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Brett Rivkind
Brett Rivkind
Attorney • (305) 374-0565

Proposed Legislation Would Prohibit Arbitration Clauses in Cell Phone Agreements

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Senator Richard Blumenthal, from Connecticut, and Senator Al Franken, Minnesota, have introduced a bill that would prohibit cell phone companies from placing binding arbitration clauses in the cell phone agreements that result in consumers being sent to binding arbitration in case of a dispute with the cell phone company. The senators have proposed this legislation in response to a recent United States Supreme Court decision that involved AT&T, which upheld an arbitration agreement in the AT&T contract that required the consumer to arbitrate any disputes with AT&T, and prohibited a class action lawsuit or class action arbitration. By requiring consumers to individually arbitrate their claims, which most of the time involves small amounts of damages, AT&T essentially closed the courthouse doors on consumers. The AT&T case stemmed out of a California couple pursuing a class action lawsuit alleging they were improperly charged $30.00 in sales taxes on cell phones that AT&T Mobility Wireless had advertised as free.

Senator Al Franken issued a statement: “This bill makes sure that Minnesotans have the ability to hold their mobile service providers accountable if they are cheated. It also ensures that any dispute resolved through arbitration is truly voluntary, and that consumers are not being forced to into it.”

Arbitration is a common device utilized by companies to require consumers to arbitrate any disputes, denying the consumer their rights to the courthouse and potentially a jury trial regarding their disputes. By banning class action lawsuits, consumers who are cheated, in cases involving small amounts of damages, will have no recourse. It will simply not be affordable for the consumer to pursue an action even if the conduct on the part of the company is improper. This allows big companies, like AT&T Wireless, to get away with the type of improper practices alleged in the class action lawsuit which was eventually dismissed by the court.

Our firm handles many claims involving crewmembers that have suffered injuries aboard cruise ships, and other vessels, including yachts. The cruise ship companies have recently been seeking to deny seamen access to the courthouse, and their right to a jury trial under the Jones Act, by moving to enforce arbitration clauses that are inserted into the seamen’s employment agreement. Despite the fact that the seamen’s employment agreement is a take it or leave it agreement, and despite the fact that there is a total absence of any bargaining power on the part of seamen, the courts have enforced these mandatory arbitration agreements.

The cruise ship companies have quickly jumped on the band wagon of arbitration by now including mandatory arbitration clauses in seamen employment agreements that not only require the seamen to arbitrate their claims, but also these agreements include choice-of-law provisions which deny seamen the benefits of the United States law they are otherwise entitled to. Although such agreements clearly violate the clear language contained in the United States Congressional Act called the Jones Act, enacted in 1920 for the benefit of seamen, these provisions have recently been upheld by the Eleventh Circuit Court of Appeals. We expect increased litigation over these issues in the near future, and movements to enact legislation addressing these issues.

Arbitration continues to be unfair in the context of agreements where one party clearly did not voluntarily agree to arbitrate the disputes. Regarding take it or leave it agreements, where one side has overwhelming bargaining power, these agreements should not be enforced. This proposed legislation involving the cell phone companies recognizes that consumers have no bargaining power when signing an agreement with a large cell phone company such as AT&T.

Similarly, seamen have absolutely no bargaining power when signing an employment agreement with the cruise ship company. Seamen typically leave their country to join a vessel in the United States or another country, and when they arrive onboard the ship they are asked to sign the employment agreement. At that time, there is simply no choice for the seamen but to sign the employment agreement. The seamen are desperate for work. If they don’t sign the employment agreement, they don’t get the work. In addition, seamen, mostly from third world countries, have no knowledge as to their legal rights, nor do the cruise ships bother to inform them of their legal rights. Therefore, any agreement they sign giving up their rights is done with a complete lack of understanding of the terms and conditions set forth in the agreement. Despite this, the courts have been enforcing these unfair arbitration agreements.

Our firm continues to be safety advocates for passengers and crewmembers harmed at sea, and continues to represent those injured in all types of boating accidents, including accidents on pleasure boats, yachts and jet skis.