AT&T v. Concepcion

Thanks a lot to the prawfs community for letting me blog here in October.  Just as a final FYI, if you're into contract law, arbitration, federalism, fed courts, cell phones, or just whacktastically difficult Supreme Court cases, be sure to check out oral arguments in AT&T v. Concepcion on November 9.  (Full disclosure/self-plug: I wrote an amicus brief on behalf of contracts professors in support of the Respondents). 

The issue is whether the Federal Arbitration Act preempts state courts from finding that the class action waiver in AT&T's wireless service agreement is invalid.  The FAA precludes courts from discriminating against arbitration clauses by subjecting them to unique anti-arbitration rules.  The California Supreme Court (and courts in many other states) have held that class action waivers can be unconscionable when they require plaintiffs to arbitrate low-value lawsuits on an individual basis.  Basically, the idea is that no one will actually bring these negative-value claims unless they can aggregate them. 

However, AT&T contends that it has cured this defect by coupling its class action waiver with incentives for plaintiffs to arbitrate low-value claims individually.  For instance, it will pay up to $10,000 to plaintiffs who recover more in arbitration than AT&T's last written settlement demand.  Thus, AT&T argues that any state law that invalidates this "pro-consumer" clause on the grounds that it's unfair--as California law did here--must be impermissibly discriminating against arbitration. 

On the other hand, the Respondents argue that (1) the Supreme Court has no business second-guessing a state court's application of its own contract law and (2) even with AT&T's bells and whistles, few consumers will arbitrate individually, meaning that the class action waiver still reduces AT&T's incentives to conform to the law.  

Should be a wild one!