The US Supreme Court on Wednesday embraced a strict reading of a federal arbitration law, making it more difficult for individuals with small claims to join together in a class action against large companies accused of fraud or other wrongdoing.
The 5-to-4 decision is a victory for corporations and business groups that favor tough enforcement of arbitration agreements as a more efficient means of resolving disputes than reliance on an overburdened, expensive, and sometimes unpredictable court system.
Analysts say the decision provides a blueprint for businesses and corporations to avoid class-action liability by requiring customers, employees, and others to sign arbitration agreements barring class actions.
“Today’s decision reduces corporate accountability by making it impractical, if not impossible, for consumers to hold corporations accountable for their wrongdoing,” said class action attorney Mark Rifkin of the New York law firm Wolf Haderstein Adler Freeman & Herz.
The decision “continues a disturbing trend favoring large public companies at the expense of individuals,” he said in a statement.
Doug Kendall, president of the Constitutional Accountability Center, denounced the ruling as “judicial policymaking in its most naked form.”
Critics saw the decision as a grant of immunity to major corporations.
“This is a death blow to Americans’ chances for justice when faced with forced arbitration clauses,” said consumer fraud attorney Gibson Vance.
“This devastating decision has the potential to result in virtually no consumer or employee cases involving small claims being heard anywhere,” he said in a statement. “Corporations will now be allowed to get away with sweeping wrongdoing, particularly where the damages would be too small to justify pursuing individual claims.”
Read More: The Christian Science Monitor