(Slip Opinion)              OCTOBER TERM, 2010                                       1

                                       Syllabus

         NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
       being done in connection with this case, at the time the opinion is issued.
       The syllabus constitutes no part of the opinion of the Court but has been
       prepared by the Reporter of Decisions for the convenience of the reader.
       See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.


SUPREME COURT OF THE UNITED STATES

                                       Syllabus

        AT&T MOBILITY LLC v. CONCEPCION ET UX.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
                  THE NINTH CIRCUIT

    No. 09–893.      Argued November 9, 2010—Decided April 27, 2011
The cellular telephone contract between respondents (Concepcions) and
  petitioner (AT&T) provided for arbitration of all disputes, but did not
  permit classwide arbitration. After the Concepcions were charged
  sales tax on the retail value of phones provided free under their ser
  vice contract, they sued AT&T in a California Federal District Court.
  Their suit was consolidated with a class action alleging, inter alia,
  that AT&T had engaged in false advertising and fraud by charging
  sales tax on “free” phones. The District Court denied AT&T’s motion
  to compel arbitration under the Concepcions’ contract. Relying on
  the California Supreme Court’s Discover Bank decision, it found the
  arbitration provision unconscionable because it disallowed classwide
  proceedings. The Ninth Circuit agreed that the provision was uncon
  scionable under California law and held that the Federal Arbitration
  Act (FAA), which makes arbitration agreements “valid, irrevocable,
  and enforceable, save upon such grounds as exist at law or in equity
  for the revocation of any contract,” 9 U. S. C. §2, did not preempt its
  ruling.
Held: Because it “stands as an obstacle to the accomplishment and exe
 cution of the full purposes and objectives of Congress,” Hines v.
 Davidowitz, 312 U. S. 52, 67, California’s Discover Bank rule is pre
 empted by the FAA. Pp. 4–18.
    (a) Section 2 reflects a “liberal federal policy favoring arbitration,”
 Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U. S.
 1, 24, and the “fundamental principle that arbitration is a matter of
 contract,” Rent-A-Center, West, Inc. v. Jackson, 561 U. S. ____, ____.
 Thus, courts must place arbitration agreements on an equal footing
 with other contracts, Buckeye Check Cashing, Inc. v. Cardegna, 546
 U. S. 440, 443, and enforce them according to their terms, Volt In
2                AT&T MOBILITY LLC v. CONCEPCION

                                  Syllabus

    formation Sciences, Inc. v. Board of Trustees of Leland Stanford Jun
    ior Univ., 489 U. S. 468, 478. Section 2’s saving clause permits
    agreements to be invalidated by “generally applicable contract de
    fenses,” but not by defenses that apply only to arbitration or derive
    their meaning from the fact that an agreement to arbitrate is at is
    sue. Doctor’s Associates, Inc. v. Casarotto, 517 U. S. 681, 687. Pp. 4–
    5.
       (b) In Discover Bank, the California Supreme Court held that class
    waivers in consumer arbitration agreements are unconscionable if
    the agreement is in an adhesion contract, disputes between the par
    ties are likely to involve small amounts of damages, and the party
    with inferior bargaining power alleges a deliberate scheme to de
    fraud. Pp. 5–6.
       (c) The Concepcions claim that the Discover Bank rule is a ground
    that “exist[s] at law or in equity for the revocation of any contract”
    under FAA §2. When state law prohibits outright the arbitration of a
    particular type of claim, the FAA displaces the conflicting rule. But
    the inquiry is more complex when a generally applicable doctrine is
    alleged to have been applied in a fashion that disfavors or interferes
    with arbitration. Although §2’s saving clause preserves generally
    applicable contract defenses, it does not suggest an intent to preserve
    state-law rules that stand as an obstacle to the accomplishment of
    the FAA’s objectives. Cf. Geier v. American Honda Motor Co., 529
    U. S. 861, 872. The FAA’s overarching purpose is to ensure the en
    forcement of arbitration agreements according to their terms so as to
    facilitate informal, streamlined proceedings. Parties may agree to
    limit the issues subject to arbitration, Mitsubishi Motors Corp. v.
    Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 628, to arbitrate accord
    ing to specific rules, Volt, supra, at 479, and to limit with whom they
    will arbitrate, Stolt-Nielsen, supra, at ___. Pp. 6–12.
       (d) Class arbitration, to the extent it is manufactured by Discover
    Bank rather than consensual, interferes with fundamental attributes
    of arbitration. The switch from bilateral to class arbitration sacri
    fices arbitration’s informality and makes the process slower, more
    costly, and more likely to generate procedural morass than final
    judgment. And class arbitration greatly increases risks to defen
    dants. The absence of multilayered review makes it more likely that
    errors will go uncorrected. That risk of error may become unaccept
    able when damages allegedly owed to thousands of claimants are ag
    gregated and decided at once. Arbitration is poorly suited to these
    higher stakes. In litigation, a defendant may appeal a certification
    decision and a final judgment, but 9 U. S. C. §10 limits the grounds
    on which courts can vacate arbitral awards. Pp. 12–18.
584 F. 3d 849, reversed and remanded.
                    Cite as: 563 U. S. ____ (2011)                   3

                               Syllabus

  SCALIA, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined. THOMAS, J., filed a
concurring opinion. BREYER, J., filed a dissenting opinion, in which
GINSBURG, SOTOMAYOR, and KAGAN, JJ., joined.
                        Cite as: 563 U. S. ____ (2011)                              1

                             Opinion of the Court

     NOTICE: This opinion is subject to formal revision before publication in the
     preliminary print of the United States Reports. Readers are requested to
     notify the Reporter of Decisions, Supreme Court of the United States, Wash
     ington, D. C. 20543, of any typographical or other formal errors, in order
     that corrections may be made before the preliminary print goes to press.


SUPREME COURT OF THE UNITED STATES
                                   _________________

                                   No. 09–893
                                   _________________


   AT&T MOBILITY LLC, PETITIONER v. VINCENT 

              CONCEPCION ET UX. 

 ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

            APPEALS FOR THE NINTH CIRCUIT

                                 [April 27, 2011] 


  JUSTICE SCALIA delivered the opinion of the Court.
  Section 2 of the Federal Arbitration Act (FAA) makes
agreements to arbitrate “valid, irrevocable, and enforce
able, save upon such grounds as exist at law or in equity
for the revocation of any contract.” 9 U. S. C. §2. We
consider whether the FAA prohibits States from condition
ing the enforceability of certain arbitration agreements on
the availability of classwide arbitration procedures.
                              I
  In February 2002, Vincent and Liza Concepcion entered
into an agreement for the sale and servicing of cellular
telephones with AT&T Mobility LCC (AT&T).1 The con
tract 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.” App.

——————
 1 The  Conceptions’ original contract was with Cingular Wireless.
AT&T acquired Cingular in 2005 and renamed the company AT&T
Mobility in 2007. Laster v. AT&T Mobility LLC, 584 F. 3d 849, 852,
n. 1 (CA9 2009).
2              AT&T MOBILITY LLC v. CONCEPCION

                         Opinion of the Court

to Pet. for Cert 61a.2 The agreement authorized AT&T to
make unilateral amendments, which it did to the arbitra
tion provision on several occasions. The version at issue in
this case reflects revisions made in December 2006, which
the parties agree are controlling.
   The revised agreement provides that customers may
initiate dispute proceedings by completing a one-page No
tice of Dispute form available on AT&T’s Web site. AT&T
may then offer to settle the claim; if it does not, or if
the dispute is not resolved within 30 days, the customer
may invoke arbitration by filing a separate Demand for
Arbitration, also available on AT&T’s Web site. In the
event the parties proceed to arbitration, the agreement
specifies that AT&T must pay all costs for nonfrivolous
claims; that arbitration must take place in the county in
which the customer is billed; that, for claims of $10,000 or
less, the customer may choose whether the arbitration
proceeds in person, by telephone, or based only on submis
sions; that either party may bring a claim in small claims
court in lieu of arbitration; and that the arbitrator may
award any form of individual relief, including injunctions
and presumably punitive damages. The agreement, more
over, denies AT&T any ability to seek reimbursement of
its attorney’s fees, and, in the event that a customer re
ceives an arbitration award greater than AT&T’s last
written settlement offer, requires AT&T to pay a $7,500
minimum recovery and twice the amount of the claimant’s
attorney’s fees.3
   The Concepcions purchased AT&T service, which was
advertised as including the provision of free phones; they
——————
  2 That provision further states that “the arbitrator may not consoli

date more than one person’s claims, and may not otherwise preside
over any form of a representative or class proceeding.” App. to Pet. for
Cert. 61a.
  3 The guaranteed minimum recovery was increased in 2009 to

$10,000. Brief for Petitioner 7.
                 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
4            AT&T MOBILITY LLC v. CONCEPCION

                      Opinion of the Court

simply “a refinement of the unconscionability analysis
applicable to contracts generally in California.” 584 F. 3d,
at 857. In response to AT&T’s argument that the Con
cepcions’ interpretation of California law discriminated
against arbitration, the Ninth Circuit rejected the conten
tion that “ ‘class proceedings will reduce the efficiency and
expeditiousness of arbitration’ ” and noted that “ ‘Discover
Bank placed arbitration agreements with class action
waivers on the exact same footing as contracts that bar
class action litigation outside the context of arbitration.’ ”
Id., at 858 (quoting Shroyer v. New Cingular Wireless
Services, Inc., 498 F. 3d 976, 990 (CA9 2007)).
   We granted certiorari, 560 U. S. ___ (2010).
                             II
  The FAA was enacted in 1925 in response to widespread
judicial hostility to arbitration agreements. See Hall
Street Associates, L. L. C. v. Mattel, Inc., 552 U. S. 576,
581 (2008). Section 2, the “primary substantive provision
of the Act,” Moses H. Cone Memorial Hospital v. Mercury
Constr. Corp., 460 U. S. 1, 24 (1983), provides, in relevant
part, as follows:
       “A written provision in any maritime transaction or
    a contract evidencing a transaction involving com
    merce to settle by arbitration a controversy thereafter
    arising out of such contract or transaction . . . shall be
    valid, irrevocable, and enforceable, save upon such
    grounds as exist at law or in equity for the revocation
    of any contract.” 9 U. S. C. §2.
We have described this provision as reflecting both a
“liberal federal policy favoring arbitration,” Moses H.
Cone, supra, at 24, and the “fundamental principle that
arbitration is a matter of contract,” Rent-A-Center, West,
Inc. v. Jackson, 561 U. S. ____ , ____ (2010) (slip op., at 3).
In line with these principles, courts must place arbitration
                 Cite as: 563 U. S. ____ (2011)           5

                     Opinion of the Court

agreements on an equal footing with other contracts,
Buckeye Check Cashing, Inc. v. Cardegna, 546 U. S. 440,
443 (2006), and enforce them according to their terms, Volt
Information Sciences, Inc. v. Board of Trustees of Leland
Stanford Junior Univ., 489 U. S. 468, 478 (1989).
   The final phrase of §2, however, permits arbitration
agreements to be declared unenforceable “upon such
grounds as exist at law or in equity for the revocation of
any contract.” This saving clause permits agreements to
arbitrate to be invalidated by “generally applicable con
tract defenses, such as fraud, duress, or unconscionabil
ity,” but not by defenses that apply only to arbitration or
that derive their meaning from the fact that an agreement
to arbitrate is at issue. Doctor’s Associates, Inc. v.
Casarotto, 517 U. S. 681, 687 (1996); see also Perry v.
Thomas, 482 U. S. 483, 492–493, n. 9 (1987). The question
in this case is whether §2 preempts California’s rule clas
sifying most collective-arbitration waivers in consumer
contracts as unconscionable. We refer to this rule as the
Discover Bank rule.
   Under California law, courts may refuse to enforce any
contract found “to have been unconscionable at the time it
was made,” or may “limit the application of any uncon
scionable clause.” Cal. Civ. Code Ann. §1670.5(a) (West
1985). A finding of unconscionability requires “a ‘proce
dural’ and a ‘substantive’ element, the former focusing on
‘oppression’ or ‘surprise’ due to unequal bargaining power,
the latter on ‘overly harsh’ or ‘one-sided’ results.” Armen
dariz v. Foundation Health Pyschcare Servs., Inc., 24 Cal.
4th 83, 114, 6 P. 3d 669, 690 (2000); accord, Discover
Bank, 36 Cal. 4th, at 159–161, 113 P. 3d, at 1108.
   In Discover Bank, the California Supreme Court applied
this framework to class-action waivers in arbitration
agreements and held as follows:
    “[W]hen the waiver is found in a consumer contract of
6           AT&T MOBILITY LLC v. CONCEPCION

                     Opinion of the Court

    adhesion in a setting in which disputes between the
    contracting parties predictably involve small amounts
    of damages, and when it is alleged that the party
    with the superior bargaining power has carried out a
    scheme to deliberately cheat large numbers of con
    sumers out of individually small sums of money, then
    . . . the waiver becomes in practice the exemption of
    the party ‘from responsibility for [its] own fraud, or
    willful injury to the person or property of another.’
    Under these circumstances, such waivers are uncon
    scionable under California law and should not be en
    forced.” Id., at 162, 113 P. 3d, at 1110 (quoting Cal.
    Civ. Code Ann. §1668).
California courts have frequently applied this rule to find
arbitration agreements unconscionable. See, e.g., Cohen v.
DirecTV, Inc., 142 Cal. App. 4th 1442, 1451–1453, 48 Cal.
Rptr. 3d 813, 819–821 (2006); Klussman v. Cross Country
Bank, 134 Cal. App. 4th 1283, 1297, 36 Cal Rptr. 3d 728,
738–739 (2005); Aral v. EarthLink, Inc., 134 Cal. App. 4th
544, 556–557, 36 Cal. Rptr. 3d 229, 237–239 (2005).
                             III 

                              A

  The Concepcions argue that the Discover Bank rule,
given its origins in California’s unconscionability doctrine
and California’s policy against exculpation, is a ground
that “exist[s] at law or in equity for the revocation of any
contract” under FAA §2. Moreover, they argue that even if
we construe the Discover Bank rule as a prohibition on
collective-action waivers rather than simply an application
of unconscionability, the rule would still be applicable to
all dispute-resolution contracts, since California prohibits
waivers of class litigation as well. See America Online,
Inc. v. Superior Ct., 90 Cal. App. 4th 1, 17–18, 108 Cal.
Rptr. 2d 699, 711–713 (2001).
  When state law prohibits outright the arbitration of a
                  Cite as: 563 U. S. ____ (2011)             7

                      Opinion of the Court

particular type of claim, the analysis is straightforward:
The conflicting rule is displaced by the FAA. Preston v.
Ferrer, 552 U. S. 346, 353 (2008). But the inquiry becomes
more complex when a doctrine normally thought to be
generally applicable, such as duress or, as relevant here,
unconscionability, is alleged to have been applied in a
fashion that disfavors arbitration. In Perry v. Thomas,
482 U. S. 483 (1987), for example, we noted that the FAA’s
preemptive effect might extend even to grounds tradition
ally thought to exist “ ‘at law or in equity for the revocation
of any contract.’ ” Id., at 492, n. 9 (emphasis deleted). We
said that a court may not “rely on the uniqueness of an
agreement to arbitrate as a basis for a state-law holding
that enforcement would be unconscionable, for this would
enable the court to effect what . . . the state legislature
cannot.” Id., at 493, n. 9.
   An obvious illustration of this point would be a case
finding unconscionable or unenforceable as against public
policy consumer arbitration agreements that fail to pro
vide for judicially monitored discovery. The rationaliza
tions for such a holding are neither difficult to imagine nor
different in kind from those articulated in Discover Bank.
A court might reason that no consumer would knowingly
waive his right to full discovery, as this would enable
companies to hide their wrongdoing. Or the court might
simply say that such agreements are exculpatory—re
stricting discovery would be of greater benefit to the
company than the consumer, since the former is more
likely to be sued than to sue. See Discover Bank, supra, at
161, 113 P. 3d, at 1109 (arguing that class waivers are
similarly one-sided). And, the reasoning would continue,
because such a rule applies the general principle of uncon
scionability or public-policy disapproval of exculpatory
agreements, it is applicable to “any” contract and thus
preserved by §2 of the FAA. In practice, of course, the rule
would have a disproportionate impact on arbitration
8                  AT&T MOBILITY LLC v. CONCEPCION

                              Opinion of the Court

agreements; but it would presumably apply to contracts
purporting to restrict discovery in litigation as well.
  Other examples are easy to imagine. The same argu
ment might apply to a rule classifying as unconscionable
arbitration agreements that fail to abide by the Federal
Rules of Evidence, or that disallow an ultimate disposition
by a jury (perhaps termed “a panel of twelve lay arbitra
tors” to help avoid preemption). Such examples are not
fanciful, since the judicial hostility towards arbitration
that prompted the FAA had manifested itself in “a great
variety” of “devices and formulas” declaring arbitration
against public policy. Robert Lawrence Co. v. Devonshire
Fabrics, Inc., 271 F. 2d 402, 406 (CA2 1959). And al
though these statistics are not definitive, it is worth not
ing that California’s courts have been more likely to hold
contracts to arbitrate unconscionable than other contracts.
Broome, An Unconscionable Applicable of the Unconscion
ability Doctrine: How the California Courts are Circum
venting the Federal Arbitration Act, 3 Hastings Bus. L. J.
39, 54, 66 (2006); Randall, Judicial Attitudes Toward
Arbitration and the Resurgence of Unconscionability, 52
Buffalo L. Rev. 185, 186–187 (2004).
  The Concepcions suggest that all this is just a parade of
horribles, and no genuine worry. “Rules aimed at destroy
ing arbitration” or “demanding procedures incompatible
with arbitration,” they concede, “would be preempted by
the FAA because they cannot sensibly be reconciled with
Section 2.” Brief for Respondents 32. The “grounds”
available under §2’s saving clause, they admit, “should not
be construed to include a State’s mere preference for pro
cedures that are incompatible with arbitration and ‘would
wholly eviscerate arbitration agreements.’ ” Id., at 33
(quoting Carter v. SSC Odin Operating Co., LLC, 237 Ill.
2d 30, 50, 927 N. E. 2d 1207, 1220 (2010)).4
——————
    4 The   dissent seeks to fight off even this eminently reasonable conces
                     Cite as: 563 U. S. ____ (2011)                    9

                          Opinion of the Court

   We largely agree. Although §2’s saving clause preserves
generally applicable contract defenses, nothing in it sug
gests an intent to preserve state-law rules that stand as
an obstacle to the accomplishment of the FAA’s objectives.
Cf. Geier v. American Honda Motor Co., 529 U. S. 861, 872
(2000); Crosby v. National Foreign Trade Council, 530
U. S. 363, 372–373 (2000). As we have said, a federal
statute’s saving clause “ ‘cannot in reason be construed as
[allowing] a common law right, the continued existence of
which would be absolutely inconsistent with the provisions
of the act. In other words, the act cannot be held to
destroy itself.’ ” American Telephone & Telegraph Co. v.
Central Office Telephone, Inc., 524 U. S. 214, 227–228
(1998) (quoting Texas & Pacific R. Co. v. Abilene Cotton
Oil Co., 204 U. S. 426, 446 (1907)).
   We differ with the Concepcions only in the application of
this analysis to the matter before us. We do not agree that
rules requiring judicially monitored discovery or adher
ence to the Federal Rules of Evidence are “a far cry from
this case.” Brief for Respondents 32. The overarching
purpose of the FAA, evident in the text of §§2, 3, and 4,
is to ensure the enforcement of arbitration agreements
according to their terms so as to facilitate streamlined
proceedings. Requiring the availability of classwide arbi
tration interferes with fundamental attributes of arbitra
tion and thus creates a scheme inconsistent with the FAA.
                            B
  The “principal purpose” of the FAA is to “ensur[e] that
private arbitration agreements are enforced according to
——————
sion. It says that to its knowledge “we have not . . . applied the Act to
strike down a state statute that treats arbitrations on par with judicial
and administrative proceedings,” post, at 10 (opinion of BREYER, J.), and
that “we should think more than twice before invalidating a state law
that . . . puts agreements to arbitrate and agreements to litigate ‘upon
the same footing’ ” post, at 4–5.
10          AT&T MOBILITY LLC v. CONCEPCION

                     Opinion of the Court

their terms.” Volt, 489 U. S., at 478; see also Stolt-Nielsen
S. A. v. AnimalFeeds Int’l Corp., 559 U. S. ___, ___ (2010)
(slip op., at 17). This purpose is readily apparent from the
FAA’s text. Section 2 makes arbitration agreements
“valid, irrevocable, and enforceable” as written (subject, of
course, to the saving clause); §3 requires courts to stay
litigation of arbitral claims pending arbitration of those
claims “in accordance with the terms of the agreement”;
and §4 requires courts to compel arbitration “in accor
dance with the terms of the agreement” upon the motion of
either party to the agreement (assuming that the “making
of the arbitration agreement or the failure . . . to perform
the same” is not at issue). In light of these provisions,
we have held that parties may agree to limit the issues
subject to arbitration, Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U. S. 614, 628 (1985), to
arbitrate according to specific rules, Volt, supra, at 479,
and to limit with whom a party will arbitrate its disputes,
Stolt-Nielsen, supra, at ___ (slip op., at 19).
   The point of affording parties discretion in designing
arbitration processes is to allow for efficient, streamlined
procedures tailored to the type of dispute. It can be speci
fied, for example, that the decisionmaker be a specialist in
the relevant field, or that proceedings be kept confidential
to protect trade secrets. And the informality of arbitral
proceedings is itself desirable, reducing the cost and in
creasing the speed of dispute resolution. 14 Penn Plaza
LLC v. Pyett, 556 U. S. ___, ___ (2009) (slip op., at 20);
Mitsubishi Motors Corp., supra, at 628.
   The dissent quotes Dean Witter Reynolds Inc. v. Byrd,
470 U. S. 213, 219 (1985), as “ ‘reject[ing] the suggestion
that the overriding goal of the Arbitration Act was to
promote the expeditious resolution of claims.’ ” Post, at 4
(opinion of BREYER, J.). That is greatly misleading. After
saying (accurately enough) that “the overriding goal of the
Arbitration Act was [not] to promote the expeditious reso
                  Cite as: 563 U. S. ____ (2011)            11

                      Opinion of the Court

lution of claims,” but to “ensure judicial enforcement of
privately made agreements to arbitrate,” 470 U. S., at 219,
Dean Witter went on to explain: “This is not to say that
Congress was blind to the potential benefit of the legisla
tion for expedited resolution of disputes. Far from it . . . .”
Id., at 220. It then quotes a House Report saying that
“the costliness and delays of litigation . . . can be largely
eliminated by agreements for arbitration.” Ibid. (quoting
H. R. Rep. No. 96, 68th Cong., 1st Sess., 2 (1924)). The
concluding paragraph of this part of its discussion begins
as follows:
      “We therefore are not persuaded by the argument
    that the conflict between two goals of the Arbitration
    Act—enforcement of private agreements and encour
    agement of efficient and speedy dispute resolution—
    must be resolved in favor of the latter in order to real
    ize the intent of the drafters.” 470 U. S., at 221.
In the present case, of course, those “two goals” do not
conflict—and it is the dissent’s view that would frustrate
both of them.
   Contrary to the dissent’s view, our cases place it beyond
dispute that the FAA was designed to promote arbitration.
They have repeatedly described the Act as “embod[ying]
[a] national policy favoring arbitration,” Buckeye Check
Cashing, 546 U. S., at 443, and “a liberal federal policy
favoring arbitration agreements, notwithstanding any
state substantive or procedural policies to the contrary,”
Moses H. Cone, 460 U. S., at 24; see also Hall Street As
socs., 552 U. S., at 581. Thus, in Preston v. Ferrer, holding
preempted a state-law rule requiring exhaustion of admin
istrative remedies before arbitration, we said: “A prime
objective of an agreement to arbitrate is to achieve
‘streamlined proceedings and expeditious results,’ ” which
objective would be “frustrated” by requiring a dispute to be
heard by an agency first. 552 U. S., at 357–358. That
12             AT&T MOBILITY LLC v. CONCEPCION

                          Opinion of the Court

rule, we said, would “at the least, hinder speedy resolution
of the controversy.” Id., at 358.5
   California’s Discover Bank rule similarly interferes with
arbitration. Although the rule does not require classwide
arbitration, it allows any party to a consumer contract to
demand it ex post. The rule is limited to adhesion con
tracts, Discover Bank, 36 Cal. 4th, at 162–163, 113 P. 3d,
at 1110, but the times in which consumer contracts were
anything other than adhesive are long past.6 Carbajal v.
H&R Block Tax Servs., Inc., 372 F. 3d 903, 906 (CA7
2004); see also Hill v. Gateway 2000, Inc., 105 F. 3d 1147,
1149 (CA7 1997). The rule also requires that damages be
predictably small, and that the consumer allege a scheme
to cheat consumers. Discover Bank, supra, at 162–163,
113 P. 3d, at 1110. The former requirement, however, is
——————
  5 Relying  upon nothing more indicative of congressional understand
ing than statements of witnesses in committee hearings and a press
release of Secretary of Commerce Herbert Hoover, the dissent suggests
that Congress “thought that arbitration would be used primarily where
merchants sought to resolve disputes of fact . . . [and] possessed roughly
equivalent bargaining power.” Post, at 6. Such a limitation appears
nowhere in the text of the FAA and has been explicitly rejected by our
cases. “Relationships between securities dealers and investors, for
example, may involve unequal bargaining power, but we [have] never
theless held . . . that agreements to arbitrate in that context are en
forceable.” Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20, 33
(1991); see also id., at 32–33 (allowing arbitration of claims arising
under the Age Discrimination in Employment Act of 1967 despite
allegations of unequal bargaining power between employers and
employees). Of course the dissent’s disquisition on legislative history
fails to note that it contains nothing—not even the testimony of a stray
witness in committee hearings—that contemplates the existence of
class arbitration.
  6 Of course States remain free to take steps addressing the concerns

that attend contracts of adhesion—for example, requiring class-action
waiver provisions in adhesive arbitration agreements to be highlighted.
Such steps cannot, however, conflict with the FAA or frustrate its
purpose to ensure that private arbitration agreements are enforced
according to their terms.
                  Cite as: 563 U. S. ____ (2011)            13

                      Opinion of the Court

toothless and malleable (the Ninth Circuit has held that
damages of $4,000 are sufficiently small, see Oestreicher v.
Alienware Corp., 322 Fed. Appx. 489, 492 (2009) (unpub
lished)), and the latter has no limiting effect, as all that is
required is an allegation. Consumers remain free to bring
and resolve their disputes on a bilateral basis under Dis
cover Bank, and some may well do so; but there is little
incentive for lawyers to arbitrate on behalf of individuals
when they may do so for a class and reap far higher fees in
the process. And faced with inevitable class arbitration,
companies would have less incentive to continue resolving
potentially duplicative claims on an individual basis.
   Although we have had little occasion to examine class
wide arbitration, our decision in Stolt-Nielsen is instruc
tive. In that case we held that an arbitration panel ex
ceeded its power under §10(a)(4) of the FAA by imposing
class procedures based on policy judgments rather than
the arbitration agreement itself or some background prin
ciple of contract law that would affect its interpretation.
559 U. S., at ___ (slip op., at 20–23). We then held that
the agreement at issue, which was silent on the question
of class procedures, could not be interpreted to allow them
because the “changes brought about by the shift from
bilateral arbitration to class-action arbitration” are “fun
damental.” Id., at ___ (slip op., at 22). This is obvious as a
structural matter: Classwide arbitration includes absent
parties, necessitating additional and different procedures
and involving higher stakes. Confidentiality becomes
more difficult. And while it is theoretically possible to
select an arbitrator with some expertise relevant to the
class-certification question, arbitrators are not generally
knowledgeable in the often-dominant procedural aspects of
certification, such as the protection of absent parties. The
conclusion follows that class arbitration, to the extent it is
manufactured by Discover Bank rather than consensual,
is inconsistent with the FAA.
14            AT&T MOBILITY LLC v. CONCEPCION

                         Opinion of the Court

   First, the switch from bilateral to class arbitration
sacrifices the principal advantage of arbitration—its in
formality—and makes the process slower, more costly, and
more likely to generate procedural morass than final
judgment. “In bilateral arbitration, parties forgo the
procedural rigor and appellate review of the courts in
order to realize the benefits of private dispute resolution:
lower costs, greater efficiency and speed, and the ability to
choose expert adjudicators to resolve specialized disputes.”
559 U. S., at ___ (slip op., at 21). But before an arbitrator
may decide the merits of a claim in classwide procedures,
he must first decide, for example, whether the class itself
may be certified, whether the named parties are suffi
ciently representative and typical, and how discovery for
the class should be conducted. A cursory comparison of
bilateral and class arbitration illustrates the difference.
According to the American Arbitration Association (AAA),
the average consumer arbitration between January and
August 2007 resulted in a disposition on the merits in
six months, four months if the arbitration was conducted
by documents only. AAA, Analysis of the AAA’s Con
sumer Arbitration Caseload, online at http://www.adr.org/
si.asp?id=5027 (all Internet materials as visited Apr. 25,
2011, and available in Clerk of Court’s case file). As of
September 2009, the AAA had opened 283 class arbitra
tions. Of those, 121 remained active, and 162 had been
settled, withdrawn, or dismissed. Not a single one, how
ever, had resulted in a final award on the merits. Brief for
AAA as Amicus Curiae in Stolt-Nielsen, O. T. 2009, No.
08–1198, pp. 22–24. For those cases that were no longer
active, the median time from filing to settlement, with
drawal, or dismissal—not judgment on the merits—was
583 days, and the mean was 630 days. Id., at 24.7
——————
  7 The dissent claims that class arbitration should be compared to

class litigation, not bilateral arbitration. Post, at 6–7. Whether arbi
                     Cite as: 563 U. S. ____ (2011)                  15

                         Opinion of the Court

   Second, class arbitration requires procedural formality.
The AAA’s rules governing class arbitrations mimic the
Federal Rules of Civil Procedure for class litigation. Com
pare AAA, Supplementary Rules for Class Arbitrations
(effective Oct. 8, 2003), online at http://www.adr.org/
sp.asp?id=21936, with Fed. Rule Civ. Proc. 23. And while
parties can alter those procedures by contract, an alterna
tive is not obvious. If procedures are too informal, absent
class members would not be bound by the arbitration. For
a class-action money judgment to bind absentees in litiga
tion, class representatives must at all times adequately
represent absent class members, and absent members
must be afforded notice, an opportunity to be heard, and
a right to opt out of the class. Phillips Petroleum Co. v.
Shutts, 472 U. S. 797, 811–812 (1985). At least this
amount of process would presumably be required for ab
sent parties to be bound by the results of arbitration.
   We find it unlikely that in passing the FAA Congress
meant to leave the disposition of these procedural re
quirements to an arbitrator. Indeed, class arbitration was
not even envisioned by Congress when it passed the FAA
in 1925; as the California Supreme Court admitted in
Discover Bank, class arbitration is a “relatively recent
development.” 36 Cal. 4th, at 163, 113 P. 3d, at 1110.
And it is at the very least odd to think that an arbitrator
would be entrusted with ensuring that third parties’ due
process rights are satisfied.
   Third, class arbitration greatly increases risks to defen
dants. Informal procedures do of course have a cost: The
absence of multilayered review makes it more likely that
errors will go uncorrected. Defendants are willing to
accept the costs of these errors in arbitration, since their
—————— 

trating a class is more desirable than litigating one, however, is not

relevant. A State cannot defend a rule requiring arbitration-by-jury by

saying that parties will still prefer it to trial-by-jury. 

16           AT&T MOBILITY LLC v. CONCEPCION

                      Opinion of the Court

impact is limited to the size of individual disputes, and
presumably outweighed by savings from avoiding the
courts. But when damages allegedly owed to tens of thou
sands of potential claimants are aggregated and decided at
once, the risk of an error will often become unacceptable.
Faced with even a small chance of a devastating loss,
defendants will be pressured into settling questionable
claims. Other courts have noted the risk of “in terrorem”
settlements that class actions entail, see, e.g., Kohen v.
Pacific Inv. Management Co. LLC, 571 F. 3d 672, 677–678
(CA7 2009), and class arbitration would be no different.
   Arbitration is poorly suited to the higher stakes of class
litigation. In litigation, a defendant may appeal a certifi
cation decision on an interlocutory basis and, if unsuccess
ful, may appeal from a final judgment as well. Questions
of law are reviewed de novo and questions of fact for clear
error. In contrast, 9 U. S. C. §10 allows a court to vacate
an arbitral award only where the award “was procured by
corruption, fraud, or undue means”; “there was evident
partiality or corruption in the arbitrators”; “the arbitrators
were guilty of misconduct in refusing to postpone the
hearing . . . or in refusing to hear evidence pertinent and
material to the controversy[,] or of any other misbehavior
by which the rights of any party have been prejudiced”; or
if the “arbitrators exceeded their powers, or so imperfectly
executed them that a mutual, final, and definite award . . .
was not made.” The AAA rules do authorize judicial re
view of certification decisions, but this review is unlikely
to have much effect given these limitations; review un
der §10 focuses on misconduct rather than mistake. And
parties may not contractually expand the grounds or
nature of judicial review. Hall Street Assocs., 552 U. S., at
578. We find it hard to believe that defendants would bet
the company with no effective means of review, and even
harder to believe that Congress would have intended to
                     Cite as: 563 U. S. ____ (2011)                    17

                          Opinion of the Court

allow state courts to force such a decision.8
   The Concepcions contend that because parties may and
sometimes do agree to aggregation, class procedures are
not necessarily incompatible with arbitration. But the
same could be said about procedures that the Concepcions
admit States may not superimpose on arbitration: Parties
could agree to arbitrate pursuant to the Federal Rules of
Civil Procedure, or pursuant to a discovery process rival
ing that in litigation. Arbitration is a matter of contract,
and the FAA requires courts to honor parties’ expecta
tions. Rent-A-Center, West, 561 U. S., at ___ (slip op., at
3). But what the parties in the aforementioned examples
would have agreed to is not arbitration as envisioned by
the FAA, lacks its benefits, and therefore may not be
required by state law.
   The dissent claims that class proceedings are necessary
to prosecute small-dollar claims that might otherwise slip
through the legal system. See post, at 9. But States can
not require a procedure that is inconsistent with the FAA,
even if it is desirable for unrelated reasons. Moreover, the
claim here was most unlikely to go unresolved. As noted
earlier, the arbitration agreement provides that AT&T
will pay claimants a minimum of $7,500 and twice their
attorney’s fees if they obtain an arbitration award greater
than AT&T’s last settlement offer. The District Court
——————
   8 The dissent cites three large arbitration awards (none of which

stems from classwide arbitration) as evidence that parties are willing to
submit large claims before an arbitrator. Post, at 7–8. Those examples
might be in point if it could be established that the size of the arbitral
dispute was predictable when the arbitration agreement was entered.
Otherwise, all the cases prove is that arbitrators can give huge
awards—which we have never doubted. The point is that in class
action arbitration huge awards (with limited judicial review) will be
entirely predictable, thus rendering arbitration unattractive. It is not
reasonably deniable that requiring consumer disputes to be arbitrated
on a classwide basis will have a substantial deterrent effect on incen
tives to arbitrate.
18          AT&T MOBILITY LLC v. CONCEPCION

                     Opinion of the Court

found this scheme sufficient to provide incentive for the
individual prosecution of meritorious claims that are not
immediately settled, and the Ninth Circuit admitted that
aggrieved customers who filed claims would be “essen
tially guarantee[d]” to be made whole, 584 F. 3d, at 856, n.
9. Indeed, the District Court concluded that the Concep
cions were better off under their arbitration agreement
with AT&T than they would have been as participants in
a class action, which “could take months, if not years,
and which may merely yield an opportunity to submit a
claim for recovery of a small percentage of a few dollars.”
Laster, 2008 WL 5216255, at *12.
                       *     *     *
  Because it “stands as an obstacle to the accomplishment
and execution of the full purposes and objectives of Con
gress,” Hines v. Davidowitz, 312 U. S. 52, 67 (1941), Cali
fornia’s Discover Bank rule is preempted by the FAA. The
judgment of the Ninth Circuit is reversed, and the case is
remanded for further proceedings consistent with this
opinion.
                                            It is so ordered.
                  Cite as: 563 U. S. ____ (2011)            1

                     THOMAS, J., concurring

SUPREME COURT OF THE UNITED STATES
                          _________________

                           No. 09–893
                          _________________


   AT&T MOBILITY LLC, PETITIONER v. VINCENT 

              CONCEPCION ET UX. 

 ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

            APPEALS FOR THE NINTH CIRCUIT

                         [April 27, 2011] 


   JUSTICE THOMAS, concurring.
   Section 2 of the Federal Arbitration Act (FAA) provides
that an arbitration provision “shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at law or
in equity for the revocation of any contract.” 9 U. S. C. §2.
The question here is whether California’s Discover Bank
rule, see Discover Bank v. Superior Ct., 36 Cal. 4th 148,
113 P. 3d 1100 (2005), is a “groun[d] . . . for the revocation
of any contract.”
   It would be absurd to suggest that §2 requires only that
a defense apply to “any contract.” If §2 means anything,
it is that courts cannot refuse to enforce arbitration agree
ments because of a state public policy against arbitration,
even if the policy nominally applies to “any contract.”
There must be some additional limit on the contract de
fenses permitted by §2. Cf. ante, at 17 (opinion of the
Court) (state law may not require procedures that are “not
arbitration as envisioned by the FAA” and “lac[k] its bene
fits”); post, at 5 (BREYER, J., dissenting) (state law may
require only procedures that are “consistent with the use
of arbitration”).
   I write separately to explain how I would find that limit
in the FAA’s text. As I would read it, the FAA requires
that an agreement to arbitrate be enforced unless a party
successfully challenges the formation of the arbitration
2            AT&T MOBILITY LLC v. CONCEPCION

                      THOMAS, J., concurring

agreement, such as by proving fraud or duress. 9 U. S. C.
§§2, 4. Under this reading, I would reverse the Court of
Appeals because a district court cannot follow both the
FAA and the Discover Bank rule, which does not relate to
defects in the making of an agreement.
   This reading of the text, however, has not been fully
developed by any party, cf. Brief for Petitioner 41, n. 12,
and could benefit from briefing and argument in an ap
propriate case. Moreover, I think that the Court’s test will
often lead to the same outcome as my textual interpreta
tion and that, when possible, it is important in interpret
ing statutes to give lower courts guidance from a majority
of the Court. See US Airways, Inc. v. Barnett, 535
U. S. 391, 411 (2002) (O’Connor, J., concurring). Therefore,
although I adhere to my views on purposes-and-objectives
pre-emption, see Wyeth v. Levine, 555 U. S. 555, ___ (2009)
(opinion concurring in judgment), I reluctantly join the
Court’s opinion.
                                I
   The FAA generally requires courts to enforce arbitration
agreements as written. Section 2 provides that “[a] writ
ten provision in . . . a contract . . . to settle by arbitration a
controversy thereafter arising out of such contract . . .
shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation
of any contract.” Significantly, the statute does not paral
lel the words “valid, irrevocable, and enforceable” by refer
encing the grounds as exist for the “invalidation, revoca
tion, or nonenforcement” of any contract. Nor does the
statute use a different word or phrase entirely that might
arguably encompass validity, revocability, and enforce
ability. The use of only “revocation” and the conspicuous
omission of “invalidation” and “nonenforcement” suggest
that the exception does not include all defenses applicable
to any contract but rather some subset of those defenses.
                 Cite as: 563 U. S. ____ (2011)            3

                    THOMAS, J., concurring

See Duncan v. Walker, 533 U. S. 167, 174 (2001) (“It is our
duty to give effect, if possible, to every clause and word of
a statute” (internal quotation marks omitted)).
  Concededly, the difference between revocability, on the
one hand, and validity and enforceability, on the other, is
not obvious. The statute does not define the terms, and
their ordinary meanings arguably overlap. Indeed, this
Court and others have referred to the concepts of revoca
bility, validity, and enforceability interchangeably. But
this ambiguity alone cannot justify ignoring Congress’
clear decision in §2 to repeat only one of the three
concepts.
  To clarify the meaning of §2, it would be natural to look
to other portions of the FAA. Statutory interpretation
focuses on “the language itself, the specific context in
which that language is used, and the broader context of
the statute as a whole.” Robinson v. Shell Oil Co., 519
U. S. 337, 341 (1997). “A provision that may seem am
biguous in isolation is often clarified by the remainder of
the statutory scheme . . . because only one of the permissi
ble meanings produces a substantive effect that is com
patible with the rest of the law.” United Sav. Assn. of Tex.
v. Timbers of Inwood Forest Associates, Ltd., 484 U. S.
365, 371 (1988).
  Examining the broader statutory scheme, §4 can be read
to clarify the scope of §2’s exception to the enforcement of
arbitration agreements. When a party seeks to enforce an
arbitration agreement in federal court, §4 requires that
“upon being satisfied that the making of the agreement for
arbitration or the failure to comply therewith is not in
issue,” the court must order arbitration “in accordance
with the terms of the agreement.”
  Reading §§2 and 4 harmoniously, the “grounds . . . for
the revocation” preserved in §2 would mean grounds re
lated to the making of the agreement. This would require
enforcement of an agreement to arbitrate unless a party
4               AT&T MOBILITY LLC v. CONCEPCION

                          THOMAS, J., concurring

successfully asserts a defense concerning the formation of
the agreement to arbitrate, such as fraud, duress, or mu
tual mistake. See Prima Paint Corp. v. Flood & Conklin
Mfg. Co., 388 U. S. 395, 403–404 (1967) (interpreting §4 to
permit federal courts to adjudicate claims of “fraud in the
inducement of the arbitration clause itself” because such
claims “g[o] to the ‘making’ of the agreement to arbitrate”).
Contract defenses unrelated to the making of the agree
ment—such as public policy—could not be the basis for
declining to enforce an arbitration clause.*
——————
   * The interpretation I suggest would be consistent with our prece
dent. Contract formation is based on the consent of the parties, and we
have emphasized that “[a]rbitration under the Act is a matter of con
sent.” Volt Information Sciences, Inc. v. Board of Trustees of Leland
Stanford Junior Univ., 489 U. S. 468, 479 (1989).
   The statement in Perry v. Thomas, 482 U. S. 483 (1987), suggesting
that §2 preserves all state-law defenses that “arose to govern issues
concerning the validity, revocability, and enforceability of contracts
generally,” id., at 493, n. 9, is dicta. This statement is found in a
footnote concerning a claim that the Court “decline[d] to address.” Id.,
at 392, n. 9. Similarly, to the extent that statements in Rent-A-Center,
West, Inc. v. Jackson, 561 U. S. ___, ___ n. 1 (2010) (slip op. at ___, n. 1),
can be read to suggest anything about the scope of state-law defenses
under §2, those statements are dicta, as well. This Court has never
addressed the question whether the state-law “grounds” referred to in
§2 are narrower than those applicable to any contract.
   Moreover, every specific contract defense that the Court has ac
knowledged is applicable under §2 relates to contract formation. In
Doctor’s Associates, Inc. v. Casarotto, 517 U. S. 681, 687 (1996), this
Court said that fraud, duress, and unconscionability “may be applied to
invalidate arbitration agreements without contravening §2.” All three
defenses historically concern the making of an agreement. See Morgan
Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish Cty.,
554 U. S. 527, 547 (2008) (describing fraud and duress as “traditional
grounds for the abrogation of [a] contract” that speak to “unfair dealing
at the contract formation stage”); Hume v. United States, 132 U. S. 406,
411, 414 (1889) (describing an unconscionable contract as one “such as
no man in his senses and not under delusion would make” and suggest
ing that there may be “contracts so extortionate and unconscionable on
their face as to raise the presumption of fraud in their inception”
(internal quotation marks omitted)).
                 Cite as: 563 U. S. ____ (2011)            5

                    THOMAS, J., concurring

                              II
    Under this reading, the question here would be whether
California’s Discover Bank rule relates to the making of an
agreement. I think it does not.
   In Discover Bank, 36 Cal. 4th 148, 113 P. 3d 1100, the
California Supreme Court held that “class action waivers
are, under certain circumstances, unconscionable as unlaw
fully exculpatory.” Id., at 65, 113 P. 3d, at 1112; see
also id., at 161, 113 P. 3d, at 1108 (“[C]lass action waivers
[may be] substantively unconscionable inasmuch as they
may operate effectively as exculpatory contract clauses
that are contrary to public policy”). The court concluded
that where a class-action waiver is found in an arbitration
agreement in certain consumer contracts of adhesion, such
waivers “should not be enforced.” Id., at 163, 113 P. 3d, at
1110. In practice, the court explained, such agreements
“operate to insulate a party from liability that otherwise
would be imposed under California law.” Id., at 161, 113
P. 3d, at 1108, 1109. The court did not conclude that a
customer would sign such an agreement only if under the
influence of fraud, duress, or delusion.
    The court’s analysis and conclusion that the arbitration
agreement was exculpatory reveals that the Discover Bank
rule does not concern the making of the arbitration
agreement. Exculpatory contracts are a paradigmatic ex
ample of contracts that will not be enforced because of
public policy. 15 G. Giesel, Corbin on Contracts §§85.1,
85.17, 85.18 (rev. ed. 2003). Indeed, the court explained
that it would not enforce the agreements because they are
“ ‘against the policy of the law.’ ” 36 Cal. 4th, at 161, 113
P. 3d, at 1108 (quoting Cal. Civ. Code Ann. §1668); see
also 36 Cal. 4th, at 166, 113 P. 3d, at 1112 (“Agreements
to arbitrate may not be used to harbor terms, conditions
and practices that undermine public policy” (internal
quotation marks omitted)). Refusal to enforce a contract
for public-policy reasons does not concern whether the
6            AT&T MOBILITY LLC v. CONCEPCION

                     THOMAS, J., concurring

contract was properly made.
    Accordingly, the Discover Bank rule is not a “groun[d]
. . . for the revocation of any contract” as I would read §2 of
the FAA in light of §4. Under this reading, the FAA dic
tates that the arbitration agreement here be enforced and
the Discover Bank rule is pre-empted.
                 Cite as: 563 U. S. ____ (2011)           1

                    BREYER, J., dissenting

SUPREME COURT OF THE UNITED STATES
                         _________________

                          No. 09–893
                         _________________


   AT&T MOBILITY LLC, PETITIONER v. VINCENT 

              CONCEPCION ET UX. 

 ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

            APPEALS FOR THE NINTH CIRCUIT

                        [April 27, 2011] 


  JUSTICE BREYER, with whom JUSTICE GINSBURG, JUS-
TICE SOTOMAYOR, and JUSTICE KAGAN join, dissenting.
  The Federal Arbitration Act says that an arbitration
agreement “shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for
the revocation of any contract.” 9 U. S. C. §2 (emphasis
added). California law sets forth certain circumstances in
which “class action waivers” in any contract are unen­
forceable. In my view, this rule of state law is consistent
with the federal Act’s language and primary objective. It
does not “stan[d] as an obstacle” to the Act’s “accomplish­
ment and execution.” Hines v. Davidowitz, 312 U. S. 52,
67 (1941). And the Court is wrong to hold that the federal
Act pre-empts the rule of state law.
                               I
   The California law in question consists of an authorita­
tive state-court interpretation of two provisions of the
California Civil Code. The first provision makes unlawful
all contracts “which have for their object, directly or in­
directly, to exempt anyone from responsibility for his
own . . . violation of law.” Cal. Civ. Code Ann. §1668 (West
1985). The second provision authorizes courts to “limit the
application of any unconscionable clause” in a contract so
“as to avoid any unconscionable result.” §1670.5(a).
2           AT&T MOBILITY LLC v. CONCEPCION

                     BREYER, J., dissenting

  The specific rule of state law in question consists of the
California Supreme Court’s application of these principles
to hold that “some” (but not “all”) “class action waivers” in
consumer contracts are exculpatory and unconscionable
under California “law.” Discover Bank v. Superior Ct., 36
Cal. 4th 148, 160, 162, 113 P. 3d 1100, 1108, 1110 (2005).
In particular, in Discover Bank the California Supreme
Court stated that, when a class-action waiver
    “is found in a consumer contract of adhesion in a set­
    ting in which disputes between the contracting parties
    predictably involve small amounts of damages, and
    when it is alleged that the party with the superior
    bargaining power has carried out a scheme to deliber­
    ately cheat large numbers of consumers out of indi­
    vidually small sums of money, then . . . the waiver
    becomes in practice the exemption of the party ‘from
    responsibility for [its] own fraud, or willful injury to
    the person or property of another.’ ” Id., at 162–163,
    113 P. 3d, at 1110.
In such a circumstance, the “waivers are unconscionable
under California law and should not be enforced.” Id., at
163, 113 P. 3d, at 1110.
  The Discover Bank rule does not create a “blanket policy
in California against class action waivers in the consumer
context.” Provencher v. Dell, Inc., 409 F. Supp. 2d 1196,
1201 (CD Cal. 2006). Instead, it represents the “appli­
cation of a more general [unconscionability] principle.”
Gentry v. Superior Ct., 42 Cal. 4th 443, 457, 165 P. 3d 556,
564 (2007). Courts applying California law have enforced
class-action waivers where they satisfy general uncon­
scionability standards. See, e.g., Walnut Producers of Cal.
v. Diamond Foods, Inc., 187 Cal. App. 4th 634, 647–650,
114 Cal. Rptr. 3d 449, 459–462 (2010); Arguelles-Romero
v. Superior Ct., 184 Cal. App. 4th 825, 843–845, 109 Cal.
Rptr. 3d 289, 305–307 (2010); Smith v. Americredit Finan
                 Cite as: 563 U. S. ____ (2011)           3

                    BREYER, J., dissenting

cial Servs., Inc., No. 09cv1076, 2009 WL 4895280 (SD Cal.,
Dec. 11, 2009); cf. Provencher, supra, at 1201 (considering
Discover Bank in choice-of-law inquiry). And even when
they fail, the parties remain free to devise other dispute
mechanisms, including informal mechanisms, that, in con­
text, will not prove unconscionable. See Volt Informa
tion Sciences, Inc. v. Board of Trustees of Leland Stanford
Junior Univ., 489 U. S. 468, 479 (1989).
                             II 

                             A

   The Discover Bank rule is consistent with the federal
Act’s language. It “applies equally to class action litiga­
tion waivers in contracts without arbitration agreements
as it does to class arbitration waivers in contracts with
such agreements.” 36 Cal. 4th, at 165–166, 113 P. 3d, at
1112. Linguistically speaking, it falls directly within the
scope of the Act’s exception permitting courts to refuse to
enforce arbitration agreements on grounds that exist “for
the revocation of any contract.” 9 U. S. C. §2 (emphasis
added). The majority agrees. Ante, at 9.
                              B
  The Discover Bank rule is also consistent with the basic
“purpose behind” the Act. Dean Witter Reynolds Inc. v.
Byrd, 470 U. S. 213, 219 (1985). We have described that
purpose as one of “ensur[ing] judicial enforcement” of
arbitration agreements. Ibid.; see also Marine Transit
Corp. v. Dreyfus, 284 U. S. 263, 274, n. 2 (1932) (“ ‘The
purpose of this bill is to make valid and enforcible agree­
ments for arbitration’ ” (quoting H. R. Rep. No. 96, 68th
Cong., 1st Sess., 1 (1924); emphasis added)); 65 Cong. Rec.
1931 (1924) (“It creates no new legislation, grants no new
rights, except a remedy to enforce an agreement in com­
mercial contracts and in admiralty contracts”). As is well
known, prior to the federal Act, many courts expressed
4           AT&T MOBILITY LLC v. CONCEPCION

                     BREYER, J., dissenting

hostility to arbitration, for example by refusing to order
specific performance of agreements to arbitrate. See
S. Rep. No. 536, 68th Cong., 1st Sess., 2 (1924). The Act
sought to eliminate that hostility by placing agreements to
arbitrate “ ‘upon the same footing as other contracts.’ ”
Scherk v. Alberto-Culver Co., 417 U. S. 506, 511 (1974)
(quoting H. R. Rep. No. 96, at 2; emphasis added).
   Congress was fully aware that arbitration could provide
procedural and cost advantages. The House Report em­
phasized the “appropriate[ness]” of making arbitration
agreements enforceable “at this time when there is so
much agitation against the costliness and delays of litiga­
tion.” Id., at 2. And this Court has acknowledged that
parties may enter into arbitration agreements in order to
expedite the resolution of disputes. See Preston v. Ferrer,
552 U. S. 346, 357 (2008) (discussing “prime objective of
an agreement to arbitrate”). See also Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 628
(1985).
   But we have also cautioned against thinking that Con­
gress’ primary objective was to guarantee these particular
procedural advantages. Rather, that primary objective
was to secure the “enforcement” of agreements to arbi­
trate. Dean Witter, 470 U. S., at 221. See also id., at 219
(we “reject the suggestion that the overriding goal of the
Arbitration Act was to promote the expeditious resolution
of claims”); id., at 219, 217–218 (“[T]he intent of Congress”
requires us to apply the terms of the Act without regard
to whether the result would be “possibly inefficient”); cf.
id., at 220 (acknowledging that “expedited resolution of
disputes” might lead parties to prefer arbitration). The
relevant Senate Report points to the Act’s basic purpose
when it says that “[t]he purpose of the [Act] is clearly set
forth in section 2,” S. Rep. No. 536, at 2 (emphasis added),
namely, the section that says that an arbitration agree­
ment “shall be valid, irrevocable, and enforceable, save
                 Cite as: 563 U. S. ____ (2011)            5

                     BREYER, J., dissenting

upon such grounds as exist at law or in equity for the
revocation of any contract,” 9 U. S. C. §2.
  Thus, insofar as we seek to implement Congress’ intent,
we should think more than twice before invalidating a
state law that does just what §2 requires, namely, puts
agreements to arbitrate and agreements to litigate “upon
the same footing.”
                              III
   The majority’s contrary view (that Discover Bank stands
as an “obstacle” to the accomplishment of the federal law’s
objective, ante, at 9–18) rests primarily upon its claims
that the Discover Bank rule increases the complexity of
arbitration procedures, thereby discouraging parties from
entering into arbitration agreements, and to that extent
discriminating in practice against arbitration. These
claims are not well founded.
   For one thing, a state rule of law that would sometimes
set aside as unconscionable a contract term that forbids
class arbitration is not (as the majority claims) like a rule
that would require “ultimate disposition by a jury” or
“judicially monitored discovery” or use of “the Federal
Rules of Evidence.” Ante, at 8, 9. Unlike the majority’s
examples, class arbitration is consistent with the use of
arbitration. It is a form of arbitration that is well known
in California and followed elsewhere. See, e.g., Keating v.
Superior Ct., 167 Cal. Rptr. 481, 492 (App. 1980) (officially
depublished); American Arbitration Association (AAA),
Supplementary Rules for Class Arbitrations (2003),
http://www.adr.org/sp.asp?id=21936 (as visited Apr. 25,
2011, and available in Clerk of Court’s case file); JAMS,
The Resolution Experts, Class Action Procedures (2009).
Indeed, the AAA has told us that it has found class ar­
bitration to be “a fair, balanced, and efficient means of
resolving class disputes.” Brief for AAA as Amicus Curiae
in Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., O. T.
6            AT&T MOBILITY LLC v. CONCEPCION

                     BREYER, J., dissenting

2009, No. 08–1198, p. 25 (hereinafter AAA Amicus Brief).
And unlike the majority’s examples, the Discover Bank
rule imposes equivalent limitations on litigation; hence
it cannot fairly be characterized as a targeted attack on
arbitration.
   Where does the majority get its contrary idea—that
individual, rather than class, arbitration is a “fundamen­
tal attribut[e]” of arbitration? Ante, at 9. The majority
does not explain. And it is unlikely to be able to trace its
present view to the history of the arbitration statute itself.
   When Congress enacted the Act, arbitration procedures
had not yet been fully developed. Insofar as Congress
considered detailed forms of arbitration at all, it may well
have thought that arbitration would be used primarily
where merchants sought to resolve disputes of fact, not
law, under the customs of their industries, where the
parties possessed roughly equivalent bargaining power.
See Mitsubishi Motors, supra, at 646 (Stevens, J., dissent­
ing); Joint Hearings on S. 1005 and H. R. 646 before the
Subcommittees of the Committees on the Judiciary, 68th
Cong., 1st Sess., 15 (1924); Hearing on S. 4213 and S. 4214
before a Subcommittee of the Senate Committee on the
Judiciary, 67th Cong., 4th Sess., 9–10 (1923); Dept. of
Commerce, Secretary Hoover Favors Arbitration—Press
Release (Dec. 28, 1925), Herbert Hoover Papers—Articles,
Addresses, and Public Statements File—No. 536, p. 2
(Herbert Hoover Presidential Library); Cohen & Dayton,
The New Federal Arbitration Law, 12 Va. L. Rev. 265, 281
(1926); AAA, Year Book on Commercial Arbitration in the
United States (1927). This last mentioned feature of the
history—roughly equivalent bargaining power—suggests,
if anything, that California’s statute is consistent with,
and indeed may help to further, the objectives that Con­
gress had in mind.
   Regardless, if neither the history nor present practice
suggests that class arbitration is fundamentally incom­
                  Cite as: 563 U. S. ____ (2011)             7

                     BREYER, J., dissenting

patible with arbitration itself, then on what basis can the
majority hold California’s law pre-empted?
   For another thing, the majority’s argument that the
Discover Bank rule will discourage arbitration rests criti­
cally upon the wrong comparison. The majority compares
the complexity of class arbitration with that of bilateral
arbitration. See ante, at 14. And it finds the former more
complex. See ibid. But, if incentives are at issue, the
relevant comparison is not “arbitration with arbitration”
but a comparison between class arbitration and judicial
class actions. After all, in respect to the relevant set of
contracts, the Discover Bank rule similarly and equally
sets aside clauses that forbid class procedures—whether
arbitration procedures or ordinary judicial procedures are
at issue.
   Why would a typical defendant (say, a business) prefer a
judicial class action to class arbitration? AAA statistics
“suggest that class arbitration proceedings take more time
than the average commercial arbitration, but may take
less time than the average class action in court.” AAA
Amicus Brief 24 (emphasis added). Data from California
courts confirm that class arbitrations can take considera­
bly less time than in-court proceedings in which class
certification is sought. Compare ante, at 14 (providing
statistics for class arbitration), with Judicial Council of
California, Administrative Office of the Courts, Class
Certification in California: Second Interim Report from
the Study of California Class Action Litigation 18 (2010)
(providing statistics for class-action litigation in California
courts). And a single class proceeding is surely more
efficient than thousands of separate proceedings for iden­
tical claims. Thus, if speedy resolution of disputes were
all that mattered, then the Discover Bank rule would
reinforce, not obstruct, that objective of the Act.
   The majority’s related claim that the Discover Bank
rule will discourage the use of arbitration because
8            AT&T MOBILITY LLC v. CONCEPCION

                     BREYER, J., dissenting

“[a]rbitration is poorly suited to . . . higher stakes” lacks
empirical support. Ante, at 16. Indeed, the majority
provides no convincing reason to believe that parties are
unwilling to submit high-stake disputes to arbitration.
And there are numerous counterexamples. Loftus, Rivals
Resolve Dispute Over Drug, Wall Street Journal, Apr. 16,
2011, p. B2 (discussing $500 million settlement in dispute
submitted to arbitration); Ziobro, Kraft Seeks Arbitration
In Fight With Starbucks Over Distribution, Wall Street
Journal, Nov. 30, 2010, p. B10 (describing initiation of an
arbitration in which the payout “could be higher” than
$1.5 billion); Markoff, Software Arbitration Ruling Gives
I.B.M. $833 Million From Fujitsu, N. Y. Times, Nov. 30,
1988, p. A1 (describing both companies as “pleased with
the ruling” resolving a licensing dispute).
   Further, even though contract defenses, e.g., duress and
unconscionability, slow down the dispute resolution proc­
ess, federal arbitration law normally leaves such matters
to the States. Rent-A-Center, West, Inc. v. Jackson, 561
U. S. ___, ___ (2010) (slip op., at 4) (arbitration agreements
“may be invalidated by ‘generally applicable contract
defenses’ ” (quoting Doctor’s Associates, Inc. v. Casarotto,
517 U. S. 681, 687 (1996))). A provision in a contract of
adhesion (for example, requiring a consumer to decide
very quickly whether to pursue a claim) might increase
the speed and efficiency of arbitrating a dispute, but the
State can forbid it. See, e.g., Hayes v. Oakridge Home, 122
Ohio St. 3d 63, 67, 2009–Ohio–2054, ¶19, 908 N. E. 2d
408, 412 (“Unconscionability is a ground for revocation of
an arbitration agreement”); In re Poly-America, L. P., 262
S. W. 3d 337, 348 (Tex. 2008) (“Unconscionable contracts,
however—whether relating to arbitration or not—are
unenforceable under Texas law”). The Discover Bank rule
amounts to a variation on this theme. California is free to
define unconscionability as it sees fit, and its common law
is of no federal concern so long as the State does not adopt
                 Cite as: 563 U. S. ____ (2011)            9

                     BREYER, J., dissenting

a special rule that disfavors arbitration. Cf. Doctor’s As
sociates, supra, at 687. See also ante, at 4, n. (THOMAS, J.,
concurring) (suggesting that, under certain circumstances,
California might remain free to apply its unconscionability
doctrine).
   Because California applies the same legal principles to
address the unconscionability of class arbitration waivers
as it does to address the unconscionability of any other
contractual provision, the merits of class proceedings
should not factor into our decision. If California had
applied its law of duress to void an arbitration agreement,
would it matter if the procedures in the coerced agreement
were efficient?
   Regardless, the majority highlights the disadvantages of
class arbitrations, as it sees them. See ante, at 15–16
(referring to the “greatly increase[d] risks to defendants”;
the “chance of a devastating loss” pressuring defendants
“into settling questionable claims”). But class proceedings
have countervailing advantages. In general agreements
that forbid the consolidation of claims can lead small­
dollar claimants to abandon their claims rather than to
litigate. I suspect that it is true even here, for as the
Court of Appeals recognized, AT&T can avoid the $7,500
payout (the payout that supposedly makes the Concep­
cions’ arbitration worthwhile) simply by paying the claim’s
face value, such that “the maximum gain to a customer for
the hassle of arbitrating a $30.22 dispute is still just
$30.22.” Laster v. AT&T Mobility LLC, 584 F. 3d 849,
855, 856 (CA9 2009).
   What rational lawyer would have signed on to represent
the Concepcions in litigation for the possibility of fees
stemming from a $30.22 claim? See, e.g., Carnegie v.
Household Int’l, Inc., 376 F. 3d 656, 661 (CA7 2004) (“The
realistic alternative to a class action is not 17 million
individual suits, but zero individual suits, as only a luna­
tic or a fanatic sues for $30”). In California’s perfectly
10          AT&T MOBILITY LLC v. CONCEPCION

                    BREYER, J., dissenting

rational view, nonclass arbitration over such sums will
also sometimes have the effect of depriving claimants of
their claims (say, for example, where claiming the $30.22
were to involve filling out many forms that require techni­
cal legal knowledge or waiting at great length while a call
is placed on hold). Discover Bank sets forth circumstances
in which the California courts believe that the terms of
consumer contracts can be manipulated to insulate an
agreement’s author from liability for its own frauds by
“deliberately cheat[ing] large numbers of consumers out
of individually small sums of money.” 36 Cal. 4th, at
162–163, 113 P. 3d, at 1110. Why is this kind of deci­
sion—weighing the pros and cons of all class proceedings
alike—not California’s to make?
   Finally, the majority can find no meaningful support for
its views in this Court’s precedent. The federal Act has
been in force for nearly a century. We have decided doz­
ens of cases about its requirements. We have reached
results that authorize complex arbitration procedures.
E.g., Mitsubishi Motors, 473 U. S., at 629 (antitrust claims
arising in international transaction are arbitrable). We
have upheld nondiscriminatory state laws that slow down
arbitration proceedings. E.g., Volt Information Sciences,
489 U. S., at 477–479 (California law staying arbitration
proceedings until completion of related litigation is not
pre-empted). But we have not, to my knowledge, applied
the Act to strike down a state statute that treats arbitra­
tions on par with judicial and administrative proceedings.
Cf. Preston, 552 U. S., at 355–356 (Act pre-empts state law
that vests primary jurisdiction in state administrative
board).
   At the same time, we have repeatedly referred to the
Act’s basic objective as assuring that courts treat arbitra­
tion agreements “like all other contracts.” Buckeye Check
Cashing, Inc. v. Cardegna, 546 U. S. 440, 447 (2006). See
also, e.g., Vaden v. Discover Bank, 556 U. S. ___, ___
                  Cite as: 563 U. S. ____ (2011)           11

                     BREYER, J., dissenting

(2009); (slip op., at 13); Doctor’s Associates, supra, at 687;
Allied-Bruce Terminix Cos. v. Dobson, 513 U. S. 265, 281
(1995); Rodriguez de Quijas v. Shearson/American Ex
press, Inc., 490 U. S. 477, 483–484 (1989); Perry v. Tho
mas, 482 U. S. 483, 492–493, n. 9 (1987); Mitsubishi
Motors, supra, at 627. And we have recognized that “[t]o
immunize an arbitration agreement from judicial chal­
lenge” on grounds applicable to all other contracts “would
be to elevate it over other forms of contract.” Prima Paint
Corp. v. Flood & Conklin Mfg. Co., 388 U. S. 395, 404,
n. 12 (1967); see also Marchant v. Mead-Morrison Mfg.
Co., 252 N. Y. 284, 299, 169 N. E. 386, 391 (1929) (Car­
dozo, C. J.) (“Courts are not at liberty to shirk the process
of [contractual] construction under the empire of a belief
that arbitration is beneficent any more than they may
shirk it if their belief happens to be the contrary”); Cohen
& Dayton, 12 Va. L. Rev., at 276 (the Act “is no infringe­
ment upon the right of each State to decide for itself what
contracts shall or shall not exist under its laws”).
   These cases do not concern the merits and demerits of
class actions; they concern equal treatment of arbitration
contracts and other contracts. Since it is the latter ques­
tion that is at issue here, I am not surprised that the
majority can find no meaningful precedent supporting its
decision.
                            IV
  By using the words “save upon such grounds as exist at
law or in equity for the revocation of any contract,” Con­
gress retained for the States an important role incident to
agreements to arbitrate. 9 U. S. C. §2. Through those
words Congress reiterated a basic federal idea that has
long informed the nature of this Nation’s laws. We have
often expressed this idea in opinions that set forth pre­
sumptions. See, e.g., Medtronic, Inc. v. Lohr, 518 U. S.
470, 485 (1996) (“[B]ecause the States are independent
12          AT&T MOBILITY LLC v. CONCEPCION

                    BREYER, J., dissenting

sovereigns in our federal system, we have long presumed
that Congress does not cavalierly pre-empt state-law
causes of action”). But federalism is as much a question
of deeds as words. It often takes the form of a concrete
decision by this Court that respects the legitimacy of a
State’s action in an individual case. Here, recognition of
that federalist ideal, embodied in specific language in this
particular statute, should lead us to uphold California’s
law, not to strike it down. We do not honor federalist
principles in their breach.
  With respect, I dissent.
