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AT&T LLC v. Concepcion

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Featuring Black's Law Dictionary 2nd Ed.
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Civil Procedure Keyed to Yeazell

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Bloomberg Law

Citation. 131 S. Ct. 1740 (2011)

Brief Fact Summary. Vincent and Liza Concepcion (P) and members of a class (P) filed suit against AT&T for deceptive advertising. They had contracted with AT&T (D) for the sale and servicing of cellular phones. The contract provided for arbitration and AT&T (D) moved the court to compel arbitration. The motion was denied by the district court, and the decision was affirmed by the Ninth Circuit Court of Appeals. AT&T (D) appealed to the Supreme Court.


Synopsis of Rule of Law. The Federal Arbitration Act of 1925 displaces state law which prevents the making of contracts which disallow class action.


Facts. Vincent and Liza Concepcion (P) contracted with AT&T Mobility LCC (AT&T) (D). When they found that they had to pay tax on phones advertised by the company as being free, they filed a case which became a class action. The contract included a provision that all claims were to be settled through arbitration, and also prohibited class arbitration. AT&T(D) moved court for an order compelling arbitration as per the contract. The Concepcions (P) opposed the action by AT&T on the grounds that the executed contract was unacceptable in law and illegal in California law because it did not allow class arbitration. The motion was denied by the district court because of the class action waiver, though it approved of the arbitration agreement in general. The court felt that bilateral arbitration would not present the same level of deterrence as class actions, and so the anti-class action provision was unconscionable. AT&T (D) appealed, arguing the preeminence of the Federal Arbitration Act of 1925 (FAA) over California law. The lower court decision was affirmed by the Ninth Circuit Court of Appeals, finding precedent in the Discover Bank v. Superior Court, 36 Cal. 4th 148 (2005). It also stated that the Discover Bank rule was not preempted by the FAA since it expressed the condition of unconscionability applicable to all contracts in California. AT&T (D) appealed to the U.S.Supreme Court. 


Issue. Does the FAA preempt state law that does not allow contracts which prohibit class action arbitration?


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