The court heard argument Tuesday in a dispute between wireless provider AT&T Mobility and a California couple who objected to being charged around $30 in sales tax for what they were told was a free cell phone.
Like many such contracts, the fine print of the agreement between AT&T and Liza and Vincent Concepcion calls for all disputes to be settled by arbitration and prohibits customers from joining forces in a class-action. The federal appeals court in San Francisco said that ban is unenforceable under California law.
The case is important because if the court rules for AT&T, it could greatly restrict the use of class actions, in which a party represents a much larger group, in disputes over contracts. AT&T is backed by an array of business interests, while consumer groups and the NAACP Legal Defense and Educational Fund are among supporters of the Concepcions.