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The Aftershock of AT&T v. Concepcion on California Employment Law

It all started in California. In April 2011, the U.S. Supreme Court ruled on the case of AT&T Mobility, LLC v. Concepcion, a legal dispute which had made its way up the litigation ladder from a district court in California. From the outside, this case probably seemed to be little more than a simple disagreement between a couple and their phone company. In actuality, the case led to a monumental and somewhat controversial ruling that continues to impact the legal options available to both consumers and employees who are seeking to recover damages from a larger company today. 

Basics of AT&T v. Concepcion

To understand the significance of the outcome of this case, a little explanation can be helpful. The timeline below details the progress of this case from beginning to end:

●      February 2002 - After signing a contract with AT&T based on an advertisement promising two free cell phones for customers who purchased wireless service, Vincent and Lisa Concepcion were surprised to find that they were charged a total of $30.22 in sales tax for the phones. 

●      March 2006 - A complaint was filed by the Concepcions with the district court in Southern California against AT&T, alleging fraud and false advertising. This complaint was consolidated with a putative class action against the company.

●      March 2008 - Due to an arbitration clause in the AT&T contract that requires claims to be brought against the company on an individual basis and not as part of a class action, AT&T moved to compel arbitration based on this criteria. The district court denied this, further finding the clause in question to be unconscionable and unenforceable under California law. This was based on the ruling of a prior case, Discover Bank v. Superior Court 5, which found that arbitration provisions which prohibit class action proceedings are unconscionable under California law. AT&T appealed the case on the grounds that the Federal Arbitration Act should preempt the state laws that prohibit class actions. 

●      October 2009 - The Ninth Circuit Court of Appeals upheld the decision of the district court. AT&T appealed to the U.S. Supreme Court. 

●      April 2011 - The U.S. Supreme Court, examining whether or not the ruling in the Discover Bank case which had found class action waiver clauses in contracts to be unconscionable under state law in California should be preempted by the Federal Arbitration Act, eventually ruled that contract provisions requiring customers to arbitrate any disputes with the company individually are enforceable. 

How does this ruling affect employees in Southern California?

While this case may seem on the surface to have little connection to employment law in California, many employees may be unaware the ruling in AT&T v. Concepcion prompted many employers to put mandatory arbitration agreement clauses into effect for their own companies. In some cases, these agreements may even be a condition of employment. These agreements are meant to serve as a measure of protection for the company from class actions brought by many employees. 

Enforcement of arbitration agreements and class action waivers in California

In spite of the fact that the ruling in AT&T v. Concepcion seems like it might smother any and all class action attempts, from both consumers or employees, in California, this issue remains in debate and is still somewhat ambiguous. In the California Supreme Court, cases on the enforceability of these class action waivers are not cut and dry, but rather are judged on more of a case by case basis, with outcomes that have favored either side of these disputes depending on the details that are unique to each case. 

The minutia and enforceability of employee arbitration agreements is an ever-evolving area of employment law, and for this reason, dispute of this nature can become overwhelmingly complex. If, as an employee, you find yourself in need of advice regarding the legality of a class action suit against your company, we encourage you to contact us for a free case evaluation today. Our experienced attorneys can help you determine the potential enforceability of arbitration and class action clauses in your contract, and guide you to the available legal options that you and any other affected employees may benefit from pursuing.

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