Arbitration & Mediation

AT&T Wireless / iPhone Arbitration, Class Action Waiver Upheld in Middle District of Florida

By Christopher B. Hopkins, Esq.

We previously commented on the AT&T Mobility Wireless Service Agreement which comes with most AT&T Wireless (formerly Cingular) plans, including the iPhone. Since its inception in mid-2007, both the original and 3G iPhone have always required AT & T service as well as arbitration and class action waivers, although the contract language has changed over time. The terms are quite unique and, as AT&T own lawyers wrote in their brief, the phone company proclaims their dispute resolution program as "more pro consumer than any other arbitration provision in the country."

Florida courts seem to agree. In Lourdes Cruz, Paul Flaherty, Jr., and Curtis Smith v. Cingular Wireless, LLC n/k/a AT&T Mobility, LLC, Judge John E. Steele of the Middle District of Florida gave both the arbitration and waiver of class action rights the big thumbs up. Indeed, there was some fairly strong, similar precedent from the Eleventh Circuit and even the Fourth DCA on the state court side.

AT&T has a Wireless Service Agreement which makes reference to a separate Terms and Conditions booklet, which describes the dispute resolution (arbitration), attorney's fees, and class action waiver. Of note, we previously used the bluish hue of our iPhone to cast some light on the Terms of Service in this prior post. Some unusual provisions in there, including a term that the consumer gets either AT&T's last offer or $5,000, whichever is higher and double attorney fees if the consumer wins a small amount.

Using the FAA, the Middle District plowed down the fertile field of unconscionability and public policy cases, picking out the precendential weeds of aborted arbitration clauses and seeds of enforced class action waivers.

The analysis rested on whether Florida's Deceptive and Unfair Trade Practice Act (FDUTPA) states or implies class action rights since it was enacted to protect the "consuming public." The 4th District, in state court, previously said that the statute did not grant such sweeping rights in Fonte v. AT&T Wireless Services, which, ironically enough, enforced a prior (apparently not-as-consumer friendly) version of the agreement at issue in this case.

There were some prior federal cases in Florida which were also examined. In S.D.S. Autos, Inc. v. Chrzanowski, the First DCA struck down a class action ban because it tripped up a unique provision in FDUTPA which dealt only with car dealers (F.S. 501.976 instead of the "normal" FDUPTA claim provision, Florida State 501.204).

The Middle District noted the case of Jenkins v. First American Cash Advance of Georgia, where the 11th Circuit in 2005 said that "class action waivers do not necessarily choke off the supply of lawyers willing to pursue claims on behalf of debtors." We do not know it was an oversight, but the Middle District could have turned to its brethren in the Southern District's Rivera v. AT&T opinion (admittedly not precedent, but gave a similar overview of the Jenkins case).

The plaintiffs also claimed that arbitration would some how shroud AT&T's FDUTPA misdeeds if arbitration was enforced however the court noted that there was no confidentiality requirement.

Finally, the Middle District noted that the Eleventh Circuit shot down arbitration and class action waiver in Dale v. Comcast, but distinguished that case since there was a bar to attorney's fees which defeated a purpose of FDUTPA.

Not mentioned in the opinion was a prior ruling from the Middle District in Sanders v. Comcast, which we previously haled as one of the big decisions of 2008 (again, not precedent, but it would be a reliable and consistent citation from within the same district). Our case today may stand in the shadow of Sanders in terms of scope, but who knows which will travel up the appellate ladder.

Full post as published by Florida Arbitration Law on November 10, 2008 (boomark / email).