Alltel Corp. v. Rosenow
2014 Ark. 375
| Ark. | 2014Background
- Rosenow filed a class action against Alltel alleging deceptive trade practices and unjust enrichment over early-termination fees; class certification was ultimately granted on remand.
- Alltel moved to compel arbitration for customers served on or after May 1, 2004, relying on its Terms and Conditions containing an arbitration clause.
- Rosenow opposed, arguing Alltel waived arbitration, failed to show notice/assent, the clause lacked mutuality, and was unconscionable.
- The circuit court denied Alltel’s motion to compel arbitration in a second amended order, finding (among other bases) that the arbitration provision lacked mutuality and was unconscionable; it also found Alltel had not used arbitration as a sword.
- Alltel appealed arguing the clause was mutual and enforceable and that Arkansas’s mutuality requirement conflicts with the FAA; Rosenow cross‑appealed on waiver. The Supreme Court of Arkansas affirmed the denial on the ground that the arbitration agreement lacked mutuality; Rosenow’s cross‑appeal was moot.
Issues
| Issue | Plaintiff's Argument (Rosenow) | Defendant's Argument (Alltel) | Held |
|---|---|---|---|
| Whether a valid arbitration agreement exists (mutuality of obligation) | Agreement lacks mutuality because customers face broader liabilities and Alltel reserved rights (and historically sued rather than arbitrated) | Clause is facially mutual; both parties equally bound to arbitrate; parol evidence was inadmissible | Court held clause lacked mutuality because another contract provision and course-of-conduct gave Alltel an effective unilateral ‘‘out,’’ rendering the arbitration agreement unenforceable |
| Whether Alltel waived right to arbitrate by delayed invocation | Alltel waited long and acted inconsistently; waiver and prejudice to class | Delay caused by pending Supreme Court decisions; Alltel did not waive | Court did not decide waiver because lack of mutuality was dispositive (cross‑appeal moot) |
| Whether parol evidence may be considered to determine mutuality | Parol evidence admissible to show course of performance and dealings | Arbitration clause unambiguous; parol evidence should be excluded | Court affirmed mutuality holding without resolving admissibility of parol evidence, because lack of mutuality disposition made further inquiry unnecessary |
| Whether Arkansas mutuality rule conflicts with the Federal Arbitration Act (FAA) | Mutuality rule is a generally applicable contract doctrine; permissible under FAA | Requirement of independent mutuality singles out arbitration and conflicts with FAA; precedent should be overruled | Court held state mutuality analysis is a general contract doctrine permissible under the FAA and declined to overrule Arkansas precedent |
Key Cases Cited
- The Money Place, LLC v. Barnes, 349 Ark. 411 (Ark. 2002) (lack of mutuality renders arbitration agreement unenforceable)
- Tyson Foods, Inc. v. Archer, 356 Ark. 136 (Ark. 2004) (mutuality is required for enforceable contracts)
- Alltel Corp. v. Sumner, 360 Ark. 573 (Ark. 2005) (same contractual rules apply to arbitration agreements)
- Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681 (1996) (FAA preempts state rules that single out arbitration provisions for special treatment)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preempts state rules that make class‑waivers per se unconscionable when they interfere with arbitration)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (arbitrability questions generally are for courts to decide under ordinary state‑law contract principles)