Does a Supreme Court Ruling Kill the PSN Class Action Lawsuit? Drew Wilson | April 28, 2011 The major PSN outage that saw 70-77 million users data compromised certainly was looking to be one of Sony’s more expensive messes. With governments expressing concern over users identities and a lawsuit already filed against the company, it looked like certain disaster until a recent supreme court ruling was made in a separate case. Note: This is an article I wrote that was published elsewhere first. It has been republished here for archival purposes We’ve been following the developments of the PSN (PlayStation Network) outage very closely for the last few days and a new development might hamper the recent class action lawsuit against Sony over the massive data loss. This point was made by an eagle-eyed blogger at Jailbreak Scene who pointed to an article in the LA Times. The article details a class action lawsuit brought against a phone company by a Southern California couple. They complained about an additional $30 fee tacked on to the price of a cellphone purchase. The case made it to the Supreme Court where the defendant argued that the contract they signed when they used the service prevented class action lawsuits. Ultimately, the question was, can a corporation create a contract that stopped end-users from filing class action lawsuits? It’s not hard to see how many wide-ranging consequences such a ruling could bring. It turns out, the Supreme court ruled 5-4 in favour of the corporations saying that, yes, corporations can contract away any chance a consumer has to form a class-action lawsuit. Justice Antonin Scalia said, “Arbitration is poorly suited to the higher stakes of class litigation” The LATimes noted a dissenting judge: But the dissenters said a practical ban on class action would be unfair to cheated consumers. Justice Stephen G. Breyer said the California courts had insisted on permitting class-action claims, despite arbitration clauses that forbade them. Otherwise, he said, it would allow a company to “insulate” itself “from liability for its own frauds by deliberately cheating large numbers of consumers out of individually small sums of money.” Breyer added that a ban on class actions would prevent lawyers from representing clients for small claims. “What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?” he wrote. Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan joined his dissent. A writer for the Huffington Post was not happy with the ruling: The case’s potential impact is breathtaking. Corporations can now prevent consumers and small business owners from exercising what is often their only real option for challenging companies that defraud them by millions or even billions of dollars: banding together to file class action lawsuits. The case could be equally devastating to millions of non-union employees, who need class actions to challenge systemic discrimination by their employers. The Supreme Court has given major corporations the green light to engage in nearly limitless wrongdoing against others, so long as they do it in relatively small dollar amounts, which ensures that no one can afford to challenge the misconduct without a class action. A sudden demise of class actions will shock the markets and the legal system. It will dramatically increase the market power of major corporations over ordinary Americans and small business owners, who are already outmatched. Innumerable laws that protect the public will become irrelevant because few people can enforce them. Yet for all these far-reaching implications, AT&T’s achievement is remarkably ordinary. The company has secured a state of lawlessness similar to the one that allowed banks to foreclose on millions of homeowners without showing evidence that they had the right to do so. It has achieved a deregulatory regime similar to those that tanked the economy and destroyed millions of jobs, devastated the Gulf of Mexico with oil, allow thousands of preventable workplace deaths every year and threaten untold upheaval through climate change. Like the big banks, the oil and coal companies and the mine operators, AT&T simply wants to write its own rules. It’s doing just that, through a practice that has become so ordinary we hardly notice the absurdity and injustice anymore: writing one-sided contracts and imposing them on others. So, does this undermine the lawsuit against Sony? It might depend on two points, first, how the lawsuit is worded and second, does Sony have an anti-lawsuit clause in their PSN network contract? It’s entirely plausible that AT&T may have given Sony an out in all of this. If Sony can somehow figure out how to bridge the ruling over to their legal case, it could be all over for those who are suing Sony. The other thing to remember is that even if any repercussions that are heading in Sony’s direction end in stunning defeat, it’s a big world out there beyond the US borders. Other countries have different privacy and data breach laws, so Sony wouldn’t be out of the woods if they are immune to litigation in the US. Do you think consumers should have a right to sue if they’ve been wronged by a corporation? Drew Wilson on Twitter: @icecube85 and Google+.