Issues Before the Courts

In AT&T Mobility, a lower court held that a cell phone contract clause waiving consumers’ right to class arbitration was unenforceable because it was “unconscionable” (that is, fundamentally unfair) under California law.  But the Supreme Court reversed on the grounds that the Federal Arbitration Act (FAA) preempted the California law – a decision that nullifies state laws meant to protect consumers, employees, and others from unfair contract terms. Today, as in the consumer context, many employment contracts include similar boilerplate language requiring arbitration if a dispute arises, meaning that employees cannot pursue discrimination claims in court.  In addition, many of those contracts also preclude class actions in the arbitration that they require. Employees typically must sign such contracts as a condition of employment, and are given no input as to the terms.  The decision in AT&T Mobility, therefore, is a blow to employees, for whom recourse to classwide proceedings – before an arbitrator or in court – was an essential protection.  But now, because AT&T Mobility in essence allows employers to avoid classwide proceedings by contract, many employees will lose the option of banding together to enforce workplace rights. NWLC was one of seven organizations to submit this brief in support of the respondents while it was under consideration.