In a legal development touted by plaintiff’s counsel as “extremely important . . . not only for consumers in Washington [state] but throughout the country,” justices of the Washington State Supreme Court ruled unanimously that terms in AT&T’s customer service contract that force subscribers to resolve disputes through binding arbitration are “unconscionable” and violate provisions of state consumer protection law. Mirroring a similar decision handed down in a case last year against Cingular Wireless, the ruling issued late last week spotlights contract terms, routinely adopted by AT&T and other fixed line and wireless phone carriers, that effectively bar customers from pursuing grievances through the class action process. The case at hand goes back to 2003, when an AT&T long distance customer in Wenatchee, Washington filed a class action suit against AT&T’s policy of charging him and other subscribers for city utility surcharges that are based on a customer’s zip code. (In the complaint, the plaintiff claimed that AT&T insisted on imposing the surcharge—plus subsequent late fees stemming from his refusal to pay the surcharge—without regard to the fact that his residence was located outside city limits.) Although AT&T argued that the dispute should be settled through individual arbitration as specified in its customer service agreement, a state superior court denied AT&T’s motion to compel arbitration. Among other things, AT&T asserted on appeal that Washington state law is not applicable as the company’s contract terms were drafted under New York state law, which permits waivers to class action suits. Declaring that, “courts, not arbitrators, decide the validity of arbitration agreements,” the justices affirmed the superior court ruling, agreeing with the lower court’s finding that AT&T’s service contract “is substantively unconscionable and therefore unenforceable to the extent that it purports to waive the right to class action, require confidentiality, shorten the Washington Consumer Protection Act statute of limitations, and limit availability of attorney fees.” While maintaining that, “a consumer is better off pursing a claim under our arbitration clause rather than pursuing . . . class action,” an AT&T spokeswoman noted: “we’ve since revised our arbitration clause to make it more consumer friendly.”