A California couple, the Concepcions, received cell phones free with their AT&T service contract and were then charged sales tax on the phones’ retail value. Their contract required arbitration of all disputes and did not permit class proceedings.
On April 27, 2011, the U.S. Supreme Court ruled 5 to 4 that federal arbitration law overrode a California rule against such waivers. The decision supported the growing use of arbitration clauses in consumer contracts.