Supreme Court says the telephone
titan must comply with Calif. law on consumer agreements.
October 6, 2003: 12:12 PM EDT
WASHINGTON (Reuters) - California consumers can sue telephone
carrier AT&T Corp. to resolve billing disputes instead of
having it decided by an arbitrator, after the U.S. Supreme
Court refused Monday to hear the company's appeal.
The justices declined to hear an appeal of a lower court
ruling that found AT&T's customer service agreements violated
California consumer laws by requiring customers to resolve
billing or contract disputes through arbitration, rather than
before a jury.
At issue was whether AT&T's customer service agreements
were covered under federal law or California consumer
protection laws.
The decision by a California-based appeals court conflicted
with one by a U.S. appeals court in Chicago, which previously
ruled that AT&T could require customers to settle disputes
through private lawyers in arbitration.
"Review of the ... decision and the resolution of the
conflicts that it creates thus has profound importance for the
entire long-distance industry and for the federal laws that
govern it,"
AT&T (T:
down $0.09 to $20.15,
Research,
Estimates) said in its appeal to the high court.
When the Federal Communications Commission ended a
requirement that long-distance rates and terms of service be
set according to certain tariffs, it required companies to
enter contracts with their customers.
To comply with that July 31, 2001, requirement, AT&T
included consumer services agreements in its bills and other
mailings that spelled out various legal remedy provisions.
In addition to the binding arbitration requirement, the
customer service agreements also limited the types of damages
available in California courts and imposed a confidentiality
rule preventing customers from publicly discussing current or
completed arbitration cases.
A federal judge and the appeals court agreed that although
federal laws cover the rates, terms and conditions of
long-distance service, issues of "contract formation and
breach" are governed by state law. As a result, California
consumer protection laws would cover AT&T customers in that
state.
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