In April 2011, the U.S. Supreme Court decided AT&T Mobility v. Concepcion, 131 S.Ct. 1740, holding that the Federal Arbitration Act pre-empts California’s Discover Bank rule that class action waivers in arbitration agreements are unconscionable and therefore unenforceable. Concepcion arose out of a class action brought against AT&T, alleging that AT&T advertised discounted cellphones while charging sales tax on the full price. AT&T demanded that the claims be submitted to individual arbitration because the service agreement mandated arbitration and prohibited class arbitration. In deciding in favor of AT&T, the court explained that “[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.” With this holding, the Supreme Court overturned more than 20 state laws prohibiting class action waivers in arbitration agreements.
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