Document ID: ./input/supremecourt_opinions/opinions/10pdf/09-893.pdf
Page Number: 6.0

Cite as:  563 U. S. ____ (2011) 

3 

Opinion of the Court 

were  not  charged  for  the  phones,  but  they  were  charged 
$30.22  in  sales  tax  based  on  the  phones’  retail  value.    In 
March  2006,  the  Concepcions  filed  a  complaint  against
AT&T in the United States District Court for the Southern 
District  of  California.    The  complaint  was  later  consoli-
dated  with  a  putative  class  action  alleging,  among  other
things,  that  AT&T  had  engaged  in  false  advertising  and 
fraud by charging sales tax on phones it advertised as free. 
In  March  2008,  AT&T  moved  to  compel  arbitration
under the terms of its contract with the Concepcions.  The 
Concepcions  opposed  the  motion,  contending  that  the  ar-
bitration  agreement  was  unconscionable  and  unlawfully 
exculpatory  under  California  law  because  it  disallowed 
classwide  procedures.  The  District  Court  denied  AT&T’s 
motion. 
It  described  AT&T’s  arbitration  agreement  fa-
vorably,  noting,  for  example,  that  the  informal  dispute-
resolution  process  was  “quick,  easy  to  use”  and  likely  to
“promp[t] full or . . . even excess payment to the customer 
without  the  need  to  arbitrate  or  litigate”;  that  the  $7,500
premium  functioned  as  “a  substantial  inducement  for  the
consumer  to  pursue  the  claim  in  arbitration”  if  a  dispute
was not resolved informally; and that consumers who were 
members  of  a  class  would  likely  be  worse  off.  Laster  v. 
T-Mobile USA, Inc., 2008 WL 5216255, *11–*12 (SD Cal., 
Aug.  11,  2008).  Nevertheless,  relying  on  the  California
Supreme  Court’s  decision  in  Discover  Bank  v.  Superior 
Court,  36  Cal.  4th  148,  113  P. 3d  1100  (2005),  the  court 
found  that  the  arbitration  provision  was  unconscionable 
because  AT&T  had  not  shown  that  bilateral  arbitration 
adequately  substituted  for  the  deterrent  effects  of  class
actions.  Laster, 2008 WL 5216255, *14. 

The  Ninth  Circuit  affirmed,  also  finding  the  provision
unconscionable  under  California  law  as  announced  in 
Discover  Bank.  Laster  v.  AT&T  Mobility  LLC,  584  F. 3d 
849, 855 (2009).  It also held that the Discover Bank rule 
was  not  preempted  by  the  FAA  because  that  rule  was