AT&T Mobility v. Concepcion
Encyclopedia
AT&T Mobility v. Concepcion is a legal dispute that was decided by the U.S. Supreme Court
. On April 27, 2011, the Court ruled, by a 5–4 margin, that the Federal Arbitration Act
of 1925 preempts state laws that prohibit contracts from disallowing class action
lawsuits, such as the law previously upheld by the California Supreme Court in the case of Discover Bank v. Superior Court
. By permitting contracts that exclude class action arbitration, the high court's decision will make it much harder for consumers to file class action lawsuits.
contract, contending that the cell phone company had engaged in deceptive advertising
by falsely claiming that their wireless plan included free cell phones. Their suit became a class action. AT&T asked the U.S. District Court for Southern California
to dismiss the suit, because in their contract with the company, the Concepcions had agreed to use an individual arbitration process, rather than filing any class action lawsuits. The district court declined to dismiss the suit, ruling that California law prohibits contracts that unfairly exculpate one party from its wrongdoing, such as clauses that do not allow class action lawsuits in consumer adhesion contracts where the individual damages are small. AT&T appealed the case, saying that the Federal Arbitration Act should preempt state law. On October 27, 2009, the Ninth Circuit Court of Appeals
upheld the lower court decision. AT&T, represented by Andy Pincus of Mayer Brown LLP, then appealed to the Supreme Court. After the Supreme Court granted review, appellate lawyer Deepak Gupta of Public Citizen Litigation Group
was brought in to represent the Concepcions.
doctrines are made under state law. Pincus argued that the California law was not being applied uniformly. Scalia challenged that assertion when he asked, "Are we going to tell the State of California what it has to consider unconscionable?". Other justices questioned different procedural issues arising from the unconscionability discussion and the scope of the rule AT&T was proposing. Deepak Gupta, representing the Concepcions, argued that the contract AT&T imposed on Respondents was clearly unfair. He asserted that state law should be a guidepost in these questions. Some of his arguments drew criticism from Chief Justice John Roberts. Gupta concluded by arguing that California "has made a judgment that if you preclude class-wide relief... that will gut the State's substantive consumer protection laws..."
, and joined by Chief Justice John Roberts
and Justices Anthony Kennedy
, Clarence Thomas
, and Samuel Alito
. "Requiring the availability of classwide arbitration interferes with fundamental attributes of arbitration," Scalia wrote. "We find it hard to believe that defendants would bet the company with no effective means of review, and even harder to believe that Congress would have intended to allow state courts to force such a decision."
The minority opinion was written by Justice Stephen Breyer
, and joined by Justices Ruth Bader Ginsburg
, Sonia Sotomayor
, and Elena Kagan
. Breyer stated that class arbitrations are appropriate ways to resolve claims that are minor individually but significant in the aggregate. "Where does the majority get its contrary idea — that individual, rather than class, arbitration is a fundamental attribute of arbitration?" He said that without class actions, minor frauds would not be remedied. "What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?"
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
. On April 27, 2011, the Court ruled, by a 5–4 margin, that the Federal Arbitration Act
Federal Arbitration Act
In United States law, the Federal Arbitration Act is a statute that provides for judicial facilitation of private dispute resolution through arbitration. It applies in both state courts and federal courts, as was held in Southland Corp. v. Keating...
of 1925 preempts state laws that prohibit contracts from disallowing class action
Class action
In law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
lawsuits, such as the law previously upheld by the California Supreme Court in the case of Discover Bank v. Superior Court
Discover Bank v. Superior Court
Discover Bank v. Superior Court is a 2005 case where the California Supreme Court ruled that an arbitration clause was unenforceable because a class-action waiver contained within it would exculpate Discover Bank from liability for wrongdoing involving small sums of damages. Carlos R...
. By permitting contracts that exclude class action arbitration, the high court's decision will make it much harder for consumers to file class action lawsuits.
History of the case
In 2006, Vincent and Liza Concepcion sued AT&T Mobility over their mobile phoneMobile phone
A mobile phone is a device which can make and receive telephone calls over a radio link whilst moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile network operator...
contract, contending that the cell phone company had engaged in deceptive advertising
False advertising
False advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or...
by falsely claiming that their wireless plan included free cell phones. Their suit became a class action. AT&T asked the U.S. District Court for Southern California
United States District Court for the Southern District of California
The United States District Court for the Southern District of California is the federal district court whose jurisdiction comprises the following counties in California: Imperial and San Diego. In terms of filed indictments, it is one of the busiest criminal districts in the United States...
to dismiss the suit, because in their contract with the company, the Concepcions had agreed to use an individual arbitration process, rather than filing any class action lawsuits. The district court declined to dismiss the suit, ruling that California law prohibits contracts that unfairly exculpate one party from its wrongdoing, such as clauses that do not allow class action lawsuits in consumer adhesion contracts where the individual damages are small. AT&T appealed the case, saying that the Federal Arbitration Act should preempt state law. On October 27, 2009, the Ninth Circuit Court of Appeals
United States Court of Appeals for the Ninth Circuit
The United States Court of Appeals for the Ninth Circuit is a U.S. federal court with appellate jurisdiction over the district courts in the following districts:* District of Alaska* District of Arizona...
upheld the lower court decision. AT&T, represented by Andy Pincus of Mayer Brown LLP, then appealed to the Supreme Court. After the Supreme Court granted review, appellate lawyer Deepak Gupta of Public Citizen Litigation Group
Public Citizen Litigation Group
Public Citizen Litigation Group is a nationally prominent public interest law firm known for its Supreme Court and appellate practice. The group is the litigating arm of the non-profit consumer advocacy organization Public Citizen...
was brought in to represent the Concepcions.
Oral arguments
The Court heard oral arguments on November 9, 2010. Justices Scalia and Sotomayor questioned Pincus (attorney for AT&T Mobility) about when unconscionabilityUnconscionability
Unconscionability is a term used in contract law to describe a defense against the enforcement of a contract based on the presence of terms that are excessively unfair to one party...
doctrines are made under state law. Pincus argued that the California law was not being applied uniformly. Scalia challenged that assertion when he asked, "Are we going to tell the State of California what it has to consider unconscionable?". Other justices questioned different procedural issues arising from the unconscionability discussion and the scope of the rule AT&T was proposing. Deepak Gupta, representing the Concepcions, argued that the contract AT&T imposed on Respondents was clearly unfair. He asserted that state law should be a guidepost in these questions. Some of his arguments drew criticism from Chief Justice John Roberts. Gupta concluded by arguing that California "has made a judgment that if you preclude class-wide relief... that will gut the State's substantive consumer protection laws..."
Decision
The majority opinion was written by Justice Antonin ScaliaAntonin Scalia
Antonin Gregory Scalia is an American jurist who serves as an Associate Justice of the Supreme Court of the United States. As the longest-serving justice on the Court, Scalia is the Senior Associate Justice...
, and joined by Chief Justice John Roberts
John Roberts
John Glover Roberts, Jr. is the 17th and current Chief Justice of the United States. He has served since 2005, having been nominated by President George W. Bush after the death of Chief Justice William Rehnquist...
and Justices Anthony Kennedy
Anthony Kennedy
Anthony McLeod Kennedy is an Associate Justice of the United States Supreme Court, having been appointed by President Ronald Reagan in 1988. Since the retirement of Sandra Day O'Connor, Kennedy has often been the swing vote on many of the Court's politically charged 5–4 decisions...
, Clarence Thomas
Clarence Thomas
Clarence Thomas is an Associate Justice of the Supreme Court of the United States. Succeeding Thurgood Marshall, Thomas is the second African American to serve on the Court....
, and Samuel Alito
Samuel Alito
Samuel Anthony Alito, Jr. is an Associate Justice of the U.S. Supreme Court. He was nominated by President George W. Bush and has served on the court since January 31, 2006....
. "Requiring the availability of classwide arbitration interferes with fundamental attributes of arbitration," Scalia wrote. "We find it hard to believe that defendants would bet the company with no effective means of review, and even harder to believe that Congress would have intended to allow state courts to force such a decision."
The minority opinion was written by Justice Stephen Breyer
Stephen Breyer
Stephen Gerald Breyer is an Associate Justice of the U.S. Supreme Court. Appointed by President Bill Clinton in 1994, and known for his pragmatic approach to constitutional law, Breyer is generally associated with the more liberal side of the Court....
, and joined by Justices Ruth Bader Ginsburg
Ruth Bader Ginsburg
Ruth Joan Bader Ginsburg is an Associate Justice of the Supreme Court of the United States. Ginsburg was appointed by President Bill Clinton and took the oath of office on August 10, 1993. She is the second female justice and the first Jewish female justice.She is generally viewed as belonging to...
, Sonia Sotomayor
Sonia Sotomayor
Sonia Maria Sotomayor is an Associate Justice of the Supreme Court of the United States, serving since August 2009. Sotomayor is the Court's 111th justice, its first Hispanic justice, and its third female justice....
, and Elena Kagan
Elena Kagan
Elena Kagan is an Associate Justice of the Supreme Court of the United States, serving since August 7, 2010. Kagan is the Court's 112th justice and fourth female justice....
. Breyer stated that class arbitrations are appropriate ways to resolve claims that are minor individually but significant in the aggregate. "Where does the majority get its contrary idea — that individual, rather than class, arbitration is a fundamental attribute of arbitration?" He said that without class actions, minor frauds would not be remedied. "What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?"