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

Today, the United States Supreme Court issued its much-anticipated ruling in AT&T Mobility LLC v Conception. The holding is not favorable to consumers as it finds that the California Supreme Court ruling in Discovery Bank, which outlawed class action bans in many consumer contracts, is preempted by the Federal Arbitration Act (“FAA”) because it stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. The 5-4 decision, authored by Justice Scalia, is split along predictable lines, with Justices Roberts, Kennedy, Thomas and Alito joining the majority opinion.

This case was brought in federal court by the Concepcions, who entered into a cell phone agreement with AT&T, and who claimed that AT&T had engaged in false advertising and fraud by charging sales tax on “free” phones. The contract provided for arbitration of all disputes between the parties, but required that claims be brought in the parties’ individual capacity, and not as a plaintiff or class member in any purported class or representative capacity, in other words, a class action ban. AT&T moved to compel the case to arbitration, but the federal trial court and Ninth Circuit Court of Appeals refused, finding the class action ban unconscionable, citing the California Supreme Court decision in Discovery Bank v Superior Court, 36 Cal 4^th 148 (2005).  The Ninth Circuit also found that Discover Bank was not preempted by the FAA because it was a refinement of the unconscionability analysis to contracts generally in California and section 2 of the FAA permits arbitration agreements to be not enforced “upon such grounds as exist at law or in equity for the revocation of any contract.”

The U.S. Supreme Court disagreed finding that section 2’s saving clause preserves generally contract defenses, but does not preserve state law rules that stand as an obstacle to the accomplishment of the FAA’s objectives to enforce arbitration agreements according to their terms to facilitate an informal streamlined procedure proceeding. However, as Justice Breyer pointed out in dissent, “a single class proceeding is surely more efficient than thousands of separate proceedings for identical claims. Thus, if speedy resolution of disputes were all that mattered, then the Discover Bank rule would reinforce, not obstruct, that objective of the Act.”

The opinion is an example of the conservative majority of the court siding with big business against the rights of consumers. The decision’s impact on class action litigation could be far reaching because it is hard to envision any company not wanting to capitalize on the decision by inserting class action bans in the fine print of their boilerplate arbitration contracts. Class actions are one of the few swords that consumers hold against big business and are often the only tool to meaningful recovery and a change to an unlawful corporate practice.

For more information about the underlying case see this previous blog post, this blog post and this article in the firm's Newsletter.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On October 18, 2010, the Wall Street Journal reported the results of their investigation which found that many of the most popular applications or “apps” on Facebook have been transmitting the names of Facebook users and, in some cases, the names of their friends to dozens of internet advertising and tracking companies. Apps are pieces of software that let Facebook users play games or share information.

The Journal reported that at least one data gathering firm, RapLeaf, Inc., linked Facebook user IDs to its own database, which it sells. The apps are extremely important o Facebook as it transforms Facebook into a hub of activity and extends the usefulness of its network. Seventy-percent of Facebook users reportedly use apps and the apps are a source of revenue for Facebook itself, which sells it own virtual currency to pay for games. 

According to the article, the biggest apps allegedly involved are FarmVille, Texas HoldEm Poker and Frontierville. The issue affects tens of millions of Facebook users, including those who set their profile as completely private. It is reportedly unclear how long the breach took place and Facebook claims it is making attempts to “dramatically limit’ the exposure of users’ personal information.

Another article in today’s New York Times  reveals that privacy advocates and technology experts are split on the significance of the breach. Privacy advocate, Peter Eckersley, argues that by transmitting a user’s ID to advertisers, the advertisers could link the ID to information collected about the user anonymously on the Web, thereby giving the advertiser the “magic key to tracking you online”. Others downplay the significance claiming that knowledge of a user’s ID does not enable anyone to access private user information without explicit consent and that credit card companies and magazines have access to far more personal information about customers than any Facebook app.

One thing is certain; this activity will result in litigation. Such breaches likely violate Facebook’s Terms and Conditions and Privacy Policy and well as state computer crime laws, federal Electronic Privacy and Stored Communications Acts and other consumer protections statutes.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In Zaragoza v. Ibarra (2009) 174 Cal.App.4^th  1012, the Court clarified the issues of homeowner liability to workers hired by non-licensed contractors, and addressed the limitations on worker’s compensation as an exclusive remedy in cases dealing with employees in a residential setting.

Homeowner Maria Ibarra engaged Claudio Quiroz, an unlicensed contractor, to construct four room and two bathrooms on her premises. Quiroz hired Eliazar Zaragoza to assist him. Zaragosa was an employee of Taco Bell. Zaragoza was injured on his second day on the job. Zaragoza slipped off a ladder while trying to pull a nail out of the wall. He fell approximately nine feet and injured his knee. He sued Ibarra. The trial court granted Ibarra’s motion for summary judgment and the appellate court affirmed.

The Court held that Zaragoza’s claim qualified as “incidental to the ownership, maintenance or use” of a residential dwelling, despite the fact that the scope of the work comprised an extensive remodel. Zaragoza was classified as a residential employee under Labor Code Section 3351(d). When the worker has worked less than 52 hours in the 90 days prior to the accident, the law is clear that any claim the worker has against the homeowner for the injury is outside the ambit of the worker’s compensation system. Labor Code Section 3351(d). The worker may bring a claim against the homeowner for negligence.

The Court held that the provisions defining who qualified as a residential employee under Labor Code Section 3351(d) must be reconciled with the provisions of Insurance Code Section 11590, which requires that all personal liability policies provide worker’s compensation coverage. The Court further held that Cal-OSHA regulations did not apply to homeowners. Zaragoza could not rely on the doctrine of negligence per se (a violation of a statute) based on alleged Cal-OSHA violations.

Moreover, the Court concluded that as a matter of law there was no triable issue of fact concerning Ibarra’s negligence, since he positioned, adjusted, and climbed the ladder before he fell. There was nothing Ibarra could have done to prevent the accident. Zaragoza’s injury was entirely his own fault, and Ibarra exercised ordinary care under the circumstances.

Homeowners should be weary of non-licensed and day laborers who carry no worker’s compensation insurance. Whether it is a painter, gardener, landscaper, or handyman, ask yourself the question: Does the gardener carry his own liability and Workers' Compensation insurance? Otherwise anything that happens on your property is your responsibility. An insured gardener may charge a bit more, but is worth the peace of mind. Next time you hire anyone to perform services on your property, make sure that person is insured, something not many homeowners think or contemplate but merely roll the dice. Make the individual working on your home produce a copy of his liability insurance certificate, and make sure it is current.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In a creative attempt to avoid class action litigation, big companies have been including class action waivers in the arbitration clauses of their agreements. These companies include these class action waivers in the multitude of fine print that they send their clients (think of those long agreements you get every time you apply for a new service, loan, or account). 

For years, we have seen arbitration clauses in these contracts – requiring all disputes to be settled in arbitration and not before a court or a jury. Most recently, these contracts have included a “class action waiver” in the arbitration clause which state that consumers may only arbitrate claims individually, not in a representative capacity or on behalf of the general public. Basically, these companies are trying to avoid liability by requiring individual claims, claims that they know are often too small to justify individual arbitration (and the costs associated with it). 

California law states that class action waivers in consumer contracts may be unenforceable, especially where they violate public policy (such as including the waiver in that multitude of fine print). Discover Bank v. Superior Court (Boehr) 36 Cal.4th 148, 158-160 (2005). The Supreme Judicial Court of Massachusetts recently became another state to agree with California’s holding, and held that arbitration clauses precluding class action lawsuits were contrary to the fundamental public policy of Massachusetts favoring consumer class actions. Feeney v. Dell, Inc., 454 Mass. 192, 205 (Mass. 2009) (“Allowing companies that do business in Massachusetts, with its strong commitment to consumer protection legislation, to insulate themselves from small value consumer claims creates the potential for countless customers to be without an effective method to vindicate their statutory rights, a result clearly at odds with our public policy.”)

What does this mean for you? Most significantly, it means a growing number of states are seeing through big businesses’ attempts to escape liability for their wrongs. If these waivers were deemed acceptable, it would effectively get rid of the class action procedure. All companies would include these waivers in their contracts, and the class action mechanism may die out. 

While you may not think that class actions are that helpful, think again. For example, when a credit card company receives a customer’s payment on time, but still charges that customer a late payment penalty, it is unlikely that any one individual would file a lawsuit or an arbitration claim for a late payment penalty of under $50. It’s also unlikely that a company would stop charging their thousands or millions of other customers that fee if only a few individuals filed a claim. The class action mechanism, however, provides an avenue to allow customers to stop the company’s practice of fraudulently charging these fines - not only to themselves but to all of the company’s customers. It’s a matter of principle in many instances, and making sure that the company doesn’t get away with these fraudulent practices. As more states hold that class action waivers are unenforceable, consumers’ rights are protected. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link