Supreme Courts Holds That It Is Illegal
for Corporations to Ban Customers from Bringing Class Actions
Hails Decision as Victory for Access to Justice
The California Supreme Court sits in San
Francisco's Earl Warren Building.
California Supreme Court held today in Discover
Bank v. Boehr that corporations cannot use clauses in their form
contracts to bar customers from bringing or participating in class actions
against them under California
law. The Court also held that the Federal Arbitration Act does not preempt or
override California’s prohibition of class action bans, even if the contract provision banning
class actions is included within a binding mandatory arbitration clause. The
Court remanded the case to the California Court of Appeals for further
proceedings to determine if
law or Delaware
law applies to the specific claims in the case.
The case was argued before the California Supreme Court in
on April 7, 2005 by F. Paul Bland, Jr., a Staff Attorney with Trial Lawyers for
Public Justice, a national public interest law firm with headquarters in
and a West Coast office in
Oakland, and by Brian R. Strange of Strange & Carpenter in
“This is a landmark victory for consumers because it secures customers’
right to use class action lawsuits, one of the most effective tools for holding
corporations accountable,” said Bland. “When consumers are cheated out of
small sums of money, a class action lawsuit is often their only chance of
securing access to justice. The Court recognized that it is unfair and illegal
for a bank to strip this powerful tool from customers raising small claims under
law. The Court rightly held that nothing in the
Federal Arbitration Act immunizes corporations from state consumer protection
Strange added, “The Court clearly understood that if corporations can bar
their customers from taking part in class actions, they can make it impossible
for their customers to vindicate their rights. In many cases, a class action
offers the only meaningful way that consumers can hold corporations
In addition to Bland and Strange,
TLPJ’s legal team in Discover Bank includes
TLPJ’s Michael J. Quirk, Arthur H. Bryant, Leslie A. Bailey, and Kate Gordon;
Gretchen Carpenter of Strange & Carpenter; and Barry L. Kramer of the Law
Offices of Barry Kramer in Los Angeles.
key legal brief in Discover Bank v. Boehr
is posted on TLPJ’s website, www.tlpj.org.
The California Supreme Court’s decision is posted at http://www.courtinfo.ca.gov/opinions/documents/S113725.DOC.