Class actions against dietary supplement sellers. Text marketers. Biz-op providers. You name it, and a class action has disturbed the peace of many a direct response marketer in recent times. Nary a weight-loss supplement client of this attorney seems to have been spared. Financially unable or unwilling to go the distance, even where meritorious defenses exist, many targets of these suits have no choice but to pay the “ransom,” most of which goes to class attorney’s fees. As is so often the case in Federal Trade Commission (FTC) suits, the suing party has all the leverage.
Perhaps in response to this consumer class action onslaught, the U.S. Supreme Court lately has been giving new heft to mandatory arbitration clauses, which also contain “class” waivers. In 2011, in AT&T Mobility LLC v. Concepcion, which addressed whether an arbitration clause could bar classwide arbitration, the court overruled a California Supreme Court decision that had said such a bar was “unconscionable” and thus unenforceable. The court held that the California rule was preempted by the Federal Arbitration Act because non-consensual class arbitration violates the Act’s “liberal policy favoring arbitration,” in that it “sacrifices arbitration’s informality,” is “more likely to generate procedural morass than final judgment,” and “greatly increases risks to defendants.”