Supreme Court Issues AT&T v. Concepcion Decision

The United States Supreme Court today issued a 5-4 opinion reversing a Ninth Circuit decision and holding that AT&T may enforce a contract provision that requires customers to arbitrate their disputes individually, rather than class-wide.  Some have predicted that such a ruling could effectively end consumer class actions of this type.  In so ruling, the Supreme Court held that the Federal Arbitration Act (FAA) preempts California’s extensively articulated doctrine of unconscionable contracts, which had operated to invalidate the manifestly one-sided provision by which AT&T customers were required to arbitrate disputes and were prohibited from arbitrating claims as class actions (a de facto class action ban).  Consequently, since such provisions are not in fact “negotiated,” but rather are drafted by the employers and retailers who have a virtual monopoly on bargaining power, this decision is expected to motivate employers and retailers to unilaterally insert class action prohibitions in employment and consumer agreements under the guise of an arbitration clause.

The AT&T v. Concepcion majority opinion was written by Justice Antonin Scalia, often celebrated in Federalist Society circles as an advocate for state autonomy.  “States cannot require a procedure that is inconsistent with the FAA,” Scalia wrote, drawing on his strict-constructionist persona, “even if it is desirable for unrelated reasons.”  In dissent, Justice Stephen Breyer ominously suggested the implications of today’s AT&T v. Concepcion ruling: “What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?”

Being that the Supreme Court is the judicial tier of last resort, this battle is now over in the courts.  Among the options for those wishing to ensure the continuation of class actions is amendment of the FAA to accommodate state policy choices.  However, it is unclear whether there is the political motivation in either the Congress or executive branch for such an undertaking.

The full opinion is available here.