U.S. Arbitration Law in the Wake of AT&T v. Concepcion
Last year, the United States Supreme Court rattled the arbitration world with its decision in AT&T Mobility v. Concepcion. The Court's decision in Concepcion overturned the widely accepted Discover Bank rule that had been handed down by the California Supreme Court in Discover Bank v. Superior Court. Discover Bank had established a fairly rigid rule that class arbitration waivers were unconscionable and could not be enforced, thus permitting class actions even where the parties had agreed to only individual arbitrations. In overturning Discover Bank, however, the Court held that the Federal Arbitration Act (FAA) preempted the Discover Bank rule and that the terms of an arbitration agreement could not be declared unconscionable simply because they contained a class action waiver. Instead, the FAA dictates that arbitration agreements - even those in adhesive contracts - must be read at face value and strictly interpreted.
Terry F. Moritz, The Fallout from AT&T Mobility v. Concepcion: Parameters Established by the Interpretation of Lower Courts, 4 Arb. L. Rev. 146 (2012).