High Court Rebuffs Appeal by Cingular

Cingular Wireless lost a bid to block three class-action lawsuits when the U.S. Supreme Court refused Monday to question California court rulings that companies say are limiting the use of arbitration.

The court rejected Cingular’s appeal without comment, clearing the way for suits that challenge the company’s early-termination fees and accuse it of locking mobile-phone handsets so that they don’t work on competing networks.

The rejection leaves intact a series of California decisions requiring some arbitration agreements to allow class actions and letting customers bypass arbitration to seek a court order that would benefit the general public. Cingular and the U.S. Chamber of Commerce argued that California courts were undermining the usefulness of arbitration as a tool to cut litigation costs in the state.

The lower court rulings “will result in the wholesale invalidation of tens of millions of arbitration agreements,” Cingular said in court papers filed in Washington.

California courts have voided arbitration agreements used in the Internet service, consumer banking and mobile-phone industries. Cingular said it faces 22 cases in which people are seeking to bypass arbitration and represent a broad group of consumers in court.

Cingular’s appeal focused on the Federal Arbitration Act, a law that requires state courts to enforce arbitration provisions just like any other contract.

The central question was how much room the federal law leaves for states to apply neutral rules such as California’s prohibition on “unconscionable” contracts. The California Supreme Court invoked that doctrine in 2005 to bar waivers of class-action rights in disputes that “predictably involve small amounts of damages” and large numbers of customers.