July 31, 2001

Jonathan Hutson, TLPJ, 202-797-8600 x 246
F. Paul Bland, Jr., TLPJ, Co-Lead Counsel, 202-797-8600
James C. Sturdevant, Co-Lead Counsel, 415-477-2410

TLPJ SUES AT&T FOR TRYING TO ELIMINATE LONG DISTANCE PHONE CUSTOMERS’ RIGHTS

Mandatory Arbitration Clause Would Effectively Immunize Company By Reducing the Time in Which Consumers Can File Suit, Barring Class Actions, and Prohibiting Punitive Damages

Trial Lawyers for Public Justice (TLPJ) and the Sturdevant Law Firm in San Francisco filed suit against AT&T on July 30 for trying to eliminate its long distance customers’ rights by inserting in the fine print of its form contract an extraordinarily broad mandatory arbitration provision. The new contractual clause, scheduled to take effect nationwide on August 1, would essentially immunize the company from most liability by barring its customers from suing it in court, participating in class actions, and recovering emotional distress and punitive damages. It would also impose a two-year statute of limitations for filing claims, when most states’ laws provide significantly more time to sue.

"AT&T is attempting to use mandatory arbitration to eliminate its long distance customers’ right to their day in court and shield itself from liability," said TLPJ Staff Attorney F. Paul Bland, Jr., co-lead counsel in the case. "This is a blatant abuse of the arbitration process and an outrageous violation of its customers’ rights. The courts should not allow it to stand."

The suit, Ting v. AT&T, is a representative and a class action filed in Alameda Superior Court in Oakland, California, on behalf of all AT&T long distance telephone customers in California. The named plaintiffs in the case are Darcy Ting, an AT&T customer who lives in Berkeley, and Consumer Action, a San Francisco-based, national public interest organization that has previously challenged mandatory, predispute arbitration clauses and that conducts an annual survey of long distance rates. The suit seeks a judicial declaration that AT&T’s mandatory arbitration provision is unlawful under California’s Consumer Legal Remedies Act and Unfair Competition Law, as well as a temporary restraining order and preliminary injunction that prevents it from taking effect on August 1 and a permanent injunction against its enforcement in California.

"If you as a consumer, small business owner or cell phone customer need to dispute a modest claim, you should be able to hold this communications giant accountable in court," said co-lead counsel James C. Sturdevant of The Sturdevant Law Firm in San Francisco. "AT&T doesn’t deserve special treatment that trumps the basic consumer rights under California law – your right to a fair hearing in the forum of your choice; your right to tell the press about your dispute and its resolution; your right to join with other wronged consumers in a class action that doesn’t cost you more than your claim is worth; and your right to let a jury decide on the amount of damages necessary to compensate the consumers and punish corporate misconduct."

AT&T’s class action ban would prevent most customers from ever enforcing their rights against the company. The new service agreement would prohibit arbitrators from awarding punitive damages, even where AT&T knows of likely harm to consumers and this relief is expressly authorized by California law, thereby eliminating an important deterrent to the worst corporate misconduct. In addition, AT&T seeks to impose a two-year limitations period for customers to file any claim in arbitration, even though nearly all California consumer protection laws allow consumers to file claims for at least three or four years from the time of injury.

TLPJ’s suit also challenges many other anti-consumer aspects of AT&T’s new compulsory arbitration plan. For example, TLPJ objects to AT&T’s attempt to force consumers into a secret arbitration process instead of an open court system. The arbitration provision in AT&T’s new Consumer Services Agreement bans long distance consumers from disclosing the results, content, or even the existence of any arbitration or award involving AT&T.

The suit alleges that the American Arbitration Association’s (AAA) business relations with companies such as AT&T give its arbitrators a strong incentive to favor corporate defendants in consumer cases. TLPJ objects to AAA’s requirement that consumers with claims over $10,000 pay high filing fees and hourly arbitrators’ fees in order to arbitrate their claims. According to the class action suit, AT&T’s new secrecy provisions would deny customers access to needed information about AAA’s costs and its tendency to rule in favor of corporate defendants in the vast majority of cases, while AT&T retains such information as the repeat party in these cases.

"AT&T is seeking to hang up on its long distance customers’ right to voice a complaint in a fair, cost-effective, and open forum," said TLPJ’s Michael J. Quirk, co-counsel in the case. "Customers with small claims run up against AT&T’s class action ban. Customers with bigger claims run up against AAA’s fee structure. Even if they clear these hurdles, they then have to submit their claims to AT&T’s own privately designated judge whose decision in the case will remain forever concealed from the public’s view."

The complaint in Ting v. AT&T was filed in California Superior Court in Oakland on July 30 and the motion for a preliminary injunction and an application for a temporary restraining order were filed on July 31. The documents are posted on TLPJ’s web site at www.publicjustice.net. In addition to Bland, Sturdevant, and Quirk, TLPJ’s litigation team in this case includes Karen L. Hindin of The Sturdevant Law Firm in San Francisco.

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Trial Lawyers for Public Justice is the only national public interest law firm dedicated to using trial lawyers’ skills and resources to advance the public good. Founded in 1982, TLPJ utilizes a nationwide network of more than 2,500 trial lawyers to pursue precedent-setting and socially significant litigation. It has a wide-ranging litigation docket in the areas of civil rights and liberties, consumer rights, worker safety, toxic torts, environmental protection, and access to the courts. TLPJ is the principal project of The TLPJ Foundation, a not-for-profit membership organization. It has offices in Washington, DC, and Oakland, CA. The TLPJ web site address is www.publicjustice.net.