[w]hat rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?”

In Owen v. Bristol Care, Inc., the Court of Appeal for the Eighth Circuit had to reverse a district court ruling that sought to limit the reach of AT&T to consumer protection. Owen involved an administrator of an eldercare facility who alleged that she and her colleagues were being unfairly denied overtime pay and benefits.  When Ms. Owen sued in a putative class action, the employer moved to compel individual arbitration.  The district court judge presiding over the litigation refused to compel individual arbitration, finding that AT&T did not speak to wage and hour claims, employment law issues or anything, in fact, except consumer cases.  The Justices on the Court of Appeal were quick to reverse, noting that the majority of circuits had already agreed that AT&T was meant to apply across the board, not just to consumer actions.

It has been rumored that there may be legislation coming down the pike to restore the ability of litigants to bring class action arbitrations, but for now and despite the efforts of some judges to limit its scope, AT&T (or at least the case that bears its name) will continue to influence outcomes across the nation.


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