U.S. Supreme Court Upholds AT&T Mobile Arbitration Clause

U.S. Supreme Court Upholds AT&T Mobile Arbitration Clause


The United States Supreme Court today issued an opinion upholding an AT&T Mobility LLC arbitration clause that requires customers to bring disputes as individuals rather than as a member of a class action or other representative proceeding.

The issue arose from a complaint filed in a California federal district court by a couple alleging that AT&T engaged in false advertising when it assessed a sales tax on cell phones that the couple received for free as part of the service agreement. The couple also alleged that the arbitration clause that disallowed the combination of their complaint with a class action was unconscionable under California state law.

Having lost its case in the federal district court and the United States Court of Appeal-Ninth Circuit, AT&T appealed to the U.S. Supreme Court. The Court held that nothing in the Federal Arbitration Act suggested an intent to preserve state laws that stood as an obstacle to the promotion of arbitration.

According to the Court, the overarching purpose of the Federal Arbitration Act is to ensure the enforcement of arbitration agreements according to their terms. Ensuring the enforcement of an agreement’s arbitration terms not only promotes arbitration, but also helps to streamline dispute resolution proceedings.

In addition to paying closer attention to dispute resolution language in their wireless service agreements, consumers may not so readily use the litigation route for resolving customer complaints. As the court also noted in this case, arbitration may at times result in a better result for the consumer. Consumers may also be encouraged to pursue other alternatives for resolving complaints, including local or state consumer protection agencies.

Ironically, in this case, the dollar amount in dispute was $30.22.