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Are Class Actions Dead?

The recent United States Supreme Court decision AT&T Mobility v. Concepcion may have provided a death blow to class action litigation. In that decision the Supreme Court enforced an arbitration clause in the customer agreement which waived the customer’s right to participate in a class action case. The customer agreement in that case was signed when they agreed to a 2 year cellular phone contract.

Prior to this decision class actions have been a major nuisance to many corporations over the years. By bringing together a class of similarly situated parties a plaintiff is able to multiply the damages at issue in a single case. By doing so the class is able to bring a lawsuit which without a great number of plaintiffs would simply have not been economical. In most cases the “harmed” parties receive some small payment or similar token when the defendants are forced to settle or risk being exposed to a staggering judgment.

The Supreme Court’s decision in AT&T Mobility v. Concepcion essentially provides a model for how corporations can avoid class action litigation in the future. Indeed, every corporation that provides a good or service to consumers should look at the language contained in the AT&T agreement to see if it would be appropriate to include similar language in their own customer agreements.