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In the past, mandatory arbitration clauses often failed to protect businesses against class actions, particularly where the parties arguably had unequal bargaining power (e.g., in consumer contracts). But recent Supreme Court decisions have made the arbitration clause a potent weapon against class actions in many areas of the law. In AT&T Mobility LLC v. Concepcion in 2011, the Supreme Court held that an arbitration clause in a consumer mobile telephone contract was enforceable – and a purported federal court class action lawsuit based on the contract was impermissible – under the strong pro-arbitration policy of the Federal Arbitration Act (FAA). The Court rejected the argument that the mandatory arbitration clause was an unconscionable “contract of adhesion” under California state law, and pointed out a number of claimant-friendly provisions in AT&T’s contract that made it easy for an individual claimant to arbitrate his or her claims (including procedures for low-cost telephonic or written arbitration for low-value claims, a prohibition on AT&T recovering attorneys’ fees, and a generous minimum award if the arbitrator awarded the claimant more than AT&T’s last settlement offer.)

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