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AT&T Mobility LLC v. Concepcion

Supreme Court of the United States

November 9, 2010, Argued; April 27, 2011, Decided

No. 09-893

Opinion

 [*336]  [***749]  [**1744]  Justice Scalia delivered the opinion of the Court.

Section 2 of the Federal Arbitration Act (FAA) makes agreements to arbitrate “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. We consider whether the FAA prohibits States from conditioning the enforceability of certain arbitration agreements on the availability of classwide arbitration procedures.

In February 2002, Vincent and Liza Concepcion entered into an agreement for the sale and servicing of cellular telephones with AT&T Mobility LLC (AT&T).1 The contract provided for arbitration of all disputes between the parties, but required that claims be brought in the parties' “individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding.” App. to Pet. for Cert. 61a.2 The agreement authorized AT&T to make unilateral amendments, which it did to the arbitration provision on several occasions. The version at issue in this case reflects  [****6] revisions made in December 2006, which the parties agree are controlling.

The revised agreement provides that customers may initiate dispute proceedings by completing a one-page Notice of Dispute form available on AT&T's Web site. AT&T may  [*337]  then offer to settle the claim; if it does not, or if the dispute is not resolved within 30 days, the customer may invoke arbitration by filing a separate Demand for Arbitration, also available on AT&T's Web site. In the event the parties proceed to arbitration, the agreement specifies that AT&T must pay all costs for nonfrivolous claims; that arbitration must take place in the county in which the customer is billed; that, for claims of $10,000 or less, the customer may choose whether the arbitration proceeds in person, by telephone,  [****7] or based only on submissions; that either party may bring a claim in small claims court in lieu of arbitration; and that the arbitrator may award any form of individual relief, including injunctions and presumably punitive damages. The agreement, moreover, denies AT&T any ability to seek reimbursement of its attorney's fees, and, in the event that a customer receives an arbitration award greater than AT&T's last written settlement offer, requires AT&T to pay a $7,500 minimum recovery and twice the amount of the claimant's attorney's fees.3

The Concepcions purchased AT&T service, which was advertised as including the provision of free phones; they were not charged for the phones, but they were charged $30.22 in sales tax based on the phones' retail value. In March 2006, the Concepcions filed a complaint against AT&T in the United States District Court for the  [***750] Southern District of California. The complaint was later consolidated with a putative class action alleging, among other things, that AT&T had engaged in false advertising and fraud by charging sales tax on phones it advertised as free.

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563 U.S. 333 *; 131 S. Ct. 1740 **; 179 L. Ed. 2d 742 ***; 2011 U.S. LEXIS 3367 ****; 79 U.S.L.W. 4279; 161 Lab. Cas. (CCH) P10,368; 52 Comm. Reg. (P & F) 1179; 22 Fla. L. Weekly Fed. S 957

AT&T MOBILITY LLC, Petitioner v. VINCENT CONCEPCION et ux.

Subsequent History: Related proceeding at McArdle v. AT&T Mobility LLC, 2011 U.S. Dist. LEXIS 83566 (N.D. Cal., July 29, 2011)

On remand at, Remanded by Laster v. AT&T Mobility LLC, 663 F.3d 1034, 2011 U.S. App. LEXIS 23252 (9th Cir. Cal., Nov. 21, 2011)

Prior History:  [****1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.

Laster v. AT&T Mobility LLC, 584 F.3d 849, 2009 U.S. App. LEXIS 23599 (9th Cir. Cal., 2009)

Disposition: Reversed and remanded.

CORE TERMS

arbitration, arbitration agreement, unconscionable, contracts, parties, courts, consumer, revocation, agreement to arbitrate, proceedings, grounds, waivers, disputes, class action, state law, pre-empted, customer, duress, terms, class-action, irrevocable, bilateral, discovery, save, bargaining power, the Act, exculpatory, invalidated, state-law, classwide arbitration

Business & Corporate Compliance, Arbitration, Federal Arbitration Act, Arbitration Agreements, Contracts Law, Contract Conditions & Provisions, Arbitration Clauses, Contracts Law, Defenses, Unconscionability, General Overview, Affirmative Defenses, Coercion & Duress, Fraud & Misrepresentation, Constitutional Law, Supremacy Clause, Federal Preemption, Scope, Governments, Legislation, Interpretation, Civil Procedure, Special Proceedings, Class Actions, Pretrial Matters, Alternative Dispute Resolution, Validity of ADR Methods, Adhesion Contracts, Prerequisites for Class Action, Adequacy of Representation, Notice of Class Action, Notice of Class Action, Content of Notice, Opt Out Provisions, Judicial Review, Appellate Review, Certification of Classes, Appeals, Standards of Review