Consumer Services Agreements Cannot Remove Class-Action Rights in Washington State
The Supreme Court of Washington State has confirmed a finding that the dispute resolution provision of AT&T’s Consumer Services Agreement was unconscionable and therefore denied a motion to compel arbitration.
The case began as a class-action suit in which the plaintiffs (customers of AT&T) alleged that they were wrongly charged fees despite their complaints. The Court ruled that Washington’s public policy favoured the availability of class-based relief for small consumer claims, as evidenced by the enactment of Washington’s Consumer Protection Act. In light of this, a mandatory arbitration provision, as well as other terms that would restrict the consumer’s procedural rights and limit the relief available under such arbitrations, were unconscionable and thus unenforceable.
Many consumer service agreements used in the telecommunications and Internet sectors, such as the AT&T Consumer Services Agreement, are presumed to have been agreed to by the consumers by their use of the services, even though there may be no signed contract. As in the US, in Canada the question whether an arbitration clause will be enforced in part depends on the jurisdiction involved. Ontario and Quebec are currently the only two provinces to disallow the enforcement of arbitration clauses that preclude class-action lawsuits by consumers.
In other provinces, mandatory arbitration terms in consumer agreements may still be enforceable, depending on the facts of the case. See Dell Computer Corp v Union des consommateurs and Dumoulin, 2007 SCC 34 (noted in E-TIPS® “Supreme Court of Canada Dismisses Dell Class Action in Quebec” August 1, 2007, Volume 6, Number 3), in which the Supreme Court of Canada dismissed a class-action lawsuit in favour of arbitration.
For the full reasons of the Supreme Court of Washington State, see:
http://www.courts.wa.gov/opinions/pdf/810061.opn.pdf
Ontario’s Consumer Protection Act can be found here:
Quebec’s Loi sur la Protection du Consommateur is found here:
Summary by: Cheryl Cheung
