The Supreme Court Considers Whether the FAA Preempts State Court Decision Holding Class Arbitration Waiver Unenforceable
On Tuesday, in AT&T Mobility LLC v. Concepcion, No. 09-893, the United States Supreme Court heard argument on whether the Federal Arbitration Act preempts a state court decision striking down an arbitration agreement that precludes class arbitration. Specifically, the California Supreme Court held that an arbitration agreement that precludes class relief is unconscionable and therefore unenforceable in contracts of adhesion where the disputes between the parties are likely to involve small amounts and the plaintiff alleges that the party with superior bargaining power has defrauded large numbers of customers out of individually small sums of money. This case offers the Court an opportunity to determine the enforceability of arbitration agreements that preclude class action arbitration, and more generally to provide guidance on the proper roles of federal and state law in shaping arbitration.