The eyes of the U.S. wireless and cable industries were focused on the U.S. Supreme Court on Tuesday as the high court heard oral arguments in a closely-watched case that involves the right of states to invalidate contract clauses that force subscribers to resolve grievances through binding arbitration. The case at hand pits AT&T against a California couple that filed a class-action lawsuit in 2006 against the wireless carrier’s practice of charging a $30 “sales tax” for handsets that were advertised as free. Although AT&T argued that the class-action claim was barred by subscriber contract provisions that require aggrieved customers to submit individual complaints to arbitration, a federal district court in California and the Ninth Circuit Court of Appeals determined that AT&T’s arbitration provision was “unconscionable” and therefore unenforceable under California law. Appearing before the Supreme Court, counsel for AT&T explained that the Federal Arbitration Act (FAA) preempts California legal precedent on the unenforceability of class action bans in subscriber contracts because the state has established a “special rule” that applies only to arbitration agreements and that does not apply to all contracts as required by the FAA. AT&T also said that its arbitration clause is consumer friendly as the company imposes no fee on subscribers to initiate the process and because complainants can collect remedies of up to $7,500 plus double reimbursement of attorney fees. Although Justice Samuel Alito appeared to agree with AT&T’s own suggestion that arbitration offers fuller and faster compensation of consumer claims than class-action suits, several other justices cast doubt AT&T’s claim that California’s “unconscionability” standard does not apply to all contracts. As Justice Ruth Bader Ginsberg asserted, “there is nothing that indicates that California’s laws are applying a different concept of unconscionability,” Justice Antonin Scalia questioned, “are we going to tell the state of California what it has to consider unconscionable?” Citing California’s contention that its law pertains to all contracts, Justice Elena Kagan quipped, “who are we to say that the state is wrong about that?”