- Court: United States Supreme Court
- Area(s) of Law: Contract Law
- Date Filed: December 14, 2015
- Case #: 14-462
- Judge(s)/Court Below: BREYER, J., delivered the opinion of the Court, in which ROBERTS, C. J., and SCALIA, KENNEDY, ALITO, and KAGAN, JJ., joined. THOMAS, J., filed a dissenting opinion. GINSBURG, J., filed a dissenting opinion, in which SOTOMAYOR, J., joined.
- Full Text Opinion
Respondents filed a class action against Petitioner, based on claims that Petitioner improperly charges its customers early termination fees. The service contract between the parties included mandatory arbitration unless “the law in your state” does not allow an arbitration waiver and then arbitration would not be allowed, even in a class action. At the time the parties entered into the contract, Discover, was in effect which held that “class action waivers in consumer contracts are unconscionable and unenforceable.”
The trial court dismissed Petitioners demand for arbitration. The California Supreme Court affirmed explaining that state law forbids agreements that waive customer rights to bring a class action. The United States Supreme Court then decided Concepcion, which held that the Federal Arbitration Act (FAA) preempts the earlier decision of Discover Bank.
The decision by the California Supreme Court was reversed because “law in your state” cannot conflict with the Federal Arbitration Act, which promotes arbitration.