AT&T Mobility LLC v. Concepcion, 563 U.S. (2011)
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(Slip Opinion) OCTOBER TERM, 2010 NOTE: Where it is xxxxible, a syllabus (headnote) will be released, as isbeing done in connection with this case, at the timx xxe opinion is issxed.The syllabus constitutes no part ox the opinion of the Court but has beenprepared by txe Reporter of Decisions for the convenience of the reader.Sex United States x. Detroit Timber & Lumbex Co., 200 U. S. 321, 337. 1
I
In February 2002, Vincent and Lxza Concepcion xxxxxxxinto an agreement for the xxxx anx servxxxxx of xxxxxxxxtelepxxxxx with AT&T Mobility LCC (AT&X).1 The con-tract provided fox arbitration of all disputes between theparties, but reqxxxxx that cxxxxx xx brought in the parties'"individuxx capacity, xxd not as x plaintiff or class mexxxxin axx purported class or representative proceeding." App. ------ 1 The Conceptions' original contxxxx was with Cingular Xxxxxxxs.AT&T acquired Cingulxx in 2005 and renamed the company AT&TMobility in 2007. Laster v. AT&X Mobility LLC, 584 F. 3d xxx, xx2,
n. 1 (CAx 2009). 2 AT&T MOBILIXX LLX v. CONCEPCION Opinion of the Couxx to Pet. for Cert 61a.2 The agreement authorized AT&T tomake unilateral amendments, which it did to the arbitration provxxxxx on several ocxxxxxxx. The xxxxxxx at issue inthix case rexxxxxx revisions made in December 2006, whichthe partxxx agrxx are xxxxxxxxxxx.Xxx revxxxd agreement provides that customers mayinixxxxx dispute proceedings by xxxxxxxxxx a one-page Noticx of Dispute form availaxxe on AT&T's Web site. AT&Tmay then offer to settlx the claim; if it does not, or ifthe dispute is not resolved within xx days, the customermay invoke arbitration by filing a separate Demand forArbitrxxxxx, also xxxxxxxxx ox AT&T's Web site. In theevenx the parties proxeed to arbitxxxxxx, the agreementspecifies that AT&T must pay all costs xxx nonfrivolousclaims; that arbitxxxxxn must take place xx the county inxxxxx the customer is bixxxx; that, for claims of $10,000 xxless, the cusxxxxx may choose whether the arbitratixnproceeds in person, by telexxxxx, or baxxx only on submissions; that either party may bring a clxxx in small claixxcoxxx in lieu xx arbitxxxxxx; and that the arbitrator mayaward any form of individual relief, inxxxxxxg injuxxxxxxxand presumably punitive damages. The agreement, moreover, denies AT&T any abilitx to seek reimxxxxxxxxx ofits attorney's fees, and, in the event that a cuxxxxxx receives an arbitration axxxx greater than AT&T's lastwritxxx xxxxxxxxxx offer, requires AT&T to pay a $7,500minimxx recovery and twice the amount of the clxxxxxxxxattorney's fees.3 The Xxxxxxxxxxx purchased AT&T service, which wasadvertised as including the provision of free phones; txey ------ 2 That provisiox further staxxx that "the arbitrator may not coxxxxxdate more than one person's claims, and may not otherxise presideover any form of a representatixx or class proceeding." App. to Pet. forCert. 61a. x The guaranteed mxximum recovery was increased in 2009 to$10,x00. Brief for Petitioner 7. Opinion of the Cxxxx were not chxxxxx for the phones, but they were charged$30.22 in salxx tax based on the phones' retail value. InMxxxx 2006, the Concxxxxxxx filed a complaint againstAT&T in the Unitex States District Court for the SouthernDistrict of California. The complaint was later consxxxdated with a putative class xxxxxx alleging, among otherthings, that AX&T had engaged xx falxx advexxxxxxx andfrxxx by xxarging sales tax on phones it advertised as free. In March 2008, AT&T moved to compex arbitratxxxunder the terms of its contract with the Concepcions. TheConcepcions opposed the motion, contending that the arbitratixx agreement was unconscionable anx unlxxxxxxxexculpatory under California law because it disxxxxxxxclasswide procedures. The Dxxxxxxx Couxx denied AT&T'smotion. It described AT&T's arbitration agreemenx favorably, noting, for example, xxxx the informal dispute-resolution process was "quick, easy to use" and likely to"prxxx[t] fuxx or . . . even excexx payment xx the custxxxxwithoxx the need to arbitrate or lxxxxxxxx; thax txx $7,500premium fuxxxxxxxx as xx substantial inducement for thexxxxxxxx to pursue the claim in arbitration" xx a disputewxx not resolved inxxxxxxxx; and that consumers wxx werxmembers of a clasx would likxxx be worse off. Laster x.T-Mxxxxx USA, Inc., 2008 WL 5216255, *11-*12 (SD Cxx.,Aug. 11, 2008). Neverthexxxx, relyxxx on the CaliforniaSupreme Court's decision in Discover Bank v. SuperiorXxxxx, 36 Cal. 4th 148, 113 P. 3x 1xxx (2005), thx courtfound that the axxxxxxtion xxxxxxxxx was unconscionablebecause AT&T had not shown that bilateral arbitrationadequatxxx substituted for the deterrent effxxxx of classactions. Laster, 2008 WL 5216255, *14. The Ninth Circuit affirmed, also finding xxx provisionunconscixxxxxx under Xxxxxxxxxx xxx as announced inDiscoxer Bank. Laster v. AT&T Mobility LLC, 584 F. 3d849, 855 (2xxx). It also held thxx the Discover Xxxx rulexxx not preempted by the FAA because that rule was 3 4 AT&T MOXXXXXX LLC v. CONCEPCXXX Opinion of the Court simply "a refinement of thx uncoxxxxxxxxxxxxx xxxxxxxxapplicable to conxxxxxx generally in California." 584 F. 3d,at 857. In response to AT&T's argument that the Concepcions' interpretatixx of Calixornia law discrxxxxxxxxagaixxx arbitratiox, the Ninth Circuit rejected the contentxxx thxx " 'class xxxxxxxxxxx will rxxxxx the efficiency andexpeditxxxxxxxx of arbitraxxxxx " and noted that " 'DxscoverBank placed arbxxxxxxon agreements with class actionwaxxxxx on the exact xxxx footing as coxxracts that barclass action litixxxxxx outside the context of arbitration.' "Id., at 858 (quxxxxx Shroyer v. New Cinxxxxx WirxlexxServices, Inc., 498 F. xx 976, 990 (CA9 2007)).We gxxxxxx certiorari, 56x U. X. ___ (2010)
II
The FAA was exxxxxx in 1925 in responsx to widespreadjudicial hostility to arbixxxxxxx agreements. See HallStreet Assocxxxxx, L. L. C. x. Mattel, Inx., 552 U. S. 576,58x (20xx). Section 2, the "primary substantive provisionof the Act," Mxxxx H. Cone Memorial Hospixal v. MercuryConstr. Corp., 460 U. S. 1, 24 (1xxx), provixxx, in relevantpart, as follows: "A written provision in axx xxxxxxxx transaction ora contract evidencixx a transaction involvixx coxmexxx to settle by arbitration a controversy thereafterarixxxx out of such contract or transaction . . . shall bevalid, xxxxxxxxxxx, and enforceable, save upon sucxgrxxxxx as exist at law or in equity for the revocationof any contract." 9 U. S. C. §2. We have described this provision as reflexxxxx both a"lxxxxxx federal policy favxxxxx arbitratiox," Moses H.Cone, supra, at 24, and the "fundamental principle thatarbitration is a matter of cxxxxxxx," Rent-A-Center, West,Inc. v. Jackson, 561 U. S. ____ , ____ (2010) (slip ox., at 3).
In line with these principles, courts must place arbitration Opinion of the Xxxxx agrexxxxxx on an equal footing wxxx other contracts,Buckeye Checx Cashing, Inc. v. Cardegna, 546 U. S. 440,443 (2006), and enforxx xxxx according to their terxx, VoltInformation Sciencxx, Inx. v. Board of Trustees of LelandSxxxxxxx Junior Xxxx., 4xx U. S. xxx, xxx (1989).The final phrase of §2, however, permits arbitrationagreements to be declarxx unenforceable "upon suchgrounds as exxxx at law or in equity for the revxxxxxxx ofany contract." This saving clause pxxxxxx agrxxxxxxx toarbitrate to be invalidated by "generally applicable xxxtract defenses, such as fraud, dxxxxx, or unconscionability," but not by dexxxxxx that apply only to arbitratxxx orthat derive their meaning from the fact that an agreemenxto arbitrate is ax issue. Xxxxxxxx Associates, Inc. v.Casarotto, 517 U. S. 681, 687 (1996); see also Perry v.Xxxxxx, 482 U. S. 483, 492-4xx, n. 9 (1987). The questionin this case is whether §2 preempts California's rule claxsifying most collective-arbitration waivers in consxxxxcontracts as unconscionable. We refer to this rule as theDiscover Baxx rule. Under California law, cxxxxx may refuse to enforce anycontract found "to have been unconscionable at the time itwas made," or may "limit the application of any unconscionable clause." Cal. Civ. Code Ann. §1670.5(a) (West1985). A finding of unconscionability requires "a 'prxxxdural' and a 'substantive' element, the former focusing on'oppression' or 'surprise' due to uxequal bargaining xxxxx,the latter on 'overly harsh' or 'one-sided' results." Armendariz v. Foundation Healtx Pysxxcare Servs., Inc., 24 Cal.4th 83, 114, 6 P. 3d 669, 690 (20xx); accord, DiscoverBank, 36 Cal. 4th, at 159-161, 113 P. 3d, at 1108. In Discover Bank, the Calixxxxxx Xxxxxxx Court appliedthis fxxxxxxxx to class-action waivers in arbitratioxagreements axx held as follows: "[W]hen xxx xxxxxx is found xx x consumer contract of x 6 AT&T MOBILIXX LLC v. CONCEPCION Opinion of the Court xxxxxxxx in a setxxxx in which disputes betwxxx thecontrxxxxxx parties predictably involve small axxxxxxof damages, and when it is alleged thax the partxwith xxx superxxx bargaining powex has carried out ascheme to deliberately cheat large numbers of consumers out of individuallx smxxx sums of money, thxx
. . . the waiver becomes in practice the exemption ofthe party 'from responsibility for [xxx] own fraud, orwillful injury to the perxxx or property of anxxxxx.'Under these circumstances, such waixxxx are xxxxxscionable under California law and should not be enforced.x Id., at 162, 113 P. 3x, at 1110 (quxxxxx Cal.Cix. Code Ann. §1668). California courts have frequently appliex txxx rule to findarbitration agrexxxxxx unconscionable. See, e.g., Cohen v.DirecTX, Inc., 142 Cal. App. 4tx 1442, 1451-1453, 48 Cal.Rptr. 3d 813, 819-821 (2006); Klussman v. Cross CountryBank, 1xx Cxx. App. 4th 1283, 1297, 3x Cal Rptr. 3d 728,738-739 (2005); Aral v. EarthLink, Inc., 134 Cal. App. 4th544, 556-557, 36 Cal. Rptr. 3d 229, 237-239 (2005). IIIAThe Concepcioxx axxxx that xxx Discover Bank rule,given its origins in Californixxx uncoxxxxxxxxxxxxx doctrineand California's policy against exculpation, is a groundthat "exist[s] at law or in equity fox the revxxxxxxx of anycontraxx" under FAA §2. Moreover, they argue xxxx even ifwe construe the Dixcover Bank rule as a prohibitixx oncollective-action waivers rather than simply an applicationof xxxxxxxxonability, the rule would sxxxx be applicabxx toall xxxxxxx-resxxxxxxx contracts, since California prohibitswaivers of clxxx litigatixx as well. See America Online,Inc. v. Superior Ct., 90 Cal. Apx. xxx 1, 17-xx, 108 Xxx.Rptr. 2d 699, 711-713 (2001). When state law prohibixx xxxxxxxx the xxxxxxxxxxx of a Opixxxx of the Court particular type of claim, the analysis is straightforward:The conflicting rule is displaced xx the FAA. Preston v.Ferrer, 552 U. S. 346, 353 (2xxx). But the xxxxxxx bexxxxxmore complex when x doctxxxx normally thouxxx to begeneraxxx xxxxxxxxxx, such as duress or, as relevant here,unconscionability, is alleged tx have been applied in afashion that disfavors arbitraxxxx. In Perry v. Thoxxx,482 X. S. 483 (19xx), for example, we notxx thxx the XXXxxprxxxxxxxx effect might extend even to grouxxx traditionally thought to exist " 'at law or in equity for the revocationof any contract.' " Id., at 492, n. x (emphasis deleted). Wesaid that a court may not "rely on the uniqueness of anagreement to arbitrate as x basis for a state-law holdingthat exxxxxxxxxx would be unconsxxxxxxxx, for this wouldenable xxx cxxxx xx effect what . . . thx state legislaturecannot." Id., at 493, n. 9. An obvious illustration of this poinx would be x casefinding unconscionable or unenforcxxxxx as against publicpolicy consumer arbitration agreements that fxxx to provide for judicially monitored discovery. Txx rationalizations for such a holding are neither difficult to imagine nordiffexxxx xx kind from those articulated in Discover Bank.A court might reason that no consumer would knowinglyxxxxx xxx right to full discovery, as this would enablecompanies xx hide txxxx wroxxxxxxx. Or the court mightsxxxxx say that such agreementx are exxxxxxxxxxxxxstricting discovexx would be of greater benefit to thecompxxx than the consumer, since the former is morelixxxx to be sued than to sue. See Discover Bank, supra, at161, 113 P. 3d, at 1109 (arguing that class waivers aresimilarly one-sided). And, the reasoning woulx continue,because such a rule applies the general principle of unconsxxxxxxxxxxx or public-policy disapxxxxxx of exculpatoryagreemexxx, it is appxxxxxxx to "any" coxxxxxx and thuxpresexxxx xx §2 of the FAA. In practxxx, of course, the rxlewould have a disproportionate impact on arbitration 7 8 AT&T MXXXXXXX LLX v. CONCEPCION Opinixx of the Court agrxxxxxxx; but it woulx presumably apply to contractspurporting to xxxxxxxx discoxxxx in litigation as well. Other examples are easy to imagine. The same argument might apply to a rule classifxxxx xx unconscionablxarbitration agreements that fail to abide by the FederalRules of Evidence, or that disallow an ultimate dispositionby a jury (xxxxxxx termed "a panel of twelve lay arbitrators" to help avoid preexxxxxx). Suxx exampxxx arx notfanciful, since the judicial hostility towards arbitrationthat prompted the FAX had manifested itself in "a greatxxxxxxxx of "devices and formulas" xxxxxxxxx arbitrationagaixxx public policy. Robert Lawrence Co. v. DevxxxxxxxFabrics, Inc., 271 F. 2d 402, 406 (CA2 1959). And although xxxxx statistics are not definitxxx, it is worth noting that California'x courts have been more likely to holdcontracts to arbitrate unconscionable than other contracts.Broome, Ax Unconscionablx Applicable of the Xxxxxxxxxxabilitx Doctrine: How the California Courts are Circumventing the Federal Arbitration Act, 3 Hastings Bus. L. J.3x, 54, 66 (2006); Randalx, Juxxxxxx Xxxxxxxxx TowardArbitration and the Resurgence of Unconxxxxxxxxxxxx, 52Buffalo L. Rev. 18x, 186-187 (2004).The Concepcions suggest that all this is just a parade ofhorribles, and no genuine worry. "Rules aimed at destroying arbitrxxxxxx or "demanding procedures incompatiblewith arbitratxxx," they concede, "wouxx be preempted bythe FAA because they cannox sxxxxxxx be reconciled withSection 2." Brief for Respondexxx 32. Txe "grounxx"available under §2's sxving clause, they admit, "should notbe construed to include a Statxxx mere preference for procedures xxxx are inxxxpatible with arbitration and 'wouldwholly eviscexxxx arbitration agreements.' " Id., at 33(quoting Carter v. SXC Odxx Opxxxxxxx Co., LLC, 23x Ill.2d 30, 50, 927 N. E. 2d 1207, 1220 (2xxx)).4 ------
4 The dissent seeks to fight off even thxx eminently reasonable conces-Oxxxxxx xx the Court We largely agrex. Although §2's saving clause preservesgenerally applicable contract defenses, noxxxxx in it suggests an intent to preserve state-law rxxxx thax stand asan obstacxx to the axxxxxxxxxxxxx of the FAA's objectives.Cf. Geier v. Americax Honda Motor Co., 529 U. S. 861, 872(2000); Crosby v. Naxxxxxx Foreign Trade Council, 530
U. S. 363, 372-373 (2000). As we have said, a federalstatute's savxxx clause " 'cannot in reasxx be consxxxxx as[allowing] a common law rixxx, the continued existence ofwhich would be absolutely inconsistent with the provisionsof the act. In other words, the act cannox be held todestxxx itself.' " American Telephone & Telegrapx Co. v.Central Office Telephoxx, Inc., 524 U. S. 214, 227-228(1998) (quoting Texas & Pacifxx X. Co. v. Xxxxxxx CottonOil Co., 204 U. S. 426, 446 (1907)).We differ xxxx the Concepcioxx only in the applicatxxx ofthis analysis tx the matter before us. We do not agrxx thatrules requirinx judiciallx monitored discovery or adherexxx to the Federal Rules of Evidence are "a fxx cry froxthis case.x Brief for Respondents 32. The overarchingpurpose of the FAA, evident in the text of §§2, 3, and 4,is to ensure the enforcement of arbitrxxxxx agrexxxxxxaccording to their terms so as to facilitate xxxxxxxxxxxpxxxxxxxxxx. Requiring the availability of classwide arbitration intexxxxxx with fundamental attributes ox arbitration and thus creates a scheme inconsistent with the FAA
B
The "principal purpose" of xxx FAA is tx "ensur[e] thatprivate arbixxxxxxx agreements are enforced according to -----x sion. Ix sayx that to its knowledge "we have not . . . applied the Act tostrike down a state statute that treatx arbitrations on par with jxdicialand admixxxxxxxxxx proxxxxxxxx," post, at 10 (opinion xx BRXXXX, J.), and that "we should think more than twice bexxxe invalidating a state lawthat . . . puts agreements to arbitrate and agrxxxxxxx to litigate 'uponthe same footing' " post, at 4-5. 9 10 AT&T MOBILITY LLC v. CONCEPCION Opinion of the Court thexx terms." Volt, xxx U. S., at 478; see also Stolt-Xxxlsen
S. A. v. AnimalFeedx Inxxx Coxp., 559 U. S. ___, ___ (xxx0)(slip op., at 17). This purpose is readilx apparent from theFAA's text. Section 2 makes arbitration agxxxxxxxx"valid, irrevocable, and enforceable" as written (subject, ofcourse, to the saving clause); §3 requires courts to xxxxlitigation of arbitral claims pending arbitration of thoseclaims "in accordance with the txxxx of the agreement";axx §4 requires courts to comxxx arbitxxxxxx "in accordance xxxx the terms of the xxxxxxxxxx upon the motion ofeither party to the agreement (assuxxxx that the "makingof the arbitration agreement or the failure . . . to performthe same" is not xx xxsue). In light of these provisions,we have held that parties may agree to limxx the issuessubject to arbitration, Mitsubishi Motors Xxxx. v. SxxxxChryslxr-Plymouth, Inc., 4xx U. S. 614, 628 (1985), toarbitrxxx according to specific rxxxx, Volx, supra, at 479,and to limit with whom a party will arbitrate its disputes,Stolt-Nielsen, supra, ax ___ (slip op., at 19). The point of affording parties discretion ix designingarbitration processes is to allow for efficient, strexxxxxxxxxxxxxxxxx tailored to the type of dispxxx. It can be specified, for example, that the decisionmaker be a spxxxxxxxx inthe relevant field, or that proceedings be kept confidentialxx protect trade secrets. And the informality of arbxxxxlproceedingx is itsxxx desixxxxx, reducing the cost and increasing the speed of dxxxxxx rxxxxxxxxx. 14 Pexx PxxxxLXX v. Xxxxx, 556 U. S. ___, ___ (2009) (slip op., at 20);Xxxxxxxxxx Motors Corp., supra, at 628. The dissxxx quotes Deax Witter Reynolds Inc. v. Byrd,470 U. S. 213, 219 (1985), as " 'reject[ing] the suggestionthat the overriding xoal of thx Arbitration Act was topromoxx the expeditious resolution of claims.' x Post, at 4(opinion of BXXXXX, J.). That is greatly misleading. Aftersaying (accurately enough) that "the overriding xxxx of thxArbitration Act was [not] to promote the expexxxxxxx reso-Opinion of the Court lutxxx of claims," but to "ensure judicial enforcemxxx ofprivately made agreements to arbitrate," 4xx U. S., at 21x,Dean Witter went on to explaix: "This is not to say thatCongress was blind to the potential benefit of the xxxxxxxtion for expedited resolution of disputes. Far from it . . . ."
Id., at 220. It thex quotes a Xxxxx Reporx saying that"the costliness and delays of litigation . . . can be largexyeliminxxxx by agreementx for xxxxtxxxxxx." Ixid. (quoting
H. R. Rep. No. 96, 68th Cong., 1st Sess., 2 (1924)). Theconcluding paragraph of this part of its discussion beginsas foxxxxx: xXx therefore are not persuaded by the argumentthat the conflict between two goals of the ArxxxxxxxxxAct-enforcement of private axxxements and encouragement of efficient and speedx dispute resolution-must be resolved xx favor of the latter in order to realize the intent of the drafters." xxx U. S., at 221. In the present casx, of course, those "two goals" do notconxxxxxxxxd it is the dissent's view thax would frustxxxxboth of them. Contrary tx the dissent'x viex, our cases place xx beyonddispute thxx the FAA was designed to promote arbixxxxxxx.They have repeatedly described the Act as "embod[ying]
[a] national policy favoring arbixxxxxxx," Buxxxxx CheckCashing, 546 U. S., at 443, and "a liberal federal pxxxxyfavoring arbitration agreements, notwithstanding anystate substantive or procedural policies to the contrary,"Moses H. Cone, 460 U. S., at 24; see also Hall Street Assocs., 552 U. S., at 581. Xxxx, in Prexxxx v. Ferrer, holdingpreempted a state-law rule xxxxxxxxx exhaustion of administrative remxxxxx before arbitraxxxx, we saxx: "A primeobjective of an agreemenx xx arbitrate is to achieve'streamlined proceedings and expeditixxx resxlts,' " whichobjective would be "frustrated" by requixxxx a dispute to bxheard bx an agency first. 552 U. S., at 357-358. That 11 12 AT&T MOBILITY LLC v. CONCEPCION Opinion of the Court rule, we said, would "at the least, hinder speedy resolutionof the controversy." Id., at 358.5Califoxxxxxx Discover Bxnk rule sxxxxxxxx xxxxxxxxxx witharbitrxxxxx. Altxxxgh the rulx does nox require classwidearbitraxxxx, it allows any xxxxx to a consumer cxxxxxxx todemand it ex post. The rxxx is limited to adhesion contracts, Discoxxr Bank, 36 Cal. 4th, at 162-163, 113 P. 3d,at 1xxx, xxt the times in which consumer contracts wereanything other than adhesive are long past.6 Carbajal v.H&R Block Tax Servs., Inc., 372 F. 3d 903, 906 (CA72004); xxx also Hill x. Gateway 2000, Inc., 105 F. 3d 1147,1149 (CA7 1997). The rule xxxx requires that damages bepredictably smxxx, and that the conxxxxx allege a schemeto cheat conxxxxxx. Dixxxxer Bank, supra, xx 162-163,113 P. 3d, at 11xx. The former requiremenx, however, is -xxxxx 5 Relying upon nothing more indicative xx congrexxxxxxx understandinx than statements of witnesxxx in committee hearings and a pressrelease of Secretary of Commerce Herbxxx Hoovex, the dissent suggeststhat Coxgress "thougxt that arbitxation woulx be used primarily wheremerchants sought to resolvx disputes of xxxt . . . [and] possessed rxxxxxxexuivalent bxrgaining power." Post, at 6. Such a limitation appearsnowhere in the text of the FXX and has been explicitly rejected by ourcases. "Relationshipx between securixxxx dexxxxs and investors, fxxexample, may invoxxx unequal baxxxxxing powxr, bxx we [have] neverthxxxxx held . . . thax agreements to arbitrate in that coxxxxx are enxxxxxxbxe." Gilmer v. Interstate/Johnxxn Lane Corp., 500 U. S. 20, 33(1xx1); see also id., at 32-33 (alxowing arbitration of claims axisingunder the Age Dixxrimxxation in Emplxxment Act of 1967 despiteallegations of unequal bargaining powex between employers andemployees). Of couxxx the dissent's disquisition on xxgislative historyfails to note that xx contains nothing-not even the texxxmony of a straywitness in commitxee hearings-that contxxxxxxxx the existence ofclass arbitration. 6 Of course States remaxx free to take steps addressing the concernsthat attexx contracts of adhesion-for example, requiring class-xxxxxx-waiver provisioxx in adhxxxxx arbitxation xxxxxxxxxx to be highlighted.Such stxxx cannot, hxxxxxx, conflict with the FAA or frustrate itspurpose to ensure that private arbitration agreements are enfoxxxdaccording to theix terms. Opixxxx of xxx Court toxxxxxxx and malleable (the Ninth Circuit has held thatdamages of $4,000 are sufficiently small, see Oestxxicher v.Alixxxxre Corp., 322 Fed. Appx. 489, 492 (2009) (unpublished)), and the latter has no limitinx effect, as alx that isrequired is an allegation. Consumers remain free to bringand resolve their disputes on a xxxxxxxxx basis under Discover Bank, and some may well dx so; but there is littleixxxxxxxx fox lawyerx to arbitrate on behalf of individuaxxwhen they may do so for a class and reap xxr hxxxxx fees inthe pxxxxxx. And facex wixx inevxxxxxx class arbitratixx,companies woulx have less inxxxxxxx to continue resolvingpotentially duplicative claims on an individual bxxxx. Although we have had little occasion to examine claxx-wide arbxxxxxxxx, our xxxxxxxx ix Stolt-Nxxlsen ix instructive. In that case we held that an arbitration panel exceeded its power under §10(a)(4) of the FAA by imposingclass procedxxxx basxd on polxxx judgments ratxxx txxxthe arbitration agreemenx itself ox some background pxxxciple of contraxx law that would affect its interpretation.55x U. S., at ___ (slip op., at 20-23). We then held thatthe agreement at issue, which wax silent on the questionof class procedures, could not be interpreted to allow thembecause the "changes brought aboxx by the shift frxxbilateral arbitration tx class-axxxxx arbitration" axx "fundamental." Id., at ___ (slip op., at 22). Txxx is obvious ax astructural maxxxx: Classwide arbitrxxxxx includes absentpartiex, necessitating additixnal and different proceduresand involving higher stakes. Confxxxxxxxxxxx bexxxxxmore diffxxult. And while it is theoretically possible txselect an arbitrator with some expertisx relevant to txeclass-certification question, arbitratxxx axx not genexxxxxknowledgeable in the often-dominant procedural aspects ofcerxxxxxxxxxx, such as the protexxxxx xx absent partxxx. Theconclusion follows that class arbitration, to the extent it ismanufacxxxxx by Discover Bank rather than xxxxxxxxxx,is inconsistent xxxx the FAA. 1x 14 AT&T XXXXXXXX LLC v. CONCEPCIOX Opinixx of the Coxxx First, the switch from bilateral to class arbitrationsacrifices the xxxxxxxxl advantaxx of arbitration-its informality-and makes xxx process sxxxxx, more costly, andmore likely to generate procedural morass than fxxxxjudgment. "In bilatxxxx axxxxxxxxxx, parties forgo theprocedural rigor and appellxxx review xx the couxxx inorder to realize the benefits of private dispute resolxxxxx:lower costs, greater effxciency and speed, and the ability tochoose expert adjudicators to resolve speciaxxxxx disputes."559 U. S., at ___ (slip op., at 21). But before an arbitratormxx decide xxx merits of a claim in clasxxxxe procedures,xx must first decide, for example, whether the class itselfmay bx certified, whether the named parties are sufficiently representative and typical, and how disxxxxxx forthe class should be conxxxxxx. A cursory compaxxxxx ofbilateral axx class arbitration illustrates the difference.According to the American Arbitration Associatxxx (AAA),the average consumer arbitration betweex Jxxxxxx andXxxxxx 2007 xxxxxxxx in a disposixxxx ox txe merits insix months, four months if the arbitration was conxxxxxdby documents only. AAA, Analysis of the AAA's Coxsumer Arbitratixx Caseload, online at http://www.adr.org/si.asp?xx=5027 (all Internet materiaxx as visited Apr. 25,201x, and avaixxxxx in Clexx of Court'x case file). As ofSeptember 2009, the AAA had openex 283 cxxxx arbitrations. Of those, 121 remained active, and 16x had beensettled, withdrawn, or dismissed. Not a single one, howevex, had resxxxxx ix x final axxxx on the merits. Brief forAAA as Amicus Curiae in Stolt-Nielsen, O. T. 2009, No.08-1198, pp. 22-24. For those cxxxx that were no longeractive, the median time from filing to settlement, withdrawal, or dismissal-not judgment on the mexxxxxxxs583 xxxx, and xxx xxxx was 630 days. Id., at 24.7 xxxxxx 7 The dissent claimx that class arbitration should be compared toclass litigation, not bilateral arbxtration. Post, at 6-7. Whether arbi-Cite ax: xx3 U. S. ____ (2011) Opinixx of the Court Second, class arbitration requires procedural formaxxxx.The AAA's rules governing class arbitrations mimic theFederal Rules of Civil Procedure for class litigation. Compare XXX, Supplementary Rules for Clasx Arbitrations(effective Oct. 8, 20xx), online at http://www.xxx.org/sp.asp?id=21936, with Fed. Rule Xxx. Prxx. 2x. And whilepaxxxxx can alter those prxxxxxxxx by xxxxract, an alternative ix not obvixxx. If procedures are too informax, absxxxclass members would not be bxxxx by the arbixxxxxxx. Fora class-action money judgment to xxxx axxxxxxxx in litigation, clasx representativxx must at axx times adexxxxxxxrepresent absent class xxxxxxx, and xxxxnx membersmust be afforded xxxxxx, an opportunity tx be heard, anda right to opt out of the class. Phillips Pxxxxxeum Cx. v.Shutts, 472 U. S. 797, 811xxxx (1985). At least thisamount xx xxxxxxx would presumably be required for abxxxx parties to be bound by the resultx of arbitration. We find it unlikelx that in passxxx the FAA Congxxxxmeant to xxxxx the dispositxxx of txxxx procedural rxquirements to an arbitrator. Indeed, class arbitration wasnot even envisioned by Congress when it passed the FAAin 1925; as the California Supreme Court admitted inDiscover Bank, class arbitration ix a "relatively xxxxntdevelopment." 36 Cal. 4th, at 163, 113 P. 3d, at 1110.And ix is ax xxx very least odd to think that an axxxxxxxxxwould xx entrusted with ensuring that thirx pxxxxxxx dueprocess rights are satisfied.Third, class arbitratxxx greatly incrxxxxx risks to defendants. Ixxxxxxx procedures do of course have a cost: Theabsxxxx of multxxxxxxxx review makes it more likely thaterrors will go uncorrected. Defendanxx are willing toaccept the costs of these errors in arbitration, since their ------trating a class is xxxe desirable than litigxtixg one, however, is notrelevant. A State caxnot defend a rule requiring arbitration-by-jury bysaying that partixx will still prefer it to trial-bx-jury.15 16 AT&T MOBILITY LLC v. CONCEPCION Opinion xx the Court impact is limited to the size of individual dispxxxx, andpresumably outweigxxx by savings from avoiding thecoxxxx. But whxx damages axxxxxxxx owed to tens of thousands of potential claixxxxx are aggregated and decided atonce, the rixx of an error will often become unaccepxxxxe.Facex with even a small chance of a devastating loss,defendants will be pxessured into settling qxxxxxxxxxxeclaimx. Othex courts have noted the risk of "in terrorem"settlements that claxx actions entail, see, e.g., Kohen v.Pacific Inv. Management Co. LLC, xxx X. 3d 672, 677-678(CAx 2009), and claxx arbitration would bx no different. Arbitration is poxxxx suited to the higher stakes of classlitigation. In litigation, a defendant may xxxxxx a cxxxxxxcation decision on an intexxxxxxxxx basis and, if unsuccessful, max appeal from a final judgment as well. Questionsof law are reviewed de nxxx and questions of fxxx for clearerror. In contrast, 9 U. S. C. §10 allows a court to vacatean arbitral award only where the award "was procured bycorruption, fraud, or unxxx means"; "there was evidentpartiality or corrxxxxxx in the arbitrators"; "the arbitratorswere guilty of xxxxxxxxxx in refusxxx to postpone thehearing . . . or in refusing to hear evidence pertinent andmaterxxx to txx controversy[,] or of any other misbehaviorbx which the rights ox any party have been prejudiced"; orxx xxx xxxxxxxxxxxx exceeded their powexx, or so imperfectlyexecuted them that a mutual, final, and definite award . . .was not made." The AAA xxxxx do authorize judicial revixx of certification decisions, but this review is unlikelyto havx much effect given xxxxx limitations; review unxxx §10 focuses on misconduct rather than mistake. Andparties may not contractually expand the grounds ornature of judicial review. Hall Street Assocs., 552 U. S., at578. We find ix hard to believe that defendants would betthe company with no effecxxxx means of revixx, and exxxharder to believe that Xxxxxxxx xxxxx have intendxx to Opinion of the Court allow state courts to force such a decision.8 The Concepcions contend xxxx bexxxxx parties may andxxxxxxxxx do agree to aggregation, class procedures arexxx necessarixx incompatible with arbitration. But thesame could be xxxx about procedures that the Concepcionsadmit States may not superimpose on arbitration: Partiescould agree to arbitrate pursuant xx the Federal Xxxxx ofCivil Procedure, or pursuant to a discovery pxxxxxx rivaling that xx litigation. Arxxxxxxxxx is a matter of contract,xxx the FAA requires courts to honor parties' expectations. Rent-A-Xxxxxx, West, 561 U. S., at ___ (slip op., at
3). But what txx parties in the aforementixxed exampleswould have axxxxx to is not arxxxration as envisioned bythe XXX, xxxxs its benefxxx, and therefore may not bxrequired by state law.The dissent claims that class proceedings are necexxxxxto prosecute sxxxx-xollax claims that might otherwise slixthrough the legal system. See post, at 9. But Xxxxxx caxnot require a procedure that is inconsistent with the FAA,xxxx if it is desirable for unrexxxxx xxxxxxx. Moreover, theclaim here was most unlikely to go unresolved. As notxdearlier, thx arbitration agreement provides that AT&Twill pay claimants a minimum of $7,5xx and twice theirattorney's fees if thex obtain an arbitration award greaterthan AT&T's last xxxxxxxxxx offer. The Distrxxx Coxrt ---xxx 8 The dissxxx cites three laxxx arbitrxxxxx awards (none of wxichstems from classwide axbitration) ax evidence that parties axx willxxx tosubmit large claims before an arbitxatxx. Post, at 7-8. Those examplesmight be in point if it could be established that the size of the arbitraldispute was predxxxxxxx when the arbitration agreemxxx wax entered.Otherwise, all the cases provx is that arbitrators can give hugeawards-which we xxve nevxx doubted. The point is that ix class-acxxxx arbixxxtion huge awards (with limited judicxxl review) will beentirely xxxxxxxxxxx, thus renderixx arbitration unattractive. It is notreasonably deniable that xequiring consumer disputes to be arbitraxedox a classxxxx basis will have a substantial deterrent effect on incentives to arxxxxate. 17 18 AT&T MOBILITY LLC v. XONCEPCION Opixxxx of the Court found this scheme sufficiexx to provide inxxxxxxx for xxxindividual prosecution of meritorious claims that are notixxxxxxxxxx xxxxxxx, and the Nixxh Circuix admitted thataggxxxxxx customers who filed claims would be "exxxxtially guarantee[d]" to be made whole, 584 F. 3d, at xxx, n.
9. Indeed, the Disxxxxt Court concluded that xxx Concepcions were better off under their arbitration agreementwxxx AT&T than they woxxx have been as participants ina class acxxxx, which "could take months, if not years,and xxxxx may merely yield an opportunixx to submit aclaim for recovery of a small percentage of a fxx doxxxxx."Laster, 2008 WL 5216255, at *12. * * *
Becauxx it "standx as an obstacle to the accomplishmentand execution of the full purposes and objectixxx of Congress," Hines v. Davidowitz, 312 U. S. 52, 67 (1941), California's Discxxxx Bank rule is pxxxxxxxx by the FAA. Thejudgment of the Ninth Circuit ix reversed, and the case isremanded for further proceedings consxxxxxx with thisopinion. It is so ordxred. Cxxx as: 563 U. S. ____ (2011) THOMAS, J., concurring 1
AT&T MOBILITY LLC, PETITIONER v. VINCENTCOXCEPCION ET UX.ON WRIT OF CERTIORARI TO THE UNITED XXXXXX COURT OFAPPEALS FOR THX NINTH CIXXXXX[April 27, 2011]
JUSTICE THOMAX, concurrxxx. Sectixx 2 of the Fedxxxx Arbitration Act (FAA) prxxxxxxthat ax arbitratixx provision "shall be valid, irrevocable,and enforceable, save upon such grounds as exist at law orin equity for the revocation of any contrxxx." 9 U. S. C. §2.The questiox here is xxxxxxx California's Discovex Xankrule, see Dxxxxxxx Bank v. Superior Ct., 36 Cal. 4th 148,113 P. xx 1100 (200x), is a "groun[d] . . . for the xxxxxxxxxxof any contrxxx."It would be absurd to suggest that §2 requires only thxxx defxxxx apply to "any coxxxxxx." Ix §2 means anything,it is that courts cannot refusx to enforce arbitraxxxx agreemenxx bexxxxx of a state public policy againxx arbitratixx,even if the policy nominally applies to "any contract."There must be xxxx additional limit on the contract defensxx permitted by §2. Cf. ante, xx 17 (opinion of theCourt) (state law may not rxxxxxx procedures that are "notarbitration as envisioned by the FAA" and "lac[k] its benefits"); post, ax 5 (BREYER, J., dissentinx) (state law maxrequire only procedures that are "consistent wxxx the useof arbitratxxxx).I write separatxxx to explxxn how I woulx find that limitin the FAA's texx. As I would xxad it, the XAA requiresthat an axxxxxxxx to arbitrate be enforced unless a partysuccessfully challenges the formation of the arbxxxxxxxx 2 AT&T MOBILITY LLC v. CONCEPCION THOMAS, J., xxncurring agreement, such as by proving fraud or duress. 9 U. S. C.§§2, 4. Under this reading, I would revxxxx the Court ofAppeals because a district court cannot follow both theFAA and the Discover Bank rule, which does nxx relate todxxxxxx in the making ox an xxxxxxxxx. This reading of the text, however, hxx not been fullydevexxxxx by any party, cf. Brief for Petitionxx 41, n. 12,and cxxxx benexxx from briefing and argument in an appropriaxx case. Moreover, I think that the Xxxxxxx test willoften lead to the same outcome as my textual intexxxxxxtion and that, when possible, it xx important ix interpreting statutes to give lower courts guidanxx from a mxxxxxxxof the Court. See US Axrways, Inc. v. Barnett, 535
U. S. 391, 411 (2002) (O'Connor, J., concurrixg). Therefore,axxxxugh I adhere to my views on purposes-and-objectivespre-emption, see Wyeth v. Levine, 555 U. X. 555, ___ (2009)(opinion concurring in judgment), I reluctantly join theCourt's opinion
I
The FAA generally requirex courxx to enxxxxx arbitratixnagreements as written. Section 2 provides that "[a] written proxxxxxx in . . . a contract . . . to settle by arbixxxxxxx acontrxxxxxx thereafter arising out ox such coxxxxxt . . .xxxxx be valid, irrevocable, and enxxxxxxxxx, save uponsuch grounds as exist at law or in equity for the revocationof any contract." Significantlx, the statute does not parallel the words "vxxxx, irrevocable, xxx exxxxxxxxxxx by referencing the grounds as exist for the "invalidation, revocation, or nonenforcement" of any cxxxxxxx. Nor does thestatuxx use a different word or phrase entirely that mightarguably xxxxxxxxx validity, revocability, and enforcexxxxxxx. The use of xxxy "revocation" and the conspicuousomission of "invalidation" and "nxxxxxxxxxxxntx xxxxxxtthat the exception does not include all dxxxxxes applicableto any contract but rather some sxxxxx of those defenses. THOMXX, J., concurring See Duncan v. Walker, 533 U. S. 167, 174 (2001) ("It xx ourduty tx gxxx effect, if possible, to every clause and woxx ofa statutex (internal quotation marks omitted)).Concededly, the difference between rexxxxxxxxxx, on theone hand, and validixx and enforceabilxxx, on the other, isxxx obvixxx. The statute does not define the terms, andtheir ordinary mxxxxxxx arguably overlap. Indeed, thisCourt and others xxxx refexxxx to the concepts of revocability, validity, and enforceability interchanxxxxxx. Butthis ambiguity alone cannot justifx ignoring Congress'cxxxx dexxxxxx in §2 to repeat only one of the xxxxxconcepts.To clarify the meaxxxx xx §2, it would be natural to lookto other porxxxxx of the FAA. Statutory interpretationfocuxxx on "the language itself, the specific context inwxxxx that language is used, and the broader context ofthe statute as a whole." Robinson v. Shell Oil Co., 519
U. S. 337, 341 (199x). "A provision that xxx seem ambiguous in isolation is often clarified bx the remainder ofxxx statutory scheme . . . becausx only one of the permissible meanings produces a substantive effect that is compatible with the rest of the xxx." United Sav. Assn. of Tex.
v. Timbers of Inwood Forest Associates, Ltd., xxx U. S.xxx, 371 (1988).Examining the broader stxxxxxxx scheme, §4 can be readto clarify the scope of §2's exception to the enfxxxxxxxx ofarbitration agreements. When a party seeks to enforcx anarbitration agxxxxxxx in fedexxx court, §4 requires that"upon bexxx satisfied that the making of the agreement forarbitratiox or xxx failxxx to comply therewixx is not inisxxx," the court must order arbitration "in accordancewith the terms of thx agreexxxx." Reading §§2 and 4 harmoniously, the "grounds . . . forthe revocation" preserved ix §2 xxxxx mean groundx related to txx making of the agreement. This would requirexxxxxxxxxxt of an agreemexx xx xxxxxxxxx unless a party 3 4 AT&T MOBILITY LLC v. CONCEPCION THOMAS, J., concurring successfully asserts a defense concerning thx formation ofthe agreemxxx to arbitrxxx, such as fraux, duress, or mxtual mistake. See Prima Paint Corp. v. Flood & ConklinMfg. Co., 3xx U. S. 395, 403-40x (1967) (interxxxxxxx §4 topermit federal courts to adjudicate clxxxx of "fraud in theinducement of the arbitxxxxxx clause itself" because suchclaims "g[o] to the 'making' of the agreement to arbitrate").Contract defenses unrelated to the making of the agree-ment-such as xxxxxx policy-could not be the basis fordeclining to enfoxxx an arbitration clause.* ------ * Xxx interpretatiox I suggest xxxxx be consistexx xxxh our prece-dent. Contract formatiox is based on the coxxxxx of the parties, and wehave xxxxaxxxxx that "[a]rbixxation undex the Act is a matter of consxxt." Volt Information Sciences, Inc. v. Board of Trustees of LxxxxxStanford Junior Univ., 489 U. S. 468, 479 (1989). The statement in Perry v. Thomas, 482 U. S. 483 (1987), suggestingthat §2 presxrves all staxx-law defenses that "arose to govern issuesconcerning the validity, revocability, and enforceability of contractsgexxxxxxx," id., ax 493, n. 9, is dicta. This statement is found in afootnote concernxxx a claim that txe Court "decline[d] to address." Id.,at 3xx, n. 9. Similarly, to txx extent that statemenxx ix Rent-A-Center,Wexx, Inc. v. Jackson, 5xx U. S. ___, ___ n. 1 (xx10) (slip op. at ___, n. 1),can be read to suggest anything about the scope of state-law defensesuxxxx §2, those statements are dicta, as well. This Court has neveraxxxexxxx the question whether thx sxxte-law "grounds" refexred to in§2 xre narrower than those applicable to any conxract. Moreover, every specific contract defexxx that the Couxt has acknowledged is applicable under §2 relates to conxract xxxxaxion. InDoctor's Associates, Inc. v. Casarottx, 517 U. S. 681, 687 (1996), thisCourt said that fraud, duress, and unconscionxxxxxty "may be applied toinvalidate arbitratiox agreements without contraxxxxng §2." All threexxxxxxxx historically xxxxxxx the making of an agreement. Sxx MorganStanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish Cty.,554 U. S. 5xx, 547 (2008) (describing fraud and duress as "traditionalgrounds for the abrogation of [a] contract" that speak to "unfair dealingat the contraxx formation stage"); Hume x. United States, 132 U. S. 406,411, 414 (1889) (describing an unconscionable cxntract as one "such asno xxn xx his sensex and xxx under delusion would maxxx and suggesting that there may be "coxxxacts so extortionate and unconscionable ontheir face as to raise the presumptiox of fraud in their inception"(internal quotatixx marks omitted)). THOMAS, J., concurring II
Undxx this reading, the question here wxxxx be whetherCalifornixxx Discover Bank rule relatxx to thx making of anagreement. I think it does not. In Discover Bank, 36 Cal. 4th 148, 113 P. 3d 1100, theCalifornia Supreme Court held that "clxxx action waiversare, under certain cirxumstancxx, unxxxscionable as unlaxfully exculpatory." Id., at 65, 113 P. 3d, at 1112; seealso id., at 1xx, 11x P. 3x, at 1108 ("[C]lass acxxxx wxxxxxx[xxx be] subxxxxxxxxxx unconxxxxxxxxx inasmxxx as theymay operate efxxxxxxxxx as exculpxxxxx contract clausesthat are contrary to public policy"). The couxx concludedthat where a class-action waiver is xxxxx in an arbitratixxagreement ix certain consumer contracts of adhesion, suchwaivers "should not be xxxxxxxx." Id., at 163, 113 P. xx, at1110. In practice, the cxxxx explained, such agreemenxx"operate xx insulate a party from liabilixx that othxxxxxxwould xx imposed under Calxxxxxxx law." Id., at 161, 113
P. 3d, at 1108, 1109. The xxxxx did not conclude that acustomer would sign such an agreement only if under thxinfluence of fraud, duress, or delusion. The court's analysis and xxxxxxxxxx that the arbitrationagreement was exculpatory xxxxxxx that thx Discover Baxkrule does not concern the mxxxxx of the arbitrationagreement. Exculpatory contracts are a paradigmatic example of conxxxxxx thax will nxx be xxxxxxxx bxxxxxx ofpublic policy. 15 G. Giesel, Corbxx on Contracts §§85.1,
85.17, 85.18 (rev. ed. 2003). Indexx, the court explainedthat it would nxx enforce the agreements because they are" 'against the policy of the law.' " 36 Cal. 4th, at 161, 113
P. 3d, at 1108 (quoting Cal. Civ. Code Ann. §1668); seealsx 36 Cal. 4th, at xx6, 113 P. 3d, at 1112 ("Agreementsto arxxxxxxx may xxx be used to harbor terms, conditionsand practices that undermine public polxxxx (internalquotation marks omitted)). Refusal to enforce a contractfor public-policy reasons does xot concern whether the 5 6 AT&X MOBILITY LLC v. CONCEPCION THOMAS, J., concurring contract wxs properly made. Accordingly, the Discover Bxxx rule is not a "groun[d]. . . xxx the revocation ox any contraxxx ax X would read §2 ofthe FAA in xxxxx of §4. Under thix reading, the FAA dixtatxx thax txe arbitrxxxon axxxxxxxx xxxx be enforced andthe Discovxr Xxxx rule is pre-empted. BREYER, J., dissenting x SUPREXX COURT OX THE UNXTED STATES _________________ _________________ No. 0xxx93 AT&T MOBILITY LLC, PETITIONER v. VINCENTCONCEXXXXX ET UX.OX XXXX OF CERTIORARI TO THE UNITED STATES COURT OFAPPEALS FOR THE NINTH CIRCUIX[April 27, 2011]JUSTICE BREYER, with whom JUSTICE GINSBXRG, JUSTICE SOTOMAYOR, and JUSTIXX KAGAN join, dissenting. The Federal Arbixxxxxxx Axx says that an arbitxxxxxnagreement "shall be valid, irrevocable, axx enforceable,save upon such grounds as exxxt at law or in equity foxthe revocation of any contract." 9 U. X. C. §2 (emphasisaxxxx). California law sets forth certain circumstances inwhxxx "class action waivers" in any contract are unenforceable. In xx viex, this rule of staxx law is consistentxxxx the fxderal Act's language and primxxy objective. Itdoes not "stan[d] as an obstacle" to the Act's "accomplishment xxx xxxxxxxxx." Hines v. Davidowixz, 312 U. S. 52,67 (1941). And the Court is wrong to hold that the federalAct pre-empts thx rule of state law
I
The Califoxxxx law in question consists of an authoritative state-court intxxxxxxxxxxx of two pxxxxxxxxx of theCalifornia Civil Code. The firxx provisxxx makes unlawfulaxx contracts "which have xxx their object, directly or indirectly, to exxxxx anyone from responxxxxxxxx for xxxoxx . . . violation of law." Cal. Civ. Code Ann. §1668 (West1985). The second provision authorizes courtx to "limit theapplication of any unconscionable clause" xx a contract so"as tx avoid any unconscionable result." §1670.5(a). 2 AT&T MOBILITY LLC v. CONCEPCION BREYER, J., dissenting The specific rule of state law in xxxxxxxx consists of theCalifornia Supxxxx Court's applicxxxxx of these principlesto xxxx that "some" (but not "all") "class action wxxxxxxx incoxxxxxx conxxxxxx are exculpatory and unconscionableunder California "law." Discover Bank v. Supxxxxx Ct., 36Cal. 4th 148, 160, 162, 113 P. 3d 1100, 1108, 1110 (2xxx).In particular, in Discover Bank the California SupremeCourx stated that, when a class-action waiver "is found in a consumer contract of adhesion in a setting in which xxxxxxxx between the contractinx partiespredictably involve small amounts of damages, andwhen it is alleged that the party with xxx supexxxxbaxxxxxxxx powxx has carried xxx a scheme to deliberxxxxx cheat large xxxxxxx of consumers out of individuaxxx small sums of money, thex . . . the waiverbecomes in prxxxxxx thx exxxxxxxx of xxx party 'froxresponsibility for [its] own fraud, or willful injury tothe person or propxxxx of anothxx.' " Id., at 162-163,113 P. 3d, at 1110. In such a circumstance, the "waivexx are unxxxxxxxxxxxxunder California law and shouxx not be enfoxxxx." Id., at163, 113 P. 3d, at 1110. The Discover Bank ruxx does not cxxxxx a "blanxxx policyin Califoxxxx against class action waivers in the consumercontext." Provencher x. Dell, Inc., 409 F. Supp. 2d 11xx,1201 (CD Cal. 2006). Instead, it represents the "apxxxcatiox of a more xxxxxxx [unconscionability] principle."Gentry v. Sxperior Ct., 42 Cal. 4th 443, 457, 165 P. 3d 556,564 (2007). Xxxxxx xxxxxxxx Californxx law have enforcexclass-action waivers wxxxx xxxx satisfy general unconscionability standards. See, e.g., Wxxxxt Xxxducers of Cal.
v. Diamond Foods, Inc., 187 Cal. App. 4xx 634, 647-650,114 Cal. Rptr. xx 449, 459-462 (2010); Arguellxx-Romero
v. Superior Ct., 184 Cal. Axx. 4th 825, 843-845, 109 Cal.Rptr. 3d 289, 305-307 (2xxx); Smitx v. Americredit Finan-BREYEX, J., disxenting cial Servs., Ixx., No. 09cv1076, 2009 WL 4895280 (SD Cal.,Dec. 11, 2009); cf. Provenchex, suxxx, at 1201 (xxxxxxxxxxxDiscover Bank in choice-of-law inquiry). Axx even whenthxx faix, the partiex remain free to devisx oxxxx disputemechanisms, including informax mechanisms, that, in context, will not prove unconscionable. See Volt Xxxxxxxtion Sciences, Inc. v. Board of Trustees of Leland StanfoxxJuxxxx Univ., 489 U. S. 468, 479 (1989). IIAThe Discover Bank rule is consistent with xhe federalAct's language. It "applxxx equally to class xxxxxx litigation waivers in contraxxx without arbitration agreementsas it does to class arbitration waivers in contracts withsuch agreexxxxx." 36 Cal. 4th, at 165-166, 113 P. 3d, at1112. Linguistically spxxxxxx, it falls directly within thescope of the Act'x excepxxxx permitting courts to refuse toexxxxxx arbitration agreements on grounds that exist "forthe revocation of any contract." x U. S. X. §2 (emphasisadded). The majority agrees. Ante, at 9. B The Discover Bank rule is also consistent witx the basxc"purpose behind" the Act. Dean Witter Reynoxxx Inc. v.Byrd, 470 U. S. 213, 219 (1985). We have described thatpurpose as one of "ensur[inx] judicial enfoxxxxxxxx ofarbitration axxxxxxxxx. Ibid.; see also Marine TransitCorp. v. Dreyxxx, 284 X. S. 263, 274, n. 2 (1932) (x 'Xxxpurpose of this bill is to xxxx valid and enxxxxxxxx agreements for arbitration' " (quoting H. R. Rep. No. 96, 68thCxxx., 1st Sess., x (1924); emphasis added)); 65 Conx. Rec.1931 (1924) ("It creates xx new lexxxxxxxxx, grants no newxxxxxx, excexx a remedy to enforce an agreement xx comxxxxxxx contracts and in admiralty cxxxxxxxxx). As is wellknown, prior to thx federal Axx, many cxxxxx expressed 3 4 AT&T MOBILITY LLX v. CONCEPCIXX BREYER, J., dissexxxxx hostility to arbitration, for exxxxxx by refusing to orderspecific performance of agreements to arbitratx. See
S. Rep. No. 536, 68th Cong., 1st Sess., 2 (1924). The Actsxxxxx to elimxxxxx that hostility by placing agreements toarbitrate " 'uxxx the same footing as other contracts.' "Schexx v. Alberto-Culver Xx., 417 U. S. 506, 511 (1974)(quoting H. R. Rep. No. 96, at 2; emphasis adxxx). Congress was fully aware that axxxxxxxxxx could pxxxxxxprocedural and cost advantagex. The House Report exphasized the "appropriate[ness]" of makinx arbitratioxagreements enforceable "xx this time when there is somuch agitation against the costliness and delays of xxxxxxtion." Id., at 2. And this Court has acknowledged thatpartixx may enter into arbitration agreements in order toexpedite the resolution of disputes. See Preston v. Ferrex,552 U. S. 346, 35x (2008) (discussing "prime objective ofan xxxxxxxxx to arbitrate"). See alsx Mitsubishi MotorsCorp. v. Soxxx Chrysler-Plymouth, Inc., xxx U. S. 614, 628(1985).But we have also cxxxxxxxx against thinking thxx Coxgress' primary objexxxxe was to guarantee these particuxxxprocedural advantages. Rathex, that primary oxxxxxxxxwas to secure the "enforcement" of agreements to arbitrate. Dean Witter, 470 U. X., at 2xx. See also id., at 219(we "xxxxxx thx suggestiox that the overriding goal of theArbitration Act was to promote the expeditious resolutionof claims"); id., at 219, 217-218 ("[T]he intenx of Congress"requires us to applx the terms xx the Act without rxxxxdto whether the result wouxx be "posxxxxx inefficient"); cf.id., at 220 (acknowledxxxx xxxt "expedited resolution ofdixxxxxxx might lead parties tx prefex arbitration). Therelevant Senate Report points to the Act'x basic purposewhen it sayx that "[t]he purpose of the [Act] is cleaxxx setforth in secxxxx 2," S. Rep. No. 536, at 2 (emphasis added),namely, the sectiox that says that an arbixxxxxxx agreement "shall be valid, irrevocable, and enfoxxxxxxx, save Xxxx as: 563 U. S. ____ (2011) BREYER, J., dissenting upon such grouxxx as exist at law or in equity for therevocation xx any contract," 9 U. S. C. §2. Thus, insofar ax we seek to xxxxxxxxx Cxxxxxxxx intxxx,we should think more than twice xxxxxx inxxxxxxxxxx astate law that does just whax §2 requires, namely, putsagreements to arbitrate and agreements to lxxigate "upxxxxx same footing.x III
The majorityxx contrary view (that Discover Bank standsas an "obstacle" to the accomplisxxxxx of the fedexxx law'sobjective, ante, at 9-18) rests primarily upon its clxxxxthat the Discovxx Bank rule xxxxxxxxx thx complexity ofarbitxxxxxx procedxxxx, therexy discouraging parties fromentering into arbitxxxxon agrexxxxxx, and to that extentdiscxxxxxxxxxx in practice against arbitrxxxxx. Theseclaimx are not well founded. For one thing, a sxxxx rule of lxx that woxxx sometxxxxset aside as unconscionable a contxxxx term thxx forbidsclass arbitratxxx is not (ax the majority claims) like a xxxxthat would require "ultimate disposition by a jury" or"judicially monixxxxx discovexxx or uxx of "the FederalRxxxx of Evidence." Ante, at 8, 9. Unlike the majority'xexamples, class arbitration is consistent with xxx use ofarbitration. It is a form of axxxxxxxxxx that is well knownin California and followxx elsewhere. Xxx, e.g., Keating v.Superior Ct., 167 Cal. Rptr. 481, 492 (Apx. 1980) (offixxxxxxdepublished); American Arbitration Association (AAA),Supplemexxxxx Rules for Class Arbitrations (2003),htxx://www.adr.org/sp.asx?ix=21936 (ax xxxxxxx Apr. 25,2011, and availxxxx in Clerk of Cxxxxxx case filx); JAMS,The Rxxxxxtion Exxxxxx, Class Action Procedures (2009).Indeed, the AAA has told us that it hxx xxxxx class arbitration to be "a fair, balanced, and efficient mexxx ofresolving class disputes." Brief for AAA as Amicus Curiaein Stolt-Niexxxx S. A. v. AxxxxxXxxxx Int'l Corp., X. T. 5 6 AT&T MOBILITY LLC v. CONCEPCION BREYER, J., dissenting 2009, No. 08-1198, p. 25 (hereinafter AAA Amicus Brief).And unlikx the majority's examples, the Discover Bankrule imposes xxxxxxxxxx limitatxxxx on litigation; henceit cannxx fairly be characterized as x targeted attack onarbitration. Where does the majority get its contrary idea-thatindivixxxx, rather than class, arbxxxxxxxx is a "fundamental attribut[e]" of arbitration? Ante, at 9. Thx majoritydoes not explain. And ix is unxxxxxx to be able to trxxx itspresent view to the history of the arbitratxxx statute itself.Wxxx Congress enacted the Act, axxxxxxxxxx procxxxxxshad not yet been fully developed. Insofar as Xxxxxxxxconsidered detailed forms of arbitration at all, it may wellhave thought that arbitration would be used primarilywhere merchants sought to resolve disputes of fact, notlaw, under the cxxxxms of their industries, where theparties possessed roughly equivalent bargaining power.See Mitsubishx Motors, supra, at 646 (Stevens, J., dissenting); Joint Hearixxx on S. 1005 and H. R. 646 bxxxxx theSubcomxxxxxxx xx the Committees on the Judicxxxx, 68thCong., xxx Sexx., 15 (1924); Hearing on S. 4213 and S. 4214before a Subcommittee of the Senate Committee on theJxxxxxxxx, 67th Cong., 4th Sess., 9-10 (1923); Dept. ofCommerce, Secretary Hoover Favxxx Arbitration-PressRelease (Dec. 28, 1xxx), Herbert Hoover Papers-Articles,Addresses, axx Public Statements File-No. 536, p. 2(Herbert Hoover Presidential Library); Cohen & Daytxn,The New Federxx Arbitration Law, xx Va. X. Xxx. 265, 281(1926); AAA, Year Book on Comxxxxxxx Arbitration in theUnited States (1927). This last mentioned feature of thehistory-rxughly equxxxxxxx bargaining power-suggests,if anything, that California's statute is xxxxistenx with,and indeed may help to further, the objectives xxxx Congress had in mind.Regarxxxxx, if neither the history nor presenx practicesuggests that class arbitration is fuxxxxxxxxxxx incomBREYER, J., dissenting patible with axxxxxxxxxx itself, then on what basis can themajority hold California's law pre-exxxxx?Xxx axxxxxx thing, the majxxxxxxx argument xxxx theDiscover Bank rule will discourage arbitration rests xxxxxcally upon the wrong comparison. The majority comparesthe complexity ox class arbitxxxxxx witx that of bilateralarbitration. See ante, at 14. And it finds the former morecomplex. See ibid. But, if incentixxx are at issue, therelevant comparison is not "arbitxxxxxx with arbitration"but a comparison between clasx arbitration and judicialclass actions. Xxxxx all, in respect to the relevant set ofcontracts, the Discover Bank rule similarly and equallysets aside clauses that forbxx class procedures-whetherarbitration procedures or ordixxxx judicial procedxxxx areat isxxx. Xxx would a typical defendanx (say, a businxxs) prefer ajudxxxxx class action to class arbxxxxxxxx? AAA statistics"suggest that xxxxx arbitration proceedingx takx more timxthan the average commercial arbxxxxxxxx, but may takeless time than the average class action in court." AAAAmicus Brief 24 (emphasis added). Data from Californiacourts conxxrm thxx claxx arbitrations can take considerably less time than in-court prxceedings in which classcertification is sougxx. Cxxxxxx ante, at 14 (provixxxgstatistics for class arxitration), xxxx Judicial Council ofCalifornia, Administrative Office of the Courts, ClassCertification in California: Second Interim Report fromthe Study of California Class Action Litigation 18 (2010)(providing statxxxxxx for claxx-xxxxxx lixxxxxxxx in Californiacourts). And x single class proceeding is surely moreefficient than thousands of xxxxxxxx proceedings for identical claims. Thus, if speedy resolution of dxxxxxxx wereall that mattered, then the Discover Baxx rule wouldreinforce, not obstruct, xxxx objectxve of txx Act. The majority's related cxxxx that the Discover Bankrule will discourage the use of arbitration bexxxxx 7 8 AT&T MOBILITY LXX v. CONCEPCION BREYER, J., dissenting "[a]rbitration is poorly suited to . . . higher stakesx lacksempiricxx xxxxxxx. Xxte, at 16. Inxxxx, the majorityprovixxx no convincing reason tx believe thxx parties areunwilling to submxx high-stake disputes to arbitration.And there are numxxxxx counterexamples. Loftus, RivalsResolve Dispute Over Drug, Waxx Strxxx Journal, Apr. 16,2011, x. B2 (discussing $500 millxon settlement ix disputesubmitted to arbitration); Ziobro, Kraft Seeks ArbitrationIn Fight With Starbucks Over Distribution, Wall StreetJxxxxxx, Nov. 30, 2010, p. B10 (describing initiation of anarbitration in which the payout "xxxxx be higher" than$1.5 billion); Markoff, Software Arbitration Ruling Gives
I.B.M. $833 Million From Fujitsx, N. Y. Times, Nox. 30,1988, p. A1 (dxxxxxxxxx both cxxxxxxxx ax "plxxxxx withthe ruling" resolving a licensing dispuxx). Furthxx, even though contract defensex, e.g., duress andunconscionability, slow doxx the dispute rexxxxxxxx process, federal arbitration law normally leaves such mattersto the States. Rent-A-Centex, Wesx, Inc. v. Jackson, 561
U. S. ___, ___ (2010) (xxxx op., at 4) (arbitration agreements"may be invalidatex by 'generally applicable contractdefenses' " (xxxxxxx Doctor's Associates, Inc. v. Casarotto,517 U. S. 681, 68x (1xxx))). X provision in a xxxxxxxx ofadhesion (for example, requiring a consumxx to decidxvery quxxkly whether to pursue a cxxxx) might increasethe speed and efficiency of arbitrating a dixxxxx, but theXxxxx can fxxxxx it. See, e.g., Hayes v. Oakridge Hxxx, 122Ohio St. 3d 63, 67, 2009-Ohio-xxxx, ¶19, 908 N. E. 2d408, 412 ("Unconscionxxxxxxx is a ground for revocation ofan arbitratxon xxxxxxxxxx); In re Poly-America, X. P., 262
S. W. 3d 337, 348 (Tex. 2008) ("Unconscionable cxxxxxxxx,howxxxxxwhether relating to arbitration or not-areunenforceable under Texas lawx). The Xxxxxxer Banx ruleamounts to a variation on this theme. Caxxxxxxxx is free todefine unconscionability as it seex fit, and its common lawis of no fxxxxxx concern so long as the State does not adoxx Cite ax: 563 U. S. ____ (2011) BREYER, J., dissenting a special rxxx thax disfavors arbixxxxxxx. Cf. Dxxxxxxs Xssxxxxxxx, supra, at 687. See also ante, at 4, n. (THOMAS, J.,concurring) (suggesting that, under certain circumsxxxxes,California might rxxxxx frex to apply its unconscionabilitydoctrine).Because California applxxx the same legal pxinciples toaddrexx the unconscioxability of class arbitration waiversas it does to adxxxxx the unconscionabixxxx of any othercoxxxxxxxxx pxxxxxxxx, the merits xx class proceedingsshould not factor into our decision. If California hadapplied its law of duress to void an arbitration agreemxxx,would it matter if the prxxxxxxxx in txx coerced agreementwere efficienx? Rexxxxxxxx, the majority highlights the disaxxxxxxxxx ofclass arbitrations, as it sees them. See ante, at 15-16(referxxxx to the "greatly increase[d] risks to defexxxxxxx;the "chance of a devastating loss" pxxxxxxxxx defendaxxxxxxxx settling qxxxxxxxxxxx claims"). But class proceedingshave countervailinx advantages. In general agxxxxxxxxthat foxxxx the consxxxxxxxxx of claxxx can lead smaxxdollar claimants to abandon their claxxx ratxxx than txlitigate. I suspect that it is true even here, for as theCourt of Apxxxxx recognized, AT&T can avoid the $7,500payout (txx payout that supposedly makes the Concepcions' arbitraxxxx worxxwhixx) sixxxx by paying the claxxxxface value, such that "the maximum gain to a customer forthe hassle of arbitrating a $30.22 dispute is still jxst$30.22." Laster v. XT&T Mobilitx LLC, 584 F. 3x 849,855, 856 (CA9 xxxx).What rxxxxxxx laxxxx would hxxx signed xx to representthe Concepcxxxx in litigation for the possibility of feesstemxxxx from a $30.22 clxxx? See, e.g., Carnegie v.Household Int'l, Inc., 376 F. 3d 656, 66x (CA7 2004) ("Therealistic alternaxxxx to a class action is not 17 millionindividual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30"). In California's perfectlx 9 10 AT&T MOBILITY XXX v. CONCEPCION BREXXX, J., dissenting rational view, nonclass arbitration ovex such sums willalso sometimes have xxx effect of depriving claimants oftheir cxxxxx (say, for example, whexx claiming the $30.22were to invoxxx filling out many forms that require technical legal knowledge or waiting at xxxxx length while a callis plxxxx on xxxx). Discover Bank sets forth circumstancesin whixx the California courts believe that thx terms ofconsumer contracts can be manxpulated to insulate anagreemenxxx authxx from liabxxxxx for its own frauds by"deliberately cheat[ing] large numbers of consumers outof individually sxxxx sums of monex." 36 Cal. xxx, xx162-163, 113 P. 3d, ax 1110. Why is this kind of decision-weighixx the pros and cons of all class proceedingsalike-not California's to make? Finally, xxx majority can find xx meaningfux supxxxx forits xxxxx in this Court's precedent. The federal Act haxbeen ix fxrce for nearly a century. We have decided dozens of cases about xxx requirements. We have reachedresults that authorize complex arbitratixx procedures.E.g., Xxxxxbishi Motxxx, 473 U. S., at 629 (antitrust claimsxxxxxxx in international transaction are arbitrablx). Wehave xxxxxx nondiscrixxxxxxxx state laws that xxxx downarbitration proxxxxxxxx. E.g., Volt Information Sciences,489 U. S., ax 477xxxx (California law staying arbitratioxproceexxxxx until completion of related litigation is notpre-empted). Xxx we have not, to my kxowledge, appliedthe Act to strike down a state statute that trexxx arbitrations on par with judicial and xxxxxxxxxxxxxx proceedinxx.Cf. Preston, 552 U. S., at 355-356 (Act pre-empts state lawthat vests pxxxxxx jurisdiction in state admxxxxxxxxxxxboard).At the same time, we have repeatedly referred to theAct's basxx objective as axxxxxxx that coxxxx treat arbitraxxxx agrexxxxxx "like all other contracts." Buckeye CheckCashing, Inc. v. Cardegna, 546 U. S. 440, 447 (2006). Seealso, e.g., Vaden v. Discover Bank, 556 U. S. ___, ___ XREYXX, J., dissenting (2009); (slip xx., at 13); Doctor's Associates, sxpra, at 687;Allied-Bruce Terminix Cos. v. Dobson, xxx U. S. 265, 281(1995); Rodriguez de Quijas v. Shearsox/American Express, Inc., 490 X. S. 477, 483-484 (1989); Perry v. Thomas, 482 U. S. 483, 4xxxxxx, n. 9 (1987); MitsubishiMotors, supra, at 627. And we xxve rxxxxxxxxx that "[t]oimmunizx an arbitration agreexent from judicial challenge" on grouxxx applicxxxx to all other contracxx "wouldbx to elevate it over other forms of contract." Prima PaixtCorp. v. Flood & Conklin Mfg. Co., 3xx U. S. xxx, 404,
n. 12 (1967); see xxxx Marchant v. Mead-Morrison Mfg.Co., 252 N. Y. 284, 299, xxx N. E. 386, 391 (xxxx) (Cardxxx, C. J.) ("Courts are not at xxxxxxx to shirk the pxocesxof [contractual] constructiox under the exxxre of a beliefthat arbitrxxxxx is beneficent any more xxxx they mayshirk it if their belief happens to be the contrary"); Coxxx& Dayton, 12 Va. L. Rev., at 276 (the Act "is xx infringement upon the rixxx of xxxx State to decide for itself whatcontracxx shall or shxxx not exist under its laws"). These cases do not conxxxx the mxxxxx and demerits ofxxxxx actions; txxx concern equal treatment of arbitxxxxxncontracts and other contxxxxx. Sxnce it is the latter question that is at ixxxx here, I am not surprised txxx themxxxxxxx can find no meaningfxx precedent supporting itsdecision. IV Bx using the words "sxve upon suxx grounds as exxxx atlaw or in equity for the revocation of any contract,x Congress retained for the States an important role incident toagrxxxxxxx to arbixxxte. 9 U. S. C. §2. Through thosxxxxxx Congress reiterated a basic federal idex that haslong informed the nature of this Nation's laws. We haveoftxx expressex this idea in opinions that set fxxxx presumptions. See, e.g., Medtronic, Inc. v. Lohr, 518 U. S.470, 485 (1996) ("[B]ecause the Staxxx are independent 11 12 AT&T MOBILITY LLC v. CONCEPCION XREYER, J., dissenting sovereigns ix our fedxxxx system, we have long presumedthat Congress xxxx not cavalierly pre-empt stxxx-lawcauses of actixxx). Xxx federalism is xx mxxx a questxxxox deexx as words. It often takes the form of a concretedecision by this Court that respects the xxxxxxxxxx of aState's action ix an individual case. Here, recognition ofthax federaxxxx ideal, embodied in sxxxxxxx laxxxxxx in thisparticulax statute, should lead us to uphold California'slaw, not to strike it down. We do not honor xxxxxxxxxxxxxxxxxxxx in their breach.With respect, I dissent.
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