Nature of the Case
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Facts
Concepcion (P) entered into an agreement for cellular telephones with AT & T Mobility LCC (D). The contract provided for arbitration of all disputes between the parties, but required that claims be brought in the parties' 'individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding.' Ps were not charged for the phones, but they were charged $30.22 in sales tax based on the phones' retail value. P filed a complaint against D alleging false advertising and fraud by charging sales tax on phones it advertised for free. D moved to compel arbitration under the terms of its contract. Ps opposed the motion, contending that the arbitration agreement was unconscionable and unlawfully exculpatory under California law because it disallowed classwide procedures. D's motion to compel was denied. The court found that the arbitration provision was unconscionable because D had not shown that bilateral arbitration adequately substituted for the deterrent effects of class actions. The Ninth Circuit affirmed holding that the Discover Bank rule was not preempted by the FAA because that rule was simply 'a refinement of the unconscionability analysis applicable to contracts generally in California. The Supreme Court granted certiorari.
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