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Mandatory Arbitration Clause May Backfire

Friday, July, 29, 2011

Mandatory arbitration is frequently cited by companies as a more rational way than lawsuits to handle customer complaints.  Now, however, the law firm of Bursor & Fisher is seeking to use AT&T's own mandatory arbitration clause in customer contracts to prevent the telephone giant from merging with T-Mobile.


Recent Mandatory Arbitration Ruling Sparked Campaign


Last April, the Supreme Court ruled that AT&T's mandatory arbitration clause required individual arbitration of each customer complaint.  Bursor & Fisher are now encouraging every customer who wishes to challenge the merger to do so through individual arbitration.  The law firm will pick up the bill for the proceedings so that customers risk nothing but their time.


According to AT&T's contract with customers, consumers who win in arbitration will receive a $10,000 payment.  Bursor & Fisher are using this to entice customers into filing contract arbitration claims.  A win also means a double payment of arbitration attorney fees, a benefit to Bursor & Fisher.


So far, more than 700 AT&T customers have volunteered to enter arbitration proceedings on those terms.  "If [AT&T] wants to arbitrate on an individual basis, that's what we'll do," said Bursor.  AT&T has disputed this use of arbitration, arguing that the arbitration clause in their customer contracts is intended to resolve billing disputes, not to give customers a say in merger decisions.