AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011)
AT&T Mobility v. Concepcion is a watershed Supreme Court decision at the intersection of contracts, arbitration, and federal preemption.
Does the Federal Arbitration Act preempt California's Discover Bank rule, which classifies most class-arbitration waivers in consumer adhesion contracts as unconscionable and thus unenforceable?
Section 2 of the Federal Arbitration Act makes arbitration agreements valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. While generally applicable contract defenses (e.g., fraud, duress, unconscionability) may invalidate arbitration agreements, state-law rules are preempted when they stand as an obstacle to the accomplishment and execution of the FAA's purposes and objectives, including enforcement of arbitration agreements according to their terms and preservation of arbitration's fundamental attributes—informality, speed, and efficiency. States may not require procedures incompatible with arbitration (such as classwide arbitration) absent the parties' consent.
Yes. The FAA preempts California's Discover Bank rule. Arbitration agreements must be enforced according to their terms, including provisions requiring individualized arbitration and waiving class proceedings.
Concepcion dramatically expanded the enforceability of class-arbitration waivers, catalyzing their widespread use in consumer and employment agreements. It restricts states from using generally framed doctrines like unconscionability to impose class procedures on arbitration, solidifying federal preemption where such doctrines undercut arbitration's core attributes. The decision set the stage for subsequent Supreme Court rulings that reinforced individualized arbitration (e.g., American Express v. Italian Colors, Epic Systems v. Lewis, Lamps Plus v. Varela) and narrowed pathways for aggregate dispute resolution absent explicit agreement. For law students, Concepcion is a cornerstone for understanding the FAA's saving clause, obstacle preemption, and the modern arbitration regime's profound procedural and substantive consequences.