WASHINGTON-The California Supreme Court last week ruled arbitration agreements between companies and customers do not necessarily preclude people from filing class-action suits, a decision with unclear implications for the state’s mobile-phone carriers with mandatory arbitration clauses in service contracts.
While the California case involved Discover Bank and credit-card holders, the decision of the state high court appears to have broader application, possibly for wireless carriers in California in the middle of a major battle over whether scores of new-albeit stayed-wireless consumer protection rules should remain on the books.
Indeed, California consumerism has become a colossal-and expensive-headache for mobile carriers in the state. The California Supreme Court’s 4-3 ruling may well add to industry’s troubles in the state.
Meantime, the California Public Utilities Commission last week heard testimony from academics, industry representatives, consumer groups and others on a review of state telecom regulations. Commissioner Susan Kennedy is leading the telecom reform initiative. Kennedy also is championing a controversial proposal to scale back a comprehensive bill of rights for telecom consumers. Wireless carriers argue the regulations hurt-not help-subscribers.
The CPUC approved the bill of rights last year, but the new guidelines are on hold while they are reassessed by the agency. The mobile-phone industry and Gov. Arnold Schwarzenegger oppose the bill of rights. Having lost two, term-ending members who voted for the bill of rights-and have since been replaced by two Schwarzenegger appointees-the CPUC is now well-positioned to approve Kennedy’s revised bill of rights by year’s end.
The California legislature has countered with bill of rights legislation based on the bill of rights authored by Commissioner Geoffrey Brown. The Senate passed the measure in May. The California State Assembly is expected to take up the bill of rights legislation this month.
