On April 27, 2011, the U.S. Supreme Court issued its opinion in AT&T Mobility LLC v. Concepcion,1 holding that the Federal Arbitration Act2 (FAA) preempts the California Supreme Court’s prohibition against class arbitration waivers as unconscionable. While AT&T Mobility turned on the preemption of a state statute limiting arbitration agreements in favor of a federal law supporting arbitration, it nonetheless may have far-reaching effects on class action waivers over a broad spectrum of legal disputes. Specifically, it remains to be seen how the Supreme Court will treat class action waiver provisions that thwart the ability of plaintiffs to pursue relief under federal antitrust laws.
Supreme Court’s Decision
In AT&T Mobility, individual purchasers of service contracts from AT&T brought suit in federal court alleging that AT&T had engaged in false advertising and fraud by charging sales tax to consumers on cell phones that had been advertised as “free.” After the suit was consolidated with a class action, AT&T filed a motion to compel arbitration under the service contract which the district court denied.3
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