At&T Mobility LLC v. Concepcion
131 S. Ct. 1740
| SCOTUS | 2011Background
- FAA §2 renders arbitration agreements 'valid, irrevocable, and enforceable' subject to traditional contract defenses.
- Concepcions entered a AT&T Mobility arbitration agreement prohibiting class actions and allowing unilateral amendments by AT&T.
- Revised 2006 arbitration clause created a pre-arbitration notice flow, unilateral settlement, limited arbitration formats, and indemnity-like fee provisions, including a $7,500 minimum recovery and doubling fees for certain outcomes.
- Concepcions sued AT&T in California for false advertising and related claims, later seeking class treatment in putative class action.
- District court and Ninth Circuit found the Discover Bank rule (class action waivers in consumer arbitration are unconscionable) pre-empted by the FAA.
- The Supreme Court reversed the Ninth Circuit, holding Discover Bank pre-empted and arbitration must be enforced under the contract terms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA §2 pre-empts Discover Bank rule. | Concepcions argue Discover Bank falls under §2's saving clause. | AT&T argues Discover Bank is pre-empted and not within §2 grounds. | Yes, pre-emption; Discover Bank rule is pre-empted. |
| Whether Discover Bank concerns the making of the arbitration agreement. | Discover Bank concerns exculpatory waivers tied to making the contract. | Discover Bank grounds may be broadly applied to arbitration and other contracts. | Discover Bank concerns the making of the agreement; it is pre-empted when applied to arbitration. |
| Is classwide arbitration compatible with the FAA’s core purposes? | Discovery of class procedures can be aligned with arbitration; California’s rule improperly curtails arbitration. | Class arbitration is an obstacle to streamlined arbitration and the FAA’s goals. | Classwide arbitration is incompatible with the FAA as interpreted here; Discover Bank pre-empted. |
| Does allowing bilateral arbitration suffice to enforce arbitration agreements under FAA §2? | State policy against class waivers should be allowed under §2 if it serves public policy. | Arbitration should be enforced as written; state policies against class waivers obstruct FAA goals. | Arbitration must be enforced according to its terms; class waivers may be pre-empted where they obstruct FAA goals. |
Key Cases Cited
- Discover Bank v. Superior Court, 36 Cal. 4th 148 (Cal. 2005) (class-action waivers in consumer contracts unconscionable under certain conditions)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (arbitration agreements on equal footing with other contracts)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (arbitration of antitrust claims; arbitration outcomes governed by contract law)
- Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (U.S. 2010) (class action arbitration requires explicit agreement; cannot be inferred)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. 1967) (fraud in the inducement of arbitration clause relates to making of the agreement)
- Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213 (U.S. 1985) (arbitration act’s purpose includes enforcing arbitration agreements; not about expediting dispute resolution)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (arbitration defenses may be raised; FAA preserves contract defenses generally)
- Vaden v. Discover Bank, 556 U.S. 49 (U.S. 2009) (limits of FAA jurisdiction and interpretation of arbitration-related defenses)
- Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (U.S. 1996) (state-law defenses may apply to arbitration agreements without violating FAA)