Trial Lawyers for Public Justice Launches Class Action Initiative (Web)
June 27, 2006
TLPJ Launches New Initiative to Save Class Actions
Employers, credit card companies, banks, phone companies, cell phone providers, insurers and companies selling on the Internet are increasingly inserting class action bans into their form dispute resolution agreements.
Companies often require consumers and employees to waive their right to join class actions as part of mandatory pre-dispute agreements to arbitrate. Customers are considered to give their assent to the agreement to arbitrate and the ban on class action by using their credit cards, cell phones, or keeping their jobs.
The arbitration agreements often contain a collective action waiver that prohibits access to class actions in both court and arbitration. The provisions require consumers to participate in arbitration on an individual basis. However, many consumers and employees have argued they cannot afford the cost of the proceeding.
A national public interest law firm, Trial Lawyers for Public Justice (TLPJ) has long criticized arbitration clauses and agreements that impinge upon class actions. TLPJ is trying to preserve consumers’ rights to class actions by launching a project, dubbed “The Class Action Preservation Project.”
TLPJ Executive Director, Arthur H. Bryant argues that preserving class actions is essential because in many cases class actions are the only way “justice can be done”.
Most courts ruling on agreements containing the class action bans have concluded that the Federal Arbitration Act (FAA) requires upholding the class action waiver. The only courts that have refused to enforce them are the California Supreme Court and the U.S. Courts of Appeal for the Ninth and First Circuits, noted the author of “Opting Out of Liability: The Forthcoming Near-Total Demise of the Modern Class Action,” law school professor, Myriam Gilles, who advises the Class Action Preservation Project. Ting v. AT&T (No.C 01-02969 BZ) before the U.S. Court of Appeals for the Ninth Circuit in 2003 and Discover Bank v. Superior Court, No. BC 256167
134 Cal. App. 4th 886, 890 (Cal. Ct. App. 2005) before the Supreme Court of California in 2005 were two leading cases in which TLPJ was successful in striking down class action bans. Recently, TLPJ argued challenges to class action bans before the Supreme Court of Washington in Scott v. Cingular Wireless and the Supreme Court of New Jersey in Muhammad v. County Bank.
According to Professor Gilles, class actions are likely to become extinct with a handful of exceptions. Utah recently passed the first law in the nation validating class action bans in consumer credit agreements.
The goals of the TLPJ’s Class Action Preservation Project are:
- to challenge attempts to ban class actions;
- to fight efforts to limit class actions, including through court decisions, legal rule changes, and mandatory arbitration;
- to educate the public about the value of class actions and the effects of waives; and
- to battle illegal settlements and other abuses that threaten class actions’ integrity or preservation (http://www.tlpj.org/pr/capp_launch_051606.htm).
- Zoltan Elek, CPR Intern