On the face of it, the Supreme Court’s April 27 decision in AT&T Mobility v. Concepcion was about the validity of commercial arbitration agreements with clauses that preclude class action claims by consumers—specifically a clause in a cell phone contract. But employment defense attorneys immediately seized on the ruling as a possible antidote to the rash of class actions plaguing employers.
In a 5-4 decision, the nation’s highest court found that the Federal Arbitration Act (FAA) pre-empted a California Supreme Court ruling in Discover Bank v. Superior Court, on which plaintiffs Liza and Vincent Concepcion based their claim. The Concepcions wanted to litigate a dispute they had with AT&T Mobility over a $30.22 charge, even though they had signed an arbitration agreement with a class action waiver. The 2005 Discover Bank decision banned class action waivers in arbitration agreements involving cases with such small claims that they would not be practical to individually litigate. The California high court said such class waivers would insulate a wrongdoer from responsibility and therefore should not be enforced.
