Thanks to the Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion, businesses now have a mechanism to insulate themselves from costly class actions. In Concepcion, the Court considered whether states can invalidate arbitration agreements that prohibit class arbitration proceedings. In a decision that changes the landscape of consumer class action litigation, the Court confirmed the enforceability of arbitration provisions and waivers akin to those at issue in Concepcion, which are designed to prevent the initiation of class action litigation. Furthermore, the decision will likely redefine the contours of arbitration and class action litigation in other contexts, including employment cases.

The dispute in Concepcion arose from a contractual agreement between AT&T and Vincent and Liza Concepcion for the sale and servicing of cellular telephones. While AT&T had advertised that purchasers of its cellular service would receive free phones, the Concepcions were charged approximately $30 in sales tax for the value of the phones they received. As a result, they filed a complaint in a California federal district court, which was later consolidated with a putative class action that alleged, in part, that AT&T had engaged in false advertising and fraud by charging sales tax on phones that it had advertised as free.

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