Consumer Advocate Legal Update : Class Action Lawyers & Attorneys : Khorrami Pollard & Abir Law Firm : Mass Torts, Products Liability

An Iowa judge has certified a class action filed on behalf of about 300 current and former residents of two Des Moines apartment buildings who say their landlord failed to combat a growing bedbug infestation.

The suit claimed the buildings for elderly and disabled residents first experienced a bedbug problem in late 2007, the Des Moines Register reports. Residents have complained they had to trash infested furniture and couldn’t move out because landlords and relatives shunned them. “Everybody sleeps on the floor,” one resident said in an interview last year.

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On November 9, 2010, the United States Supreme Court will hear arguments in AT&T Mobility v Conception. The court will decide whether The Federal Arbitration Act preempts state courts from striking down class action bans in arbitration agreements. Large corporations, such as AT&T, frequently insert in their boilerplate customer agreements, often in fine print, provisions requiring that any dispute arising from the agreement be arbitrated and brought on behalf the individual consumer alone and not as a class action on behalf of other similarly impacted consumers. These big companies know that the amount of a single consumer’s dispute is often less than a couple hundred dollars, that consumers have little time and incentive to litigate their single small claim and no attorney would represent them with such a small amount in dispute. For example, the Concepcions sued AT&T claiming that AT&T represented that that their wireless service included free cellphones but the phones actually came with charges.

The only effective way to recoup small amounts of money owed to many consumers by a corporate wrongdoer is by grouping the claims as a class action. Class actions are the only “big stick” consumers have to fight large corporations and the threat of them deters corporate wrongdoing. Not surprisingly, corporations desperately want to halt class actions. California’s Supreme Court has ruled that class action bans in consumer agreements are unconscionable and unenforceable and the trial court and United States Ninth Circuit Court of Appeals in the Conception’s federal court case ruled similarly. Now the issue is before the United States Supreme Court, known to be conservative and pro-business.

An article by David Lazarus in the November 5, 2010 Los Angeles Times summarizes the issues raise by the case in plain English. SCOTUSblog has a link to all of the briefs. Look for future blogs here on this important case affecting consumer rights. 

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An editorial run online yesterday at nytimes.com as well as in print in today's New York Times, addresses Wal-Mart's pending petition for Supreme Court review of the 9th Circuit's April ruling affirming class certification of the largest employment class in U.S. history. The class is comprised of over 1 million women who have worked for Wal-Mart,  the nation's largest private employer,  throughout the last decade, and allege they have experienced ongoing gender discrimination in relation to equal pay and promotions.

The editorial notes that seeking Supreme Court review is likely a savvy legal move by Wal-Mart given the Supreme Court's tendency to show favor to large corporations, while also opining that a full hearing of Wal-Mart's allegedly discriminatory employment practices is in order. Thus far, the battle between the behemoth corporation and the class has  been strictly limited to whether class treatment is appropriate, and sadly it remains to be seen whether the underlying merits of the plaintiffs' claims will ever be heard on a class-wide basis.

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When Bank of America announced that it will no longer require customers to settle disputes with the company through arbitration, rather than being able to go to court, many saw it as a victory for consumers.  However, as David Lazarus reported in Sunday's edition of the LA Times, Bank of America's decision to drop the arbitration requirement does not mean that it is ending its prohibition on customers joining class action lawsuits.  Betty Riess, a Bank of America spokesperson, told Lazarus, "We aren't addressing the class-action waivers as part of [the decision regarding arbitration].  We will preserve the class-action waivers in our agreements."

Class action waivers prevent individuals from joining with other individuals with similar complaints to sue a company.  As Lazarus noted, class actions are arguably the best tool many consumers have to address problems involving relatively small amounts of money as, often, individual lawsuits can cost more to resolve than the amount under dispute, effectively precluding consumers from seeking redress.

In California, class action waivers in consumer contracts may be unenforceable, especially where they violate public policy (such as where the waiver is included in a contract's fine print).  See Discover Bank v. Superior Court (Boehr), 36 Cal.4th 148, 158-160 (2005).  However, many states permit class action waivers in consumer contracts.  Thus, Bank of America's decision is just the first step in protecting consumers' rights.

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