Pendergast v. Sprint nextel, courts asked to reject arbitration clauses that prevent consumer recovery

AARP's brief in a cell phone contract case argues that a class action ban in an arbitration clause is against Florida law. Background Arbitration is an out-of-court process that was

originally developed to resolve disputes between businesses with equal bargaining power in industries that benefited from having a decision maker with specialized expertise in a particular

field. Now, arbitration is increasingly forced upon people in standard form contracts for virtually every good and service they purchase, without any opportunity to negotiate. For the

average person, arbitration can sharply limit access to remedies and permit corporations to evade any consequences for violating their legal obligations. Often, arbitration clauses are

designed not simply to move a dispute to an alternative forum, but to prevent a dispute from being heard at all. This is because arbitration is expensive and difficult for the average

person. Clauses may also limit remedies and ban class actions. Class actions are often the only effective mechanism to challenge unfair or deceptive practices that can cheat people out of

millions, a few dollars at a time. Because litigation is expensive, forcing people to litigate or arbitrate such claims individually is both cost prohibitive and impractical. Increasingly,

businesses include forced arbitration clauses with class action bans in contracts for a wide variety of ordinary consumer products and services. They are routinely used in contracts for

phone service, employment, health insurance, nursing home care, medical services and in credit card agreements. _Pendergast v. Sprint Nextel_ addresses a forced arbitration clause with a

class action ban used in form contracts for cell phones. In this case, customers of Sprint Nextel challenged roaming charges they incurred while (they alleged) they were in covered areas.

Because the individual charges were small enough to make it difficult to justify the time and expense of litigation on an individual basis, consumers sought to proceed as a class action.

Although each consumer was overcharged only small amounts, overall the cell phone provider illegally collected large ill-gotten sums.   The cell phone provider sought to enforce the ban on

class actions and to force consumers into individual arbitrations. The case is before the Supreme Court of Florida, which is considering whether the ban on class actions is unenforceable

under Florida law. Florida courts will not enforce arbitration clauses that unfairly limit consumer rights or exculpate corporations from wrongdoing. AARP's brief, filed by attorneys

with AARP Foundation Litigation, argues that arbitration clauses with class action bans eviscerate Florida's consumer protection laws, which are designed to be enforced by private

lawsuit rather than by a regulatory agency. Forced individual arbitration essentially shuts the door to any enforcement because it is too difficult and expensive, if not impossible, for most

consumers to pursue a remedy.