Today, AT&T filed a petition for certiorari in AT&T Mobility LLC v. Concepcion, raising the question “[w]hether the FAA preempts States from conditioning the enforcement of an arbitration agreement on the availability of particular procedures–here, class-wide arbitration–when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims.” According to petitioners, the petition raises the question discussed but not decided in Southland v. Keating — whether States may ever superimpose class procedures on arbitration.
In the case, the Concepions appear to have been in a position to obtain full relief for their claims under AT&T’s arbitration provison. Among other provisions, the brief stated that the agreement applied AAA procedural rules, gave the consumer the option to bring his claim in small claims court in lieu of arbitration, permitted the arbitrator to award the full remedies that would have been available to the consumer in court and offered the consumer a $7,500 minimum recovery if the arbitral award exceeded AT&T’s last settlement offer.
The main issue in this case is whether the FAA preempts California’s ruling that class action arbitration must be made available to consumers with arbitration agreements in order for those agreements to be enforceable. Could the California courts order class action arbitration to take place (to cure unconscionability) without treating arbitration differently than other contracts? One sticky issue is that ordering class action arbitration can only be done in a context where an arbitration agreement exists. Thus, AT&T might argue that ordering class action arbitration treats arbitration agreements differently than other contracts, a rule that the FAA would preempt. However, in response, the consumer might argue that the court is not treating arbitration differently — it is only in a case involving an arbitration agreement that the issue of class action arbitration would come up.
I hope that certiorari is granted in this case — if business were to win this case, precluding states from ordering class action arbitration under the FAA, a consumer with a small claim whose arbitration agreement is not one-sided enough to be declared unconscionable but who could not afford to bring his case in arbitration, would effectively be precluded from bringing a claim at all. I suppose the Supreme Court could narrow its decision to precluding states from ordering class arbitration if the consumer can effectively vindicate their claims in individual arbitration (as the Concepions apppeared to be). But, its holding could certainly be broader. I look forward to your comments on this case.
