New York Times

WASHINGTON — The Supreme Court on Monday ruled that dissatisfied customers of DirecTV in California could not band together in a class action and must instead pursue individual arbitrations.

The decision, by a 6-to-3 vote, was the latest in a series of Supreme Courtdecisions that have made it harder for consumers to go to court to pursue claims of fraud and defective products.

Citing a New York Times article on the phenomenon, Justice Ruth Bader Ginsburg wrote in dissent that “these decisions have predictably resulted in the deprivation of consumers’ rights to seek redress for losses, and, turning the coin, they have insulated powerful economic interests from liability for violations of consumer protection laws.”

The new case, DirecTV v. Imburgia, No. 14-462, arose from a 2008 lawsuit brought by two customers who objected to the company’s early termination fees and sought to represent a class of people in the same situation. After the Supreme Court in 2011 allowed companies to use their contracts to forbid class actions and other mass adjudications, DirecTV asked a state court judge in California to dismiss the lawsuit and require arbitration.

The case turned on an odd provision in the company’s contract, one that forbade class arbitration but made the entire arbitration provision unenforceable if “the law of your state” barred such class-arbitration waivers. California courts said state law did just that, meaning the proposed class action could proceed.

Justice Stephen G. Breyer, writing for the majority on Monday, said that the state courts had failed to take into account the Supreme Court’s 2011 decision in AT&T Mobility v. Concepcion. That decision allowed companies to avoid class action by insisting on individual arbitrations.

Justice Breyer acknowledged that the parties to a contract might choose to be governed by any legal system they chose.

“In principle, they might choose to have portions of their contract governed by the law of Tibet, the law of prerevolutionary Russia, or (as is relevant here) the law of California,” he wrote, without reference to the 2011 decision.

But he said the right way to read the contract was to assume that it referred to valid California laws and not to ones displaced by the 2011 decision.

Justice Breyer was in dissent in the 2011 case, which was decided by a 5-to-4 vote. But when the DirectTV case was argued in October, he said he was worried that the lower courts were not complying with it, and he alluded to the difficulty of enforcing the court’s 1954 decision in Brown v. Board of Education to underscore his point.

Justice Clarence Thomas, in a solo dissent on Monday, reiterated his view that the Federal Arbitration Act, the law Justice Breyer said required overriding California law, “does not apply to proceedings in state courts.”

Justice Ginsburg’s dissent, which was joined by Justice Sonia Sotomayor, was unusually heated. She said the court’s decisions in this area were dangerous and that she would not have extended them based on what she called “a Delphic provision” and “chameleon term” in the contract.

“I would take no further step to disarm consumers, leaving them without effective access to justice,” she wrote.

She took issue with Justice Breyer. “Pre-revolutionary Russian law, but not California’s ‘home state laws’ operative and unquestionably valid in 2007?” she asked. “Makes little sense to me.”

Justice Ginsburg wrote: “Today, the court holds that consumers lack not only protection against unambiguous class arbitration bans in adhesion contracts. They lack even the benefit of the doubt when anomalous terms in such contracts reasonably could be construed to protect their rights.”

While the case continued a trend, the contract provision at its heart was unusual enough to limit its reach. It has been abandoned by DirecTV and is not used by any other major company.

But other kinds of arbitration clauses are now a standard feature of thousands of consumer and employment contracts. It is becoming increasingly impossible to apply for cable or Internet service, shop online or buy a car without agreeing to private arbitration.

Over the last few years, companies have been using these arbitration clauses as a way to bar people from joining in class-action lawsuits, realistically the only means that individuals have to fight illegal or deceitful business practices.

The Times investigation cited by Justice Ginsburg found that once blocked from going to court as a group, most people dropped their claims entirely. By assembling records from arbitration firms across the country, The Times found that from 2010 to 2014, only 505 consumers went to arbitration over a dispute of $2,500 or less.

Companies say arbitration provides a less costly and more efficient process for consumers to resolve disputes than going to court, but support for those assertions is largely anecdotal.