May Antitrust Bulletin

Arbitration Clauses in Consumer Contracts May Bar Class Actions

On April 30, 2011, the U.S. Supreme Court ruled in a 5-4 opinion in AT& T Mobility LLC v. Concepcion that California state law deeming class action waivers in arbitration agreements unenforceable in certain circumstances is preempted by the Federal Arbitration Act because it "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." A class of plaintiffs had sued AT&T for charging sales tax on purportedly "free" cellular phones. The service contract between the plaintiffs and AT&T provided for arbitration of all disputes, brought in an "individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding." AT&T had moved to compel individual arbitration, but a district court ruled that the arbitration clause was unenforceable. The Supreme Court's reversal of this decision could have a significant impact on the