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Consumers Find New Tools to Recover Small Claims

By Gary E. Mason | 

Since the Supreme Court’s opinion last May in AT&T v. Concepcion upholding corporations’  use of arbitration agreements to avoid class actions, there have been an alarming number of federal opinions enforcing arbitration provisions and barring consumers from pursing relief through the class actions mechanism.

A few courts have recognized that arbitration provisions unfairly deny consumers the ability to pursue their rights.  In one case, a court recognized that important federal rights, like those given to consumers under the Antirust Act, cannot be taken away by an arbitration provision.  This same court recognized that certain kinds of claims are just too costly to purse individually and require the economies of scale allowed by a class action.  

But some consumers have taken matters into their own hands and are not waiting for the courts to provide relief from arbitration provisions.  Instead, they are turning to the courts – this time, small claims courts, for help.

Recently, an owner of a Honda hybrid car brought her small claim against the automaker over the vehicle’s failure to deliver its stated fuel economy – and won.  A Los Angeles small claims court judge awarded Heather Peters $9,867 saying that Honda misled her about the expected mileage.

A few weeks later, another California judge awarded $850 to a man who sued AT&T over its practice of slowing down data of consumers with unlimited data plans. That consumer went to small claims court. AT&T’s terms of service expressly bars class actions.

The number of owners of Honda hybrids is in the tens of thousands. More than 17 million AT&T customers have unlimited data plans.  Do these awards mean that thousands of small claims will soon be filed? 

Probably not. But consumers are surely beginning to realize that the power to obtain redress lies, in the first instance, with themselves.  Still,  the cost and hassle of obtaining compensation means that small claims  truly cannot be pursued for large numbers of consumers unless there is a means to aggregate large numbers of them.  Procedural  devices designed to amass large number of claims must be available or recovery will be limited to the few and the wrongdoing corporation will be unfairly rewarded.  Class actions may be under attack, but mass torts, collective actions and other methods to aggregate claims will continue to exist and evolve so long as corporations continue to harm consumers.