In AT&T Mobility v. Concepcion, the Supreme Court considered the extent to which companies can ban class actions in the fine print of their contracts with consumers and employees. Class-action bans are contract provisions that purport to deny consumers and workers the right to seek classwide relief, whether in litigation or in arbitration. Companies have increasingly included class-action bans in their standard mandatory arbitration agreements. Many courts have deemed these provisions unconscionable and invalid under state law where precluding class actions would have the effect of allowing companies to get away with widespread wrongdoing, particularly where the individual claims would be too small to justify pursuing individual redress.
In the U.S. Supreme court, the question presented in AT&T Mobility v. Concepcion was whether the Federal Arbitration Act of 1925 preempts courts from striking down class-action bans under generally applicable state contract law. On behalf of California residents who brought consumer fraud claims against AT&T, we served as lead counsel in the Court. We argued that there was no federal preemption under these circumstances. In a 5-4 decision issued on April 27, 2011, the Court held that corporations can use arbitration provisions in consumer and employment contracts to ban class actions, and that state contract law is preempted to the extent that it deems class-action bans unconscionable.