AT&T Mobility LLC v. Concepcion

Supreme Court of the United States · 2011 · Contracts

563 U.S. 333 (2011)

Updated July 26, 2026

ContractsArbitrationFederal Arbitration ActPreemptionUnconscionabilityClass arbitrationFAASection 2

Facts

The Concepcions entered into a cellular service agreement with AT&T that required arbitration of disputes on an individual basis and prohibited class or representative proceedings. The agreement included consumer-friendly features, including AT&T's payment of arbitration costs for nonfrivolous claims, local or remote arbitration options for small claims, availability of small claims court, and a $7,500 minimum recovery plus double attorney's fees if the consumer beat AT&T's last written settlement offer. After being charged $30.22 in sales tax on phones advertised as free, the Concepcions joined litigation alleging false advertising and fraud. AT&T sought to enforce the arbitration agreement, while the Concepcions argued that the class-waiver provision was unconscionable under California law.

Issue

Whether § 2 of the Federal Arbitration Act preempts California's Discover Bank rule, which classified most class-action waivers in consumer arbitration agreements as unconscionable and thereby conditioned enforcement of arbitration agreements on the availability of classwide arbitration procedures.

Rule

FAA § 2 preserves generally applicable contract defenses such as fraud, duress, and unconscionability, but not state-law rules that apply only to arbitration or that stand as an obstacle to the FAA's objectives. Because the FAA's overarching purpose is to enforce arbitration agreements according to their terms and to facilitate streamlined proceedings, a state rule is preempted when it requires the availability of classwide arbitration and thereby interferes with fundamental attributes of arbitration.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nora Kim bought a home-security subscription from Summit Harbor Monitoring, a fictional company serving customers in Phoenix, Arizona. The contract requires all disputes to be resolved in individual arbitration and bars any class or representative proceeding. Arizona's highest court has adopted a rule that class waivers in adhesive consumer arbitration agreements are unconscionable whenever the likely individual damages are small and the complaint alleges a business practice affecting many consumers.

If Nora sues in court and argues the class-waiver rule makes the arbitration clause unenforceable, how should a court rule under the FAA?

Explanation. FAA § 2 preserves generally applicable defenses only insofar as they do not stand as an obstacle to the FAA's objectives. A state rule that effectively requires the availability of classwide arbitration because small-value consumer claims would otherwise proceed individually interferes with arbitration's informality, speed, lower cost, and contractual nature. The majority held such a rule is preempted even if framed as unconscionability and even if similar limits exist for litigation waivers.