OPINION OF THE COURT

JORDAN, Circuit Judge.

This case is before us on remand from the United States Supreme Court. Appellants Keith Litman and Robert Wachtel had earlier asked us to reverse an order of the United States District Court for the District of New Jersey compelling them to arbitrate their contract dispute with Cellco Partnership d/b/a Verizon Wireless ("Verizon") on an individual rather than a class-wide basis. In an unpublished opinion and order filed May 21, 2010, we vacated the District Court's order because a recent precedent of ours bound us to conclude that class arbitration should have been available to the appellants. Litman v. Cellco P'ship, 381 Fed.Appx. 140 (3d Cir. 2010) (citing Homa v. American Express Co., 558 F.3d 225 (3d Cir.2009)). Verizon responded to our ruling by seeking a stay of our mandate and filing a petition for a writ of certiorari, both of which were granted. The Supreme Court, shortly after issuing its opinion in AT&T Mobility v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), vacated our decision and remanded the case to us for further consideration. Cellco P'ship v. Litman, ___ U.S. ___, 131 S.Ct. 2872, 179 L.Ed.2d 1184 (2011) (table). On remand, we asked for supplemental briefing to gain the parties' perspectives on how Concepcion applies to this case. Having now reviewed the supplemental briefing and Concepcion, we conclude that the New Jersey law at issue, which "[r]equire[es] the availability of classwide arbitration ... [,] creates a scheme inconsistent with the [Federal Arbitration Act]." Concepcion, 131 S.Ct. at 1748. Accordingly, we will affirm the District Court's order compelling individual arbitration in accordance with the terms of Litman's and Wachtel's contracts with Verizon.

I. Background

Verizon provides wireless telephone service to millions of customers nationwide. Litman and Wachtel were among that number. They each entered into a Customer Agreement (the "Agreements") pursuant to which Verizon supplied them cell phone service for a fixed monthly price.

Beginning on or about September 30, 2005, Verizon allegedly began to impose on its fixed-price customers a "bogus, unlawful, and inequitable" monthly administrative charge of forty cents. (App. at 26-27.) Later, in March 2007, it allegedly charged fixed-price customers an improper seventy-cent administrative charge. According to Litman and Wachtel, the added charges amounted to a "unilateral price increase for all of its customers," in violation of Verizon's contractual obligation to provide cell phone service at a fixed price. (App. at 27, 35-37.) On that theory, Litman and Wachtel filed this putative class action.

The complaint asserts three claims: breach of contract, unjust enrichment, and violations of the New Jersey Consumer Fraud Act, N.J. STAT. ANN. §§ 56:8-1, et seq. Verizon moved to compel individual arbitration pursuant to the following clause in the Agreements:1

(App. at 54-55, 71-72.)

Litman and Wachtel opposed Verizon's motion to compel individual arbitration, arguing that, pursuant to the New Jersey Supreme Court's decision in Muhammad v. County Bank of Rehoboth Beach, Delaware, 189 N.J. 1, 912 A.2d 88, 100 (2006), the Agreements' arbitration clause — specifically its class-arbitration waiver — was unconscionable and therefore unenforceable under New Jersey law.2 For purposes of its motion, Verizon did not challenge the applicability of Muhammad, but instead argued that the Federal Arbitration Act ("FAA") preempted Muhammad. The District Court accepted that argument. Relying on our decision in Gay v. CreditInform, 511 F.3d 369 (3d Cir.2007), which stated that Pennsylvania court decisions declaring class-wide arbitration waivers unconscionable were preempted by the FAA,3 the District Court held that the class arbitration waiver at issue here is valid. The Court thus granted Verizon's motion to compel individual arbitration and dismissed the case. Litman and Wachtel timely appealed.

After the opening and answering briefs had been submitted, we decided Homa v. American Express Co., 558 F.3d 225 (3d Cir.2009), in which we specifically addressed whether the conclusion expressed by the New Jersey Supreme Court in Muhammad was preempted by the FAA. We held that it was not preempted, and we distinguished our earlier decision in Gay by noting that the Pennsylvania cases considered there, "`though ... written ostensibly to apply general principles of contract law, ... hold that an agreement to arbitrate may be unconscionable simply because it is an agreement to arbitrate,'" id. at 229 (quoting Gay, 511 F.3d at 395), whereas the New Jersey Supreme Court in Muhammad was, we thought, at pains to say that a waiver of class-wide dispute resolution would be improper in the context of either litigation or arbitration. We thus concluded that Muhammad "plainly [did] not hold that an agreement to arbitrate may be unconscionable simply because it is an agreement to arbitrate." Homa, 558 F.3d at 229-30 (internal quotation marks and citations omitted). Rather, we said, because Muhammad provides a defense against "all waivers of class-wide actions, not simply those that also compel arbitration," it was not preempted by the FAA. 558 F.3d at 230 (emphasis added).

Not surprisingly, Litman and Wachtel moved for summary reversal in this case, based on our decision in Homa. We agreed that reversal was required.4 See Litman, 381 Fed.Appx. at 142. We recognized that Gay's discussion of the FAA's preemptive effect on Pennsylvania law was only dicta.5 Id. In contrast, we noted, Homa was precedent "directly on point and binding on us," so we were required to "conclude[] that the FAA does not preempt Muhammad." Id. at 143. Accordingly, we vacated the District Court's order compelling individual arbitration and remanded the case for further proceedings, which might have involved some class-wide dispute resolution. Id.

Verizon filed a motion to stay our mandate pending the filing of a petition for writ of certiorari. We allowed the stay, and Verizon filed its petition. On May 2, 2011, the Supreme Court granted Verizon's petition, vacated our May 2010 opinion and order, and remanded the case for our review in light of its newly issued opinion in AT&T Mobility v. Concepcion. See Cellco P'ship, 131 S.Ct. at 2872.

II. Discussion6

The specific question before us remains whether the FAA preempts the New Jersey Supreme Court's ruling in Muhammad. As noted above, we had previously held that, pursuant to Homa, it did not. We now examine that decision anew and hold that Homa has been abrogated by Concepcion and that Muhammad is preempted by the FAA.

Section 2 of the FAA, the "primary substantive provision of the Act," Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), provides that

9 U.S.C. § 2 (emphasis added.) Thus, consistent with § 2, "generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements." Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). In considering an arbitration agreement, we may use the law "of the involved state or territory" as an interpretive guide, Gay, 511 F.3d at 388, but the "liberal federal policy favoring arbitration," Moses H. Cone, 460 U.S. at 24, 103 S.Ct. 927, which gave birth to the FAA, requires that "arbitration agreements [be] on an equal footing with other contracts and [that they be] enforce[d] ... according to their terms," Concepcion, 131 S.Ct. at 1745 (internal citations omitted).

As is obvious from our decisions in Gay and Homa, this case is not our first effort to reconcile waivers of class arbitration with state court decisions reflecting public policies against such waivers. In our initial ruling in this case, we discussed the tension between Gay and Homa and decided we had to follow Homa, since it addressed precisely the question at issue here, namely whether New Jersey's Muhammad decision forbidding class arbitration waivers could withstand the preemptive sweep of the FAA. "We are bound by precedential opinions of our Court[,]" we observed, "unless they have been reversed by an en banc proceeding or have been adversely affected by an opinion of the Supreme Court." Litman, 381 Fed.Appx. at 143 (internal quotation marks and citation omitted).

The Supreme Court's more recent opinion in Concepcion works just such a change in the law. The Court addressed "whether the FAA prohibits States from conditioning the enforceability of certain arbitration agreements on the availability of classwide arbitration procedures." 131 S.Ct. at 1744. The Concepcions had purchased AT & T cell phone service, which was advertised to include free phones. Id. at 1744. They were charged sales tax on the phones and, believing that to be inconsistent with the promise that the phones were "free," they brought a putative class action against AT & T. Id. AT & T moved to compel arbitration under the terms of its contract with the Concepcions, which "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." Id. at 1744 (internal quotation marks and citations omitted). The district court ruled that, pursuant to the California Supreme Court's decision in Discover Bank v. Superior Court, 36 Cal.4th 148, 30 Cal.Rptr.3d 76, 113 P.3d 1100 (2005),7 the governing contract's arbitration provision was unconscionable. Concepcion, 131 S.Ct. at 1745. AT & T appealed, but the United States Court of Appeals for the Ninth Circuit affirmed, concluding that the Discover Bank rule was not preempted by the FAA because it was simply "a refinement of the unconscionability analysis applicable to contracts generally." Id. The Supreme Court saw it differently.

In dispatching the reasoning and rule of Discover Bank, the Supreme Court stated that the clause in § 2 of the FAA that requires enforcement of an arbitration agreement "save upon such grounds as exist at law or in equity for the revocation of any contract[,]" does not "preserve state-law rules that stand as an obstacle to the accomplishment of the FAA's objectives." Id. at 1748. In the Court's view, "[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA." Id. More specifically, the Court held that requiring the availability of class action mechanisms undermines the "principal purpose of the FAA[, which] is to ensure that private arbitration agreements are enforced according to their terms." Id. (internal quotation marks and brackets omitted). Further, the Court determined that the FAA's objective of "affording parties discretion in designing arbitration processes... to allow for efficient, streamlined[,]" tailored mechanisms to address a dispute, id. at 1749, is compromised by state rules "[r]equiring the availability of classwide arbitration," id. at 1748. The Court reasoned that "the switch from bilateral to class arbitration sacrifices the principal advantage of arbitration — its informality — and makes the process slower, more costly, and more likely to generate procedural morass than final judgment," id. at 1751, not to mention that it increases the "risks to defendants," id. at 1752. Accordingly, the Supreme Court held that California's Discovery Bank rule stood "as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress... [and was] preempted by the FAA." Id. at 1753 (internal citations and quotation marks omitted).

We understand the holding of Concepcion to be both broad and clear: a state law that seeks to impose class arbitration despite a contractual agreement for individualized arbitration is inconsistent with, and therefore preempted by, the FAA, irrespective of whether class arbitration "is desirable for unrelated reasons." Id. at 1753. Therefore, we must hold that, contrary to our earlier decisions in Homa and in this case, the rule established by the New Jersey Supreme Court in Muhammad is preempted by the FAA. It follows that the arbitration clause at issue here must be enforced according to its terms, which requires individual arbitration and forecloses class arbitration.8

III. Conclusion

Because the United States Supreme Court's decision in Concepcion holds that state law "[r]equiring the availability of classwide arbitration ... is inconsistent with the FAA[,]" 131 S.Ct. at 1748, we now endorse the District Court's decision to reject New Jersey law holding that waivers of class arbitration are unconscionable, and we will affirm the District Court's order compelling individual arbitration of the appellants' claims.