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Abstract

Since Congress first enacted the Federal Arbitration Act (FAA) in 1925, arbitration agreements have become ubiquitous in consumer contracts. Although Congress intended for the FAA to promote arbitration, Congress preserved the applicability of common law and equitable defenses, such as unconscionability, to arbitration agreements through section 2 of the FAA. The California Supreme Court in Discover Bank v. Superior Court established parameters for finding unconscionability in arbitration agreements, specifically with respect to waivers of collective redress. In AT&T Mobility LLC v. Concepcion, the U.S. Supreme Court, in a 5–4 decision, turned its back on consumers and section 2 of the FAA, holding that Congress intended to promote arbitration through the FAA. Therefore, the Court preempted any application of the Discover Bank rule to class action arbitration waivers.

This Article explores how the Court used faulty or inadequate analysis to reach its conclusion, failed to account for the importance of collective consumer redress in the modern era, and likely invalidated unconscionability as a defense to any arbitration agreement. Achieving its desired result of enforcing class arbitration waivers, the Court essentially eliminated one of the few methods, if not the only method, that consumers have to adjudicate legitimate claims that likely could not or would not be brought on an individual basis. This decision insulates companies from any meaningful liability that may result from poor practices or even fraudulent schemes. After Concepcion, only congressional action can balance the scales between the enforceability of arbitration agreements and the protection of consumers through equitable contract defenses. Congress must act now to clarify the intent and scope of the FAA; this Article offers several recommendations for such legislation.

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