Supreme Court 5-4 Decides FAA Preempts State Court Rule on Class Arbitration Waivers

In a ruling that will impact the arbitration of labor and employment law disputes, a divided U.S. Supreme Court April 27 held that a California rule of law classifying most waivers of classwide arbitration in consumer contracts as unconscionable is preempted by the Federal Arbitration Act and is therefore unenforceable (AT&T Mobility LLC v. Concepcion).

Writing for the majority in the 5-4 decision, Justice Antonin Scalia said that a state rule of law that requires making classwide arbitration procedures available to parties who have agreed to arbitrate individual consumer disputes “interferes with fundamental attributes of arbitration and thus ...