Excuse me while I take this break from your regularly scheduled budget updates, but I felt this was of enough importance to take a small diversion.  Remember when California was the bastion of consumer protection?  We head state legislators like (now Congresswoman) Jackie Speier writing some really strong consumer protection legislation.  And while our Supreme Court was stocked with Republicans, they were the sort that understood how the real world worked.  Well, you woke up today in a whole new California, where consumer protection is only something for the simple fools who can’t pen an arbitration provision.

In a stunningly corporate-fueled decision, the United States Supreme Court in AT&T vs. Concepcion somehow found that the Federal Arbitration Act (the FAA of 1925(!)) was in conflict with state law ruling that consumers can not be imposed with arbitration provisions as they were unconscionable.  That is a legal term, but it essentially means that the provision would be so unfair, and the situation so heavily tilted towards one party that the courts won’t enforce the provisions.

And that has essentially been the law in California for years, and this case involving a $30.83 charge from AT&T, is a great example.  The Courts have refused to enforce many such arbitration provisions, because quite simply the litigants would not go to court over $30.83.  They would not go to arbitration over $30.83.  It just isn’t worth any individual’s time.  And quite frankly, every attorney knows that no attorney is going to take a case, even one for $7500, which prevailing parties are awarded at arbitration.  And no individual is really going to fight for the $30.83.  

And Justice Scalia, who wrote this decision (shocking!), knows this, but he just doesn’t like the idea of petty consumers getting in the way of a hard-working corporation’s money-making.

That law makes arbitration agreements enforceable on the same terms as other contracts and prohibits states from singling out arbitration for unfavorable treatment, said Scalia, writing for the court’s conservative majority. He said the California ruling, which allows customers to pursue class actions in arbitration, “interferes with fundamental attributes of arbitration.”

Arbitrating cases for a large number of customers at once “makes the process slower, more costly and more likely to generate procedural morass,” said Scalia.

He said class-wide arbitration also “greatly increases the risk to defendants” and may coerce settlements.(SF Chronicle)

Except that the FAA of 1925(!) doesn’t do anything of the sort that Scalia is representing.  It encourages arbitration and notes that they are valid and enforceable.  However, it does give one major exception: “{An arbitration provision} shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

And guess what? The unconscionability provision has been a part of law since well before 1925, and should therefore be respected under the FAA of 1925(!).  That this ruling is only happening 86 years later should be an indicator of something sketchy.  

The other major issue here is that while conservatives are all over states rights when it comes to issues they care about, health care, racial discrimination, that sort of thing, when it comes to corporate profits they’ve never heard of the concept.

Dissenting Justice Stephen Breyer accused the majority of disregarding traditional state authority over the fairness of contracts while leaving consumers in the lurch.

Bans on class actions “can lead small-dollar claimants to abandon their claims rather than to litigate,” said Breyer, joined by Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan.(SF Chronicle)

After yesterday’s decision, you will be seeing many more arbitration provisions in every agreement that you sign with a big corporation.  And really, you won’t have a choice about it, because you want the cell phone, or you need the internet service or what not.  So you’ll sign it.  And unless you are willing to personally go to arbitration over $30.83, you will lose pretty much all of your rights under California consumer protection law.

This is a monumentally poor decision, one that will continue the radical shift of power away from the people and to the corporate “persons.”  California’s right to be an innovator of consumer protection has been greatly eroded by a band of 5, and there’s not a whole lot we can do about it.

Really, the only way to change this is to pass a law in Congress.  And how likely do you think it is that the Tea Party controlled House gives one second’s worth of consideration to this states’ rights cause?  You think the Koch Brothers are slowly rubbing their hands together as they greet another step along the road to a government by, for, and of the corporation?

UPDATE: Sen Al Franken has introduced legislation to overturn this decision.  Of course, it will be a long road before it gets signed into law, but along with Rep. Hank Johnson, at least he’s walking it.