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Maximizing Arbitration Provisions Post-Concepcion v. AT&T

By J. Christopher Allen, Jr., Brian C. Avello and Sara E. Farber
November 23, 2011

On April 27, 2011, the United States Supreme Court issued a decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), which will have significant impacts on the prevalence of class-based claims arising out of contracts with consumers. In Concepcion, the plaintiffs brought a putative class action against AT&T, asserting claims for false advertising and fraud in connection with a cellular telephone agreement. The telephone services contract between the parties provided that all disputes arising out of the contract be brought by individual arbitration and explicitly banned class actions. The plaintiffs argued that the arbitration provision's ban on class-wide proceedings was unconscionable and, thus, unenforceable under California law. The Supreme Court disagreed and, in a 5-4 decision, held that the Federal Arbitration Act (FAA) preempts state laws that void class-action waivers for reasons of state public policy concerns, including unconscionability.

In the months since Concepcion, the majority of courts that have confronted arbitration provisions in consumer contracts that prohibit class actions have upheld them. However, a few decisions distinguished Concepcion and placed restrictions on its application. We examine the post-Concepcion landscape and offer guidance on how best to take advantage of the protections afforded by the Supreme Court's ruling.

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