Lucas,
I'm just back from the U.S. Supreme Court with an update on yesterday's oral argument in AT&T Mobility v. Concepcion, which focused on whether the Federal Arbitration Act prevents a state from saying corporations cannot enforce contracts that ban class actions.
Public Citizen's Deepak Gupta represented consumers seeking to pursue a class action against AT&T despite an arbitration clause in their cell phone contracts purporting to bar all class actions.
In his first appearance before the high court, Deepak eloquently explained to the court that the California law at issue in the case neither favors nor disfavors arbitration, and that it evenhandedly applies to preclude companies from inserting provisions in form contracts that effectively immunize them from liability for misconduct. Because the Federal Arbitration Act permits states to apply general principles of contract law to hold arbitration agreements unenforceable as long as those principles do not discriminate against arbitration, Deepak argued that California's law is valid.
The Court's probing questions both to Deepak and to AT&T's lawyer suggest that the Court understands the arguments on both sides and, despite other recent rulings favoring arbitration, may be open to the argument that federal law does not preempt California legal decisions holding that class-action bans are "unconscionable" and unenforceable in certain circumstances.
A question from Justice Antonin Scalia to AT&T's lawyer summed up the question before the Court: "Are we going to tell the state of California what it has to consider unconscionable?"
Predicting the Court's decision based on questions at argument is always a chancy business. But today's argument left us convinced that we are in the game in this case and that consumers have a fighting chance of prevailing.
I hope you can join Deepak and me for a webinar today at 1:00 p.m. EST to discuss the case. Register here.
Thank you.
Scott Nelson
Public Citizen Litigation Group