On April 27, 2011, the Supreme Court issued its much-awaited opinion in Concepcion v. AT&T Mobility LLC, reaffirming the Court’s commitment to the “liberal federal policy favoring arbitration.” -- U.S. --, No. 09-893, Slip Op. at *4 (Apr. 27, 2011). Specifically, the Court held that the Federal Arbitration Act (FAA) preempts a California rule that class action waivers in consumer contracts are unconscionable.
In Concepcion, the plaintiffs filed a class-action complaint in federal court against their cell phone provider, AT&T, for allegedly charging sales tax on phones that were advertised as free. The parties’ contract provided for arbitration of all disputes between the parties, and required that claims be brought in the parties’ “individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding.” Relying on that provision, AT&T moved to compel arbitration, and also argued that the arbitration clause precluded the plaintiffs from proceeding as a class action. The district court denied AT&T’s motion.
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