The U.S. Supreme Court has heard oral argument this term in two cases with a potential impact on product liability law: Williamson v. Mazda Motor of Am., Inc., No. 08-1314 (U.S., argued November 3, 2010), and AT&T Mobility LLC. v. Concepcion, No. 09-893 (U.S., argued November 9, 2010). Williamson asks the Court whether the husband of a woman who died in an auto accident while wearing a lap-only seat belt can bring state-law-based claims against the car maker despite applicable federal rules that gave manufacturers the option of installing lap-only seat belts or shoulder/lap restraints in the rear middle seats of passenger vehicles. California courts determined that the federal law preempted the plaintiff’s state-law claims and dismissed the suit. Counsel for the plaintiff reportedly argued that the federal rule created a minimum standard under a statute with a savings clause that preserved common-law remedies. Mazda contended that the federal regulatory scheme, designed to promote child safety and flexibility, would be frustrated by allowing state-tort lawsuits.
Numerous commentators and legal scholars, meanwhile, wonder whether Concepcion “could end class-action litigation in America as we know it.” In that case, AT&T was sued for deceptive practices because it advertised discounted cell phones but charged sales tax on the full retail price. The plaintiffs sued on behalf of a class of consumers for alleged overpayments, but AT&T pointed to its customer contract, which required all claims to be submitted to arbitration and did not allow them to be pursued on a class-wide basis. Lower federal courts struck down the contract, ruling that it was imposed on consumers and violated public policy. The company argues that the Federal Arbitration Act preempts states “from conditioning the enforcement of an arbitration agreement on the availability of particular procedures—here, class-wide arbitration—when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims.”
Numerous friend-of-the-court briefs have been filed in the case, and some commentators suggest that if the Court agrees with AT&T, “the consequences could be staggering.” According to Vanderbilt Law School Associate Professor Brian Fitzpatrick, “virtually all class actions today occur between parties who are in transactional relationships with one another: shareholders and corporations, consumers and merchants, employees and employers.… Once given the green light, it is hard to imagine any company would not want its shareholders, consumers and employees to agree to” arbitration agreements with class-action waivers. Fitzpatrick calls such an outcome “a terrible mistake,” arguing that the class-action device was created to help those with injuries too small to vindicate on an individual basis. By banding together, they can stop companies from cheating “people out of small amounts with impunity.”
Corporate interests find that class actions are not good for business, and an AT&T spokesperson reportedly noted that its arbitration agreement was consumer-friendly and offered significant benefits because it avoids “the burdensome costs of lawyer-driven class actions.” See The National Law Journal, November 3, 2010; The Los Angeles Times, November 5, 2010; The San Francisco Chronicle, November 7, 2010.