delivered the opinion of the court:
William Ramette filed a class action lawsuit against AT&T based on AT&T’s decision to charge its customers $1.50 per month to continue receiving their long-distance telephone bills with their local service telephone bills. Ramette alleged that the fee was imposed without any disclosure from AT&T that it would send a separate long-distance bill at no charge. The imposition of this fee closely coincided with the first-ever contract between AT&T and its customers, the “Consumer Services Agreement” (CSA). Previously, the relationship between AT&T and its customers was governed by tariffs filed with the Federal Communications Commission (FCC).
AT&T moved to compel arbitration of the claims pursuant to the CSA’s arbitration provision. Ramette argued that the legal remedies provisions of the CSA, including the arbitration provision, were unconscionable under Illinois law. The circuit court granted AT&T’s motion to compel arbitration, finding that the Federal Communications Act (47 U.S.C. § 203 (2000)) preempts all state-law challenges to the enforcement of the arbitration clause. The circuit court also found the CSA was not unconscionable as a matter of law. Ramette filed an interlocutory appeal on December 23, 2002, pursuant to Supreme Court Rule 307 (188 Ill. 2d R. 307).
BACKGROUND
Prior to 1996, pursuant to the Federal Communications Act (FCA), the FCC required long-distance providers to file tariffs detailing the terms and cost of telephone service (47 U.S.C. § 203 (2000)). The tariffs then governed the relationship between the telephone service provider and its customers. Under the “filed tariff doctrine,” customers were bound by the terms of the tariff even if they had never seen the tariff, and even if the customer had been promised services with different rates, terms, or conditions. Boomer v. AT&T Corp.,
The Telecommunications Act of 1996 (47 U.S.C. § 160 (2000)) amended the FCA. The amendment expressly granted the FCC the authority to forbear from applying the tariff-filing requirement. The Telecommunications Act of 1996 allowed the FCC to exempt carriers from the tariffing requirements (47 U.S.C. § 160(a) (2000)). Accordingly, the FCC ordered mandatory detariffing. Detariffing meant that the rates, terms, and conditions of long-distance service would be governed by individual contracts between the service provider and the customer, rather than through tariffs filed with the FCC. The carriers were required to provide customers with notice of the rates, terms, and conditions of service, and to offer customers service under such terms and conditions. Boomer,
In May 2001, AT&T began mailing the CSA to its customers. AT&T mailed each customer three documents: the CSA, a letter explaining the reasons the CSA was being sent, and a list of anticipated frequently asked questions with explanatory responses (collectively CSA Mailing). The CSA Mailing was sent to Ramette in June 2001, in an envelope that was separate from his monthly bill. On the outside of the envelope was typed: “ATTENTION: Important information concerning your AT&T service enclosed.”
The cover letter and sheet of frequently asked questions specifically highlighted that the CSA contained a mandatory arbitration provision. The cover letter explained to customers that the CSA contained “[a] new binding arbitration process which uses an objective third party rather than a jury for resolving any disputes that may arise.” The cover letter also informed customers that their AT&T service or billing would not change. The CSA Mailing provided a method for customers to reject the terms offered by AT&T. The customer was provided a toll-free number to call to cancel his AT&T services. The CSA Mailing informed customers that they would accept the terms of the CSA agreement by continuing to use AT&T services.
The CSA included a section entitled “Legal Remedies Provisions.” Section 7 of the CSA mandated binding arbitration and bans all class-wide dispute resolution. This section began in bold and capitalized text: “IT IS IMPORTANT THAT YOU READ THIS ENTIRE SECTION CAREFULLY. THIS SECTION PROVIDES FOR RESOLUTION OF DISPUTES THROUGH FINAL AND BINDING ARBITRATION BEFORE A NEUTRAL ARBITRATOR INSTEAD OF IN A COURT BY A JUDGE OR JURY OR THROUGH CLASS ACTION. YOU CONTINUE TO HAVE CERTAIN RIGHTS TO OBTAIN RELIEF FROM A FEDERAL OR STATE REGULATORY AGENCY.” Following this bold language, the agreement explained that all disputes must be resolved by arbitration, unless the consumer chooses to bring an eligible dispute in small claims court or before a regulatory body, like the FCC.
In 2001, AT&T also sent Ramette and other customers a letter informing them of billing options. The letter explained that customers could continue to receive their long-distance bill with their local service bill at a cost of $1.50 per month, or the customer could elect to receive his or her bill on the Internet at no charge. This letter did not inform customers that AT&T would mail a separate bill at no charge. The additional-charge alternative was the default option, and AT&T began charging Ramette $1.50 each month as a “Bill Statement Fee.”
Ramette did not contact AT&T to cancel his services. Instead, Ramette filed a class action complaint for restitution and damages under common law and the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2000)). AT&T moved to stay the action and compel arbitration on a nonclass basis. Ramette argued that enforcement of the CSA’s legal remedies provision would leave him without a forum for his claims and that this rendered the arbitration clause unconscionable and unenforceable.
Shortly before oral argument on the motion to compel arbitration, the Seventh Circuit decided Boomer,
On appeal, Ramette argues that the circuit court erred in granting AT&T’s motion to compel arbitration.
ANALYSIS
I. The Federal Communications Act and Preemption
Pursuant to the supremacy clause of the United States Constitution, federal law can preempt state laws that interfere with or are contrary to federal law. U.S. Const., art. VI, cl. 2. Congress’ purpose “ ‘is the ultimate touchstone’ of preemption analysis.” Cipollone v. Liggett Group, Inc.,
The principal issue, that of preemption, is a question of law, which is reviewed de novo. Cress v. Recreation Services, Inc.,
Both the Seventh Circuit and the Ninth Circuit have addressed the relationship between the FCA and the exact CSA arbitration provision at issue in the instant case. The main contention between the parties is which decision should be followed. In Boomer,
Section 201(b) of the FCA provides:
“All charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful.” 47 U.S.C. § 201(b) (2000).
Section 202(a) provides:
“It shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or service for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.” 47 U.S.C. § 202(a) (2000).
In Boomer, a class action suit was filed against AT&T, alleging that it overcharged customers for contributions to federal universal service funds. Boomer,
The Seventh Circuit considered whether Boomer’s state-law challenges to the validity of the arbitration clause were preempted by the FCA. Boomer,
Second, the Seventh Circuit found: “[A] state law challenge to an arbitration clause (or for that matter a provision prohibiting class actions) not only affects the uniformity of that term, but it also threatens to destroy the consistency of rates offered consumers throughout the United States. As we recognized in [Metro East Center for Conditioning & Health v. Qwest Communications International, Inc.,
The Seventh Circuit’s third reason for finding preemption was based on Section 201(b): “[I]t is clear from Section 201(b) that Congress intended federal law to govern the validity of the rates, terms and conditions of long-distance service contracts. *** [T]hat section requires all charges and practices related to communication service to be just and reasonable, and it declares unlawful any unjust or unreasonable charges or practices. 47 U.S.C. § 201(b). This language demonstrates Congress’s intent that federal law determine the reasonableness of the terms and conditions of long-distance contracts. [Citations.] While Boomer challenges the arbitration clause under the state law doctrine of unconscionability and various state consumer protection statutes, in essence the question is the same — whether the term is fair and reasonable. Permitting such state law challenges would open the door for direct conflicts between federal and state law on the validity of terms and conditions contained in a long-distance service contract.” Boomer,
The Seventh Circuit concluded: “In sum, in passing the Communications Act Congress sought to ensure that consumers would receive uniform rates and that consumers would not be discriminated against based on their locality. Allowing state law challenges to the validity of the terms and conditions contained in long-distance contracts, however, results in the very discrimination Congress sought to prevent. Moreover, the arbitration clause serves to lower customers’ rates, and thus an indirect result will be price discrimination, either directly or indirectly (i.e. because customers paying the same price receive different contractual rights). Finally, Section 201(b) clearly demonstrates Congress’s intent that federal law determine the fairness and reasonableness of contractual terms, as opposed to state law principles such as unconscionability.” Boomer,
In Ting, a class action suit was filed against AT&T, alleging that provisions in AT&T’s CSA violated California contract and consumer protection laws. Ting,
Accordingly, the Ninth Circuit disagreed with the Seventh Circuit’s decision in Boomer: “In the post-tariff environment, we find no reason to imply a conflict between otherwise complementary state and federal laws. In deregulated markets, compliance with state law is the norm rather than the exception. Congress recognized as much in authorizing forbearance authority and in emphasizing competition in the 1996 Act.” Ting,
The Seventh Circuit has directly answered the question of whether the FCA preempts Illinois law. Reading sections 201(b) and 202(a) together, the Seventh Circuit held that the FCA preempts state-law challenges to the enforcement of AT&T’s arbitration clause. Ramette, citing to Weiland v. Telectronics Pacing Systems, Inc.,
Ramette urges this court to reject the Seventh Circuit’s decision in Boomer as incorrect. He argues that Illinois law is consistent with the purpose and objectives of section 201 of the FCA, requiring “All charges, practices, classifications, and regulations *** shall be just and reasonable.” 47 U.S.C. § 201(b) (2000). Ramette disagrees with Boomer’s assertion that section 201(b) cannot be satisfied if arbitration provisions were declared illegal under state law. Ramette contends that the federal and state laws do not conflict but, rather, complement each other. Ramette alleges that AT&T could enter into just and reasonable contracts that comply with state consumer protection and contract laws. However, Ramette fails to recognize the purpose of the FCA was to advance uniformity in telecommunication services. Allowing state-law challenges to the CSA would create a diversity in terms and conditions of service.
We determine what deference, if any, is due to the Seventh Circuit decision in Boomer. The history of deference given to the federal courts was recently reviewed in Mekertichian v. Mercedes-Benz U.S.A., L.L.C.,
“In Wilson, our supreme court followed the Seventh Circuit’s interpretation of the Federal Employers’ Liability Act (45 U.S.C. § 51 et seq. (1994)). In its decision, the court stated that ‘federal decisions are considered controlling on Illinois state courts interpreting a federal statute’ because the federal statute must be given uniform application. [Wilson v. Norfolk & Western Ry. Co.,187 Ill. 2d 369 , 383,718 N.E.2d 172 (1999)]. Were the Illinois Supreme Court to adopt a rule contrary to that of the Seventh Circuit, the viability of a claim under a federal statute could turn on whether the action was filed in federal or state court. Wilson,187 Ill. 2d at 383 ,718 N.E.2d at 179 .
Six months later, however, in [Weiland,188 Ill. 2d 415 ,721 N.E.2d 1149 ], our supreme court determined that it need not follow Seventh Circuit precedent interpreting a federal statute for three reasons — the United States Supreme Court had not ruled on the issue, there was a split of authority among the federal circuit courts of appeals, and the court believed that the controlling Seventh Circuit decision was wrongly decided. Weiland,188 Ill. 2d at 423 ,721 N.E.2d at 1154 . In an apparent attempt to reconcile the Wilson and Weiland decisions, the court then stated in Sprietsma v. Mercury Marine,197 Ill. 2d 112 ,757 N.E.2d 75 (2001), reversed on other grounds,537 U.S. 51 ,154 L. Ed. 2d 466 ,123 S. Ct. 518 (2002):
‘Although we have stated in the past that the decisions of federal courts interpreting a federal statute are controlling on Illinois courts [citation], this overstates the degree of deference this court must pay to federal decisions. Thus, in [Wilson], we elected to follow the precedent of the Seventh Circuit with regard to its interpretation of the Federal Employer’s Liability Act (FELA) (45 U.S.C. § 51 et seq. (1994)), because we found the Seventh Circuit analysis to be “reasonable and logical.” More recently, however, we declined to follow Seventh Circuit precedent in a case involving a preemption issue under FELA when there was a split of authority among the federal circuits and we believed the Seventh Circuit case was wrongly decided. [Citation], Nevertheless, as we have repeatedly recognized, uniformity of decision is an important consideration when state courts interpret federal statutes. [Citations.] *** In the absence of a decision of the United States Supreme Court, which would definitively answer the question presented by this case, we elect to give considerable weight to the decisions of federal courts of appeals and federal district courts that have addressed this issue.’ *** Sprietsma,197 Ill. 2d at 119-20 ,757 N.E.2d at 80 .
Accordingly, federal circuit court decisions are considered persuasive, but not binding on us or our supreme court in the absence of a decision by the United States Supreme Court as recognized in Sprietsma.” (Emphasis omitted.) Mekertichian,347 Ill. App. 3d at 834-35 ,807 N.E.2d at 1170-71 .
In light of the split in authority between the Seventh Circuit and the Ninth Circuit, we look to see which decision is more reasonable and logical. We find Boomer to be persuasive in its logic and reasoning. Boomer has also been followed outside the Seventh Circuit. In re Universal Service Fund Telephone Billing Practices Litigation,
At oral argument, Ramette argued that Universal Service held that state-law challenges to arbitration agreements are authorized by the Federal Arbitration Act (9 U.S.C. § 1 et seq. (2000)) (FAA) and the FCA cannot preempt the right to challenge an arbitration agreement. The court did find that the FAA allows a plaintiff to raise procedural unconscionability challenges to the enforceability of an arbitration clause, and these arguments are not preempted by the FCA. Universal Service,
“This court certainly agrees with the aspect of the Seventh Circuit’s holding in Boomer that the FCA’s uniformity principle survived detariffing. *** The FCA’s uniformity or nondiscrimination principle is embodied in § 202(a), [Western Union Telegraph Co. v. Esteve Brothers & Co.],256 U.S. 566 , 571,41 S. Ct. 584 ,65 L. Ed. 1094 (1921) (citing the predecessor to § 202(a) as establishing the uniformity principle); [North American Phillips Corp. v. Emery Air Freight Corp.],579 F.2d 229 , 232 (2nd Cir. 1978) (explaining that the purpose of § 202(a) was to establish a uniformity of rates in all interstate transactions), and therefore the Congressional objective of achieving uniformity in rates, terms, and conditions of service remains in full force notwithstanding detariffing.
Applying the laws of all fifty states to defendants’ interstate long distance service contracts would impede the Congressional objective of achieving this uniformity. If courts were to apply all of those various laws, the result would be that no uniform body of federal law would emerge to guide long distance carriers such as AT&T and Sprint in attempting to ascertain the lawfulness of the provisions in their service agreements. Instead, they would be left to guess whether each provision passes muster under the laws of all fifty states. *** Thus, the lack of uniformity in the laws of all fifty states will in fact ultimately impede the Congressional objective of uniformity. Carriers such as defendants should be entitled to rely on uniform federal standards when determining how to fashion their service agreements. Application of a uniform federal standard, not application of the various fifty states’ laws, will further the Congressional objective of achieving uniformity in long distance carriers’ service contracts.” Universal Service,300 F. Supp. 2d at 1119-20 .
Universal Service does not support Ramette’s position but, rather, reinforces AT&T’s argument and Boomer's holding that there must be uniformity in service contracts. However, as Universal Service stresses, the FCA preemption is not absolute. Universal Service,
In the instant case, the challenge to the actual arbitration clause is a challenge to neither the formation nor to the breach of the CSA. Rather, Ramette is claiming that the arbitration clause, by its very inclusion, is unfair and should not be enforced. As such, the arbitration clause is a term and condition of services, which is governed by the FCC. As Universal Service noted, substantive unconscionability challenges involve arguments that the terms and conditions of the CSA are unjust and unreasonable. Universal Service,
Furthermore, Ramette does not dispute that AT&T mailed the CSA to him, that he received it, and that he accepted its terms by continuing to use AT&T’s services. Thus, he does not argue that there was no offer, no acceptance, no reasonable opportunity to reject, and no consideration. Accordingly, we find the challenge to be a substantive unconscionability challenge. Therefore, the challenge to the arbitration clause can be brought only through the proper federal procedure because state challenges are preempted by the FCA.
We agree with Boomer and Universal Service, that the congressional objective of achieving uniformity in rates, terms, and conditions of service survived detariffing. Allowing state challenges would impede the congressional objective of achieving uniformity in telecommunication services. AT&T would be faced with different laws from different states and would have no uniform body of federal law to follow in proposing services and contracts. This would frustrate the congressional purpose of uniformity. Furthermore, state-law challenges would destroy the consistency of rates and cause discrimination. Customers in some states would be bound by an arbitration agreement that would not bind customers in other states. We find the congressional objective of achieving uniformity sufficiently strong. Therefore, we follow the reasoning in Boomer, and find that the FCA preempts Ramette’s state-law unconscionability challenge to AT&T’s arbitration clause.
II. Unconscionability
Both parties agree that in the absence of preemption Illinois law governs the unconscionability issue. However, because we have decided that according to Boomer, the FCA preempts Ramette’s state-law challenge to this arbitration clause, we need not address the merits of Ramette’s unconscionability claim.
Even if we were to find Ramette’s challenge to the arbitration clause to be procedural in nature, and thus not preempted by the FCA, under Illinois law, we would affirm the circuit court’s decision. The legal remedies provision and, specifically, the arbitration provision are not procedurally unconscionable. Ramette received the CSA in an envelope that was separate from his monthly bill, which stated “ATTENTION: Important information concerning your AT&T service enclosed.” The CSA Mailing included a cover letter and sheet of frequently asked questions that specifically highlighted that the CSA contained a mandatory arbitration provision. The arbitration provision contained a conspicuous paragraph in capital letters and bold text, notifying Ramette and other AT&T customers that they were relinquishing their right to bring claims in court. The CSA Mailing provided a method for customers to reject the terms offered by AT&T. Ramette had the option to call a toll-free number and cancel his services with AT&T. Customers were clearly informed that they would accept the terms of the CSA by continuing to use AT&T services. Ramette did not cancel his AT&T service and accepted the terms of the CSA by continuing to use his AT&T service. Illinois courts have enforced arbitration clauses under similar circumstances. See Rosen v. SCIL, LLC,
Furthermore, under Illinois law, “[blefore a contract or clause will not be enforced, it must be found to be both procedurally and substantively unconscionable.” Rosen,
Under the FCA, provisions must be just and reasonable. 47 U.S.C. § 201(b) (2000). Therefore, Ramette must pursue his unconscionability argument as an “unjust and unreasonable” argument under the federal requirements. Section 207 of the FCA provides that any person alleging damage by a common carrier can file a complaint with the FCC. 47 U.S.C. § 207 (2000). Section 208 similarly allows that any person complaining of an act or omission by a common carrier may apply to the FCC by petition. 47 U.S.C. § 208 (2000). A statement of the complaint will be forwarded by the FCC to the common carrier, who must satisfy the complaint or answer the complaint in writing to the FCC. 47 U.S.C. § 208 (2000).
Therefore, any relief Ramette believes he is entitled to must begin with a complaint to the FCC. See Boomer,
CONCLUSION
For all of the foregoing reasons, we affirm the decision of the circuit court.
Affirmed.