In September 2007, the U.S. Court of Appeals for the 11th Circuit followed a clear trend when it ruled that Comcast could not enforce its mandatory arbitration clause against subscribers who brought an overcharge case against Comcast. In Dale v. Comcast Corp., 498 F.3d 1216 (11th Cir. 2007), the Court ruled that the arbitration clause was unconscionable and unenforceable because it made consumers’ pursuit of claims nearly impossible.
The case is part of a growing trend in which federal and state courts are scrutinizing mandatory arbitration clauses. Full disclosure: Paul & Sugerman represents consumers in litigation against Comcast and has successfully fought the Comcast arbitration clause in Oregon. That case--Martin v. Comcast--is still pending.
The problem with mandatory arbitration clauses is that they are often one-sided and unfair. A requirement that both parties go to arbitration isn’t necessarily so bad IF both sides agree. But often these clauses are buried in fine print. Worse, they frequently contain other provisions that hurt consumers, like limits on recovery of attorneys fees, prohibitions on class actions, and elimination of certain types of damages. The one-way clause often includes a choice of arbitration services that favor large corporations. In the end, it’s often about as fair as a rigged ring toss at a carnival.
It’s nice to see things turning back toward the middle. This is one area in which the pendulum went way out of whack.
David F. Sugerman
Paul & Sugerman, PC