The key issue litigated in Noohi v. Toll Brothers focused on whether the US Supreme Court's interpretation of the Federal Arbitration Act (FAA) in AT&T Mobility LLC v. Concepcion preempted Maryland contract law regarding arbitration clauses.

The plaintiffs contracted with the defendants for the construction and purchase of a house located in Maryland. The contract contained an arbitration provision, stating that the buyer waived the right to a proceeding in a court of law. However, no mention was made of the seller waiving its right to a court trial.

A contract dispute arose regarding the plaintiffs' ability to obtain a mortgage, and the plaintiffs sought a refund of their US$77,008 deposit, as provided for in the contract. The defendants refused to comply, and the plaintiffs brought an action under the Class Action Fairness Act in the US District Court for the District of Maryland, on behalf of themselves and other home buyers around the nation who had lost deposits under similar circumstances.

Citing the contract's arbitration clause, the defendants filed a motion to dismiss or stay the plaintiffs' complaint, pending arbitration. The district court denied this motion. It ruled that under Maryland law, as articulated in Cheek v. United Healthcare, an arbitration provision is treated as a severable contact that must be supported by adequate consideration. As only the buyer/plaintiff was required to submit to arbitration in the present contract, consideration was lacking, and the arbitration clause was therefore unenforceable.

The defendants appealed, arguing that the district court did not address Concepcion, which held that the FAA preempted a state rule regarding class action waivers in consumer contracts, and that the Concepcion precedent should likewise preempt Maryland law.

In its February 26, 2013 decision, the Fourth Circuit distinguished the present case from Concepcion, and held that Maryland law controlled and the arbitration clause remained invalid. The court noted that the Concepcion decision concerned a state law that dealt with the unconscionability of class arbitration waivers in consumer contracts. The Concepcion decision analyzed the ways in which class-wide procedures interfere with the informality of arbitration, as well as the increased risk litigation poses to defendants.

In the present case, the Fourth Circuit distinguished Concepcion by noting:

Going forward, Maryland's Cheek rule remains in effect, and parties including arbitration clauses in their Maryland contracts should be sure that such clauses contain sufficient consideration to satisfy this requirement. The Fourth Circuit also demonstrated the limits of the Concepcion ruling, establishing that it will not use the precedent to preempt all state laws regarding arbitration clauses, merely laws that are in conflict with the principles of the FAA.