Ending class-action litigation in America as we know it

Ashby Jones:

Are class-action lawsuits going the way of the Dodo?

On first blush, it sounds crazy. But many legal experts think it could happen if the U.S. Supreme Court rules the way many think it will in a case called AT&T Mobility Services v. Concepcion.

For instance, writes Vanderbilt law professor Brian Fitzpatrick in this opinion piece from the SF Chron: “If the case is decided the way many observers predict, it could end class-action litigation in America as we know it.”

Fitzpatrick does a nice job laying out the rather complicated factual and legal issues in the case. ...

For Scotusblog’s page on the case, which includes a host of links, click here; click here for a story from the Washington Post; here for one from the LA Times.

The gist of the argument is that mandatory arbitration clauses in contracts, such as the AT&T cell phone service contract at issue in this case, are binding and therefore preclude plaintiffs from filing a class action.

Writes Fitzpatrick:

If the court goes down AT&T’s path, the consequences could be staggering. It could be the end of class action litigation. . . . [V]irtually all class actions today occur between parties who are in transactional relationships with one another: shareholders and corporations, consumers and merchants, employees and employers. Because they are in transactional relationships, they are able to enter arbitration agreements with class action waivers.

Once given the green light, it is hard to imagine any company would not want its shareholders, consumers and employees to agree to such provisions.

Definitely go read Fitzpatrick's piece. But you might also want to read my essay, Corporate Governance and U.S. Capital Market Competitiveness, which argues for repeal of--or at least sharp limits on--securities class actions.