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May 29, 2008

Yesterday, the Supreme Court rejected an appeal by T-Mobile USA in cases involving class action lawsuits.

The problem in several different cases is whether federal low pre-empts state laws regarding regulating class action suits.

In its appeal to the Supreme Court, T-Mobile argued that federal law, which usually requires arbitration clauses be enforced, overrules state laws that limit the ability of companies to ban class actions.

Part of the contract T-Mobile consumers sign for wireless service is a portion that prohibits them from waging a class action suit against the wireless carrier.

Instead T-Mobile’s contract has a clause saying that any complaints must be resolved through arbitration.

This is true in many contracts customers sign for all kinds of services. But some states have laws that limit a company’s ability to ban class action suits, and T-Mobile is facing several class action suits in states that say banning such suits is unfair to customers.

Last fall, a federal appeals court ruled in one of T-Mobile’s cases that courts could refuse to honor class actions bans that are part of contracts.

The Supreme Court ruled in favor of that decision, allowing the suits to continue.

As is usually the case, the court made no specific comment on the issue.

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Source: T-Mobile USA.