The U.S. Supreme Court made it clear earlier this month that, regardless of what the Constitution says about a consumer's right to sue, businesses are absolutely entitled to block people from banding together to take a dispute to court.
It was the court's latest ruling in favor of arbitration as a preferred method for resolving issues between companies and their customers.
Mandatory arbitration overwhelmingly favors business interests, consumer advocates say, and prevents people from closing ranks to challenge unfair conditions.
In a 6-3 ruling, the Supreme Court said a class-action lawsuit over early-termination fees filed in California against satellite provider DirecTV couldn't go forward.
The California Supreme Court ruled in 2005 that forcing people to arbitrate disputes was "unconscionable" and shouldn't be enforced. But the U.S. Supreme Court ruled in 2011 that national law trumps state law, so the Federal Arbitration Act of 1925 has the last word on the issue.
In its most recent ruling, the court addressed a portion of DirecTV's customer contract that required arbitration for dispute settlement unless the "law of your state" made such a waiver unenforceable.
A California appeals court said last year that the meaning of DirecTV's provision was clear enough: Since the state already had decided that mandatory arbitration was unacceptable, the company had no business telling Californians that they couldn't sue. Not so, said the Supreme Court.
There's nothing wrong with arbitration per se. In certain circumstances, consumers undoubtedly will find the process faster and easier than going to court.
The problem, consumer advocates say, is when mandatory arbitration is foisted on people on a take-it-or-leave-it basis. That is, accept arbitration as your sole remedy or you can't have this credit card or that cable package.
A 2007 report by Public Citizen found that over a four-year period, arbitrators ruled in favor of banks and credit card companies 94 percent of the time in disputes with California consumers. Arbitrators' fees typically are paid by the business involved in a disagreement.
"The Supreme Court has taken away Americans' only right to obtain justice: their day in court," said Harvey Rosenfield, founder of Consumer Watchdog in Santa Monica, Calif. "The more the U.S. Supreme Court allows big corporations to evade accountability, the less confidence Americans have in the judicial branch and the rule of law."
There are legislative reforms on the table. Sen. Al Franken, DFL-Minn., has spearheaded efforts to eliminate forced arbitration from all consumer contracts and employment agreements.
His legislation has gained more cosponsors in recent weeks, but with Republicans in control of Congress, no one expects an arbitration-reform bill to become law anytime soon. Regulatory changes are more likely. The Consumer Financial Protection Bureau is considering a ban on mandatory-arbitration provisions in contracts for credit cards and other financial services.
Perhaps it's time for the Federal Communications Commission to go down the same road with wireless, cable and other telecom contracts.
David Lazarus is a Los Angeles Times columnist.