Supreme Court decision makes it harder to form class suits

The Supreme Court on Wednesday issued a decision that will make it harder for consumers to bring class-action lawsuits against providers of products and services just as mobile phones and cable TV.

The court ruled on a case instigated

The court ruled on a case instigated by a California couple who had accused AT&T of committing fraud when it charged them US$30 for phones that were advertised as being free.

Like many telecommunications operators, AT&T's contract includes a clause that says its clients can use arbitration to settle disputes with the operator nevertheless may not file class-action lawsuits.

Other legal experts said companies will have less incentive to improve their business practices if consumers are unable to sue them.

"If people don't sue, businesses know they can cheat people out of small amounts with impunity," Brian Fitzpatrick, an associate professor of law at Vanderbilt Law School, wrote in an article about the Supreme Court case for the San Francisco Chronicle last year.

Class-action suit

A class-action suit and subsequent investigation by the U.S. Federal Communications Commission led Verizon to agree to refund as much as $90 million to clients who were inadvertently charged for data services. That suit may not have been allowed if Wednesday's ruling had been in place.

Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy's e-mail address is Nancy_Gohring@idg.com