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USA Today: Supreme Court hears case involving sales tax on "free" cellphone

Tuesday, November 9, 2010

In a dispute that could affect consumers nationwide, the Supreme Court took up a case Tuesday revolving around the terms of a cellphone contract and testing when disgruntled customers can file a class-action lawsuit rather than be forced to arbitrate out of court.

The case, begun by a couple in California who were charged $30 in taxes for a "free" cellphone when they signed up for service, pits the terms of federal arbitration law against a state policy permitting class-action lawsuits.
The dispute has also set civil rights organizations, such as the NAACP Legal Defense Fund, against business groups including the Chamber of Commerce. The NAACP legal fund contends the leverage of class-action lawsuits are often the only way to protect consumers or deter employer misconduct. The chamber counters that arbitration serves both sides by eliminating costly and time-consuming litigation.

Read the full story here.