Supreme Court sides with DIRECTV in class action case

Richard Wolf | USA TODAY

WASHINGTON — Score one for business over consumers at the Supreme Court this term — but don't assume the pattern will repeat itself in a series of disputes over class action lawsuits.

The justices ruled 6-3 Monday that California customers cannot band together against satellite TV provider DIRECTV because a federal law favoring dispute resolution by individual arbitration trumps a state law that once protected such class actions.

Businesses increasingly rely on arbitration provisions in contracts to guard against potentially expensive lawsuits. Consumer groups defend the right to band together in class actions, whether in court or through collective arbitration.

The Supreme Court already has heard four cases that touch on class action lawsuits this term, of which the DIRECTV case was the least consequential. Its customers were disputing early termination fees that they said violated California law.

The justices ruled that DIRECTV was within its rights to insist that disputes be handled individually, rather than through class action arbitration. The decision was written by Justice Stephen Breyer. Dissenting were Justices Ruth Bader Ginsburg, Sonia Sotomayor and — on grounds of federalism only — Clarence Thomas.

Breyer said a 2011 court decision with which he disagreed made clear that a 90-year-old federal law supersedes state laws on arbitration, and therefore the DIRECTV contract is not rendered unenforceable, as a state court had concluded.

Ginsburg argued that recent high court decisions "have predictably resulted in the deprivation of consumers' rights to seek redress for losses and, turning the coin, they have insulated powerful economic interests from liability for violations of consumer protection laws."

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