In AT&T Mobility LLC v. Vincent Concepcion,1 the U.S. Supreme Court held that the Federal Arbitration Act (FAA) precludes the application of the California Supreme Court’s Discover Bank unconscionability doctrine voiding consumer contracts containing waivers of the consumers’ right to pursue a class or collective action.2 The AT&T Mobility decision builds upon the Supreme Court’s 2010 decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corp.,3 in which the Court held that where an arbitration agreement is silent on the issue of whether it authorizes class claims in arbitration, the arbitrator lacks the authority under the FAA to impose class arbitration procedures on the parties.4 Together, the AT&T Mobility and Stolt-Nielsen decisions clarify the circumstances in which a court, reading silence or applying unconscionability principles, may compel class-wide arbitration, at either the state or federal level, without violating the FAA.
Procedural Background
Vincent and Liza Concepcion had entered into an agreement with AT&T Mobility LLC, a wireless subsidiary of AT&T, in February 2002 for the sale and servicing of “free” wireless telephones.5 The Concepcions were not charged for the retail value of the phones, but were responsible for $30.22 in sales tax, a cost that was not disclosed in AT&T’s advertisement. The Concepcions filed a complaint in the United States District Court for the Southern District of California in March 2006 alleging violations of California consumer protection laws based on AT&T’s non-disclosure of the state sales tax. The case was later consolidated with Laster v. T-Mobile USA Inc., a putative class action alleging state law claims of fraud and false advertising.6
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