AT&T Mobility, LLC v. Concepcion
April 2011
Jaime A. Bianchi, David P. Draigh, Bryan A. Merryman, Christopher M. Curran, J. Mark Gidley, Peter J. Carney, Eric Grannon, Jack E. Pace III
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The United States Supreme Court Holds Consumer Arbitration Clause With Class Action Waiver Is Enforceable; California State Law Prohibiting Class Action Waivers Is Preempted by the Federal Arbitration Act.
On April 27, 2011, the US Supreme Court issued the long-awaited opinion in AT&T Mobility, LLC v. Concepcion. Justice Scalia's majority opinion, joined by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito, held that because California's Discover Bank rule, which precludes class action waivers in most consumer arbitration agreements in that state, "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," it is preempted by the Federal Arbitration Act ("FAA"). The Court's decision in AT&T repeatedly relied on its decision issued exactly one year ago to the day in Stolt-Nielsen v. AnimalFeeds—"Although we have had little occasion to examine classwide arbitration, our decision in Stolt-Nielsen is instructive." Putting Stolt-Nielsen on equal footing with the Court's venerable arbitration precedents, the Court relied on it for the proposition that the FAA requires that the parties be permitted by agreement "to limit with whom a party will arbitrate its disputes" (emphasis in original).
After AT&T, similar law in other states invalidating class action waivers in consumer arbitration agreements should also be preempted by the FAA. This decision, coupled with the Stolt-Nielsen decision, will have a dramatic effect on the use and enforceability of consumer arbitration agreements in the US containing class action waivers in the future.
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