On Wednesday, April 27, 2011, the United States Supreme Court decided AT&T Mobility LLC v. Concepcion, No. 09-893 (U.S. Apr. 27, 2011), holding that the Federal Arbitration Act, 9 U.S.C. sec. 2 ("FAA") preempts the California Supreme Court's "Discover Bank" rule, which held that class action waivers in arbitration agreements were unconscionable and unenforceable. The Supreme Court held that California's Discover Bank rule directly conflicted with the central purpose of the FAA, which is to ensure that private arbitration agreements are enforced according to their terms.
The AT&T Mobility decision rests on preemption grounds and does not necessarily resolve the question of whether class action waivers can be enforced against plaintiffs pursuing federal antitrust claims. However, the Second Circuit addressed that precise issue only weeks earlier in In re American Express Merchants' Litig., 634 F.3d 187 (2d Cir. 2011), in which it held that class action waivers contained in an arbitration agreement were not enforceable against a class of plaintiffs pursuing tying claims against American Express under Section One of the Sherman Act. Thus, the stage may now be set for the Supreme Court to decide this issue. Although the Supreme Court expressed great hostility to class arbitration in AT&T Mobility, it is not a foregone conclusion that it will similarly hold class action waivers unenforceable in the context of federal antitrust claims. On the other hand, if it does so hold, the entire landscape of antitrust consumer class actions could drastically change.
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