Client Alert

States May Not Prohibit Class Action Waivers as Part of Pre-Dispute Arbitration Agreements

May 09, 2011

Neal Mollen & Sean Smith

In a decision with broad implications for the use of pre-dispute arbitration agreements in a variety of contexts, the Supreme Court has held that courts cannot refuse to enforce an arbitration agreement because it does not permit the class-based arbitration of claims. In the decision, AT&T Mobility LLC v. Concepcion, No. 09-893, 2011 WL 1561956, the Court held that states may not use state contract law principles as a means to impose limitations or requirements that stand[] as an obstacle to the unfettered use of arbitration agreements. Under Concepcion, obstacles of this sort will be suspect and ripe for challenge on Federal Arbitration Act preemption grounds. Paul Hastings will be sponsoring a teleconference in the coming weeks to discuss more fully the breadth of the decision and the steps employers should take as a consequence.

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