In AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), the U.S. Supreme Court held that the Federal Arbitration Act (FAA) prohibits states from invalidating arbitration provisions that promote streamlined and efficient arbitration proceedings. Concepcion specifically held that state courts may not find an arbitration agreement unconscionable for failure to provide a right to class-wide arbitration. Two years after Concepcion, the Supreme Court decided yet another case in which it found an improper invalidation of a class-wide arbitration waiver. In American Express Co. v. Italian Colors Rest., 133 S.Ct. 2304 (2013), the Supreme Court held that a contractual waiver of class arbitration may not be invalidated on the grounds that the plaintiff’s practical cost for arbitration of an antitrust claim exceeds the potential recovery. Many businesses have taken advantage of this Supreme Court precedent to expand and bolster the arbitration provisions in their consumer agreements.
Notwithstanding the Supreme Court’s broad holdings on the scope of the FAA’s protection of arbitration clauses, careful drafting and implementation remain important to maximize the enforceability of arbitration clauses, particularly in e-commerce consumer agreements. Plaintiffs continue to challenge the validity of arbitration agreements in favor of proceeding in court, and the lower courts continue to be receptive to those challenges and attacks. Consumers may still take advantage of traditional state law contract defenses to attack arbitration provisions. See 9 U.S.C. §2 (an arbitration agreement “shall be valid, irrevocable, and enforceable, save upon grounds as exist at law or in equity for the revocation of any contract.”).
