AT&T to force California customers into arbitration in bid to curb class action lawsuits

The notice comes more than a month after AT&T settled a class action lawsuit brought in the Golden State over data throttling.
(Photo by Matthew Keys for The Desk)

Communications giant AT&T has sent a notice to its customers in California binding them to a new arbitration agreement if they continue to use AT&T’s wireless phone, home phone and Internet services.

The notice said AT&T was uniting its numerous customer service agreements covering various services into a single, comprehensive agreement governing all services. Those services include AT&T pre-paid and post-paid wireless phone, AT&T home phone, AT&T Fiber Internet, AT&T Fixed Wireless Internet and AT&T DSL.

The updated agreement does not cover AT&T TV, AT&T U-Verse TV or DirecTV. AT&T is in the process of spinning off its pay TV units into a separate company.

The new agreement, which takes effect on May 5, says customers must resolve any disputes arising from their services through “individual arbitration and not by jury trial or class action.”

“Your continued use of AT&T services tells us that you accept and agree to be bound by the Customer Service Agreement and its updated arbitration clause,” the notice mailed to AT&T’s customers in California this week said.

The update continues a push by AT&T to force customers into arbitration as a means to settle legal disputes that are typically heard before a judge. Though arbitrators are supposed to be neutral parties, critics have argued that they typically rule in favor companies and that forced arbitration is a way to deprive customers of having their day in court, which is often the only way to truly settle malpractice and other legal wrongdoings by businesses.

When a group of California consumers attempted to bring a class action lawsuit several years ago, AT&T fought back in court, pointing to a similar arbitration clause enforced in its customer agreement at that time. That individual element — whether customers were bound by arbitration — took years to settle in court before a federal appeals court ruled that the lawsuit could go forward.

In that case, customers formed a class action after accusing AT&T of throttling their unlimited wireless data plans after they used a certain amount of data in a billing month. The throttling happened whether AT&T’s network was congested or not, the plaintiffs alleged. The case was settled early last month. Like its peers, AT&T now employs a system of data prioritization based on network congestion.

The notice sent to California consumers this week appears to update the arbitration clause in the wake of the settlement announced last month. The agreement makes one small exception in that customers can sue AT&T in court if they need to settle a disagreement over whether the company’s arbitration clause is legally enforceable.

“All issues are for the arbitrator to decide, except issues relating to the scope and enforceability of the arbitration provision or whether a dispute can or must be brought in arbitration are for the court to decide,” the customer agreement read when reviewed by The Desk early Tuesday morning.

If a customer brings a case through arbitration, AT&T said it would reimburse the customer for certain costs incurred, including attorney’s fees. But if the customer loses, or if the arbitrator decides the claim is “frivolous or brought for an improper purpose,” the customer will likely have to reimburse AT&T for its legal expenses.

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