A U.S. Court of Appeals for the Ninth District ruled that AT&T's arbitration clause, which claims any AT&T wireless subscriber cannot file class action suits against the company, is "unconscionable." Judge Stephen Reinhardt wrote: "We hold that the waiver is unconscionable, and, thus, unenforceable, and that the invalidation of the contract provision is not preempted by the Federal Arbitration Act." The ruling allows an AT&T customer, Kenneth Shroyer to bring a class-action suit against the carrier for alleged breach of contract and untrue advertising following AT&T's acquisition of Cingular Wireless, according to the suit.
These arbitration clauses are somewhat common and their legality has so far been decided on a state-by-state basis, but the Ninth Court's decision may lead to a Supreme Court case that could decide the matter nationwide. AT&T's clause forced the customer to waive his or her right to a trial by jury or have a judge hear the arguments. Instead, customers are instructed to settle the matter in a less costly arbitration process.
For more on the clause:
- read this article CNET