211 F. Supp. 3d 500
E.D.N.Y2016Background
- Plaintiff Eve Wexler received unsolicited calls and text messages from AT&T (a separate AT&T company) beginning October 2014 and sued under the TCPA as a putative class action.
- Wexler had ordered service from AT&T Mobility, LLC in 2008 via Mobility’s website; she denies accepting the Mobility Service Agreement though she does not deny placing the order.
- Mobility’s Service Agreement (and a 2009 revision) included an expansive arbitration clause covering “all disputes and claims” and purporting to bind Mobility’s “subsidiaries, affiliates” and others, and stated the clause survives termination.
- Wexler’s Mobility contract expired in September 2014; she continued month-to-month service; Mobility says the Service Agreement (and arbitration clause) still governs.
- AT&T (the defendant) is an affiliate within the AT&T corporate family and made the U-verse calls/messages; Wexler’s TCPA claim concerns those communications and not Mobility services.
- The court denied AT&T’s motion to compel arbitration, concluding the arbitration clause was not enforceable as written because there was no mutual intent to arbitrate literally all disputes with affiliates.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wexler agreed to arbitrate her TCPA claim via Mobility’s arbitration clause | Wexler denies accepting the Service Agreement; her TCPA claim is unrelated to Mobility’s service | Mobility/AT&T say Wexler accepted the terms (online box and emailed Agreement) and the clause covers all disputes including claims against affiliates | Denied — no enforceable arbitration agreement for this dispute because no mutual intent to arbitrate literally all claims with affiliates |
| Whether clause’s breadth ("all disputes" and affiliates) is enforceable | Clause is overbroad and would produce absurd results; does not reasonably reflect assent | Clause’s plain language is clear and should be enforced objectively as written | Court treated overbreadth as formation issue: not enforced because a reasonable person would not expect to arbitrate every possible dispute with corporate affiliates |
| Whether state contract principles can defeat arbitration given FAA and Concepcion | FAA’s savings clause preserves contract defenses; overbreadth might be unconscionability | FAA and Concepcion favor enforcing arbitration clauses and preempt state rules that unduly restrict arbitration | Court avoided ruling unconscionability conflict with Concepcion and relied on lack of mutual intent (contract formation) — consistent with FAA consent principle |
| Whether Wexler’s TCPA claim "relates to" the Mobility agreement so as to fall within a reasonable arbitration scope | TCPA calls/texts came from AT&T about U-verse unrelated to Wexler’s Mobility service agreement | AT&T contends the phone/service relationship suffices to tie the claim to the Mobility agreement | Held that the TCPA claim is not reasonably related to Mobility’s service agreement and thus not covered |
Key Cases Cited
- Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (Sup. Ct. 1983) (FAA reflects a liberal federal policy favoring arbitration)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (Sup. Ct. 2010) (arbitration is a matter of contract; courts decide gateway issues unless parties clearly delegate)
- Granite Rock Co. v. International Bhd. of Teamsters, 561 U.S. 287 (Sup. Ct. 2010) (court must be satisfied parties agreed to arbitrate the dispute)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (Sup. Ct. 1995) (ordinary state-law principles govern formation questions about arbitration agreements)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (Sup. Ct. 2002) (distinction between procedural gateway questions for courts versus arbitrators)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (Sup. Ct. 2011) (FAA preempts state rules that unduly interfere with arbitration; class-action waiver enforceability)
- Smith v. Steinkamp, 318 F.3d 775 (7th Cir. 2003) (illustrates absurd results from arbitration clauses untethered to the underlying agreement)
- Volt Info. Scis., Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 (Sup. Ct. 1989) (arbitration under the FAA is based on consent, not coercion)