In an April 27 decision, AT&T Mobility LLC v. Concepcion, 11 C.D.O.S. 4842, the U.S. Supreme Court held that the Federal Arbitration Act pre-empts California’s rule prohibiting class action waivers in most consumer arbitration agreements. This decision is a victory for companies across a wide spectrum of industries, as it reaffirms the courts’ preference for enforcing arbitration agreements according to their terms in order to ensure that parties will receive the full benefit of those agreements.
Factual and Procedural Background
In 2002, the Concepcions entered into a cellphone service agreement with AT&T, which had advertised the service as including free phones. When the Concepcions received those phones, AT&T charged them sales tax based upon the phones’ retail values. The Concepcions filed a case in the U.S. District Court for the Southern District of California that was subsequently consolidated with a putative class action involving the same issue, claiming that AT&T had engaged in false advertising and fraud.
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