The End of Consumer Class Actions? Supreme Court Upholds AT&T Arbitration Contract

Posted in ABA Journal Law News Now  Apr 27, 2011 9:29 AM CDT  By Debra Cassens Weiss

The U.S. Supreme Court has sided with AT&T in its bid to enforce contract provisions banning class actions and requiring individual arbitration in consumer disputes.

The Federal Arbitration Act pre-empts a California common-law rule that allowed some consumers to avoid contracts in which they waived their class action rights, the court ruled in an opinion (PDF) by Justice Antonin Scalia.

"The dissent claims that class proceedings are necessary to prosecute small-dollar claims that might otherwise slip through the legal system,” Scalia wrote in his opinion. “But states cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.”

Tom Goldstein of SCOTUSblog calls the 5-4 decision in AT&T Mobility v. Concepcion “super-significant.” In a preview of the case, Vanderbilt law professor Brian Fitzpatrick had warned that a ruling for AT&T could “end class-action litigation in America as we know it.”

The court ruled against cell phone customers Vincent and Liza Concepcion, who sued AT&T for advertising discounted cell phones but charging sales tax—$30.22—on the full retail price. They had asked the court to uphold California court rulings finding AT&T's contractual class-action waivers were unconscionable as applied to consumers. More.

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