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Submission + - Can Microsoft Ban Class-Action Suits? Apparently so.-> 2

colinneagle writes: In a 5-to-4 decision that split along the usual ideological lines, the Supreme Court ruled in April 2011 that businesses may use standard-form contracts to bar consumers claiming fraud from teaming up for a class-action suit.

The decision concerned arbitrations, not suits, but that's no problem. Companies now use their standard contract to use arbitration to settle disputes. This is bad because you can't appeal the findings of a private arbitration hearing, nor is there an independent or public means of reviewing an arbitrator's decisions. They are designed to be conducted in private, unlike court cases.

The decision "basically lets companies escape class actions, so long as they do so by means of arbitration agreements," said Brian T. Fitzpatrick, a law professor at Vanderbilt University, in the New York Times.

Armed with this case, Microsoft has changed the terms of its consumer EULA. You know, that contract no one reads. Last Friday, right before Memorial Day when no one noticed it, Tim Fielden, assistant general counsel for Microsoft, announced that Microsoft was changing its EULA.

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Can Microsoft Ban Class-Action Suits? Apparently so.

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  • Section 2 of the Federal Arbitration Act(FAA) declares that agreements to arbitrate will be subject to invalidation only for the same grounds applicable to contracts generally, mainly unconscionability and duress. Under the Act, state laws that disfavor the enforcement of arbitration agreements will be preempted by the FAA.

    The laws are from the legislative branch. If you don't like the FAA then write your Congressman. If Congress changes the law that too will most likely be deemed Constitutional.

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