Hendricks v AT&T - Research Paper Example

? Hendricks v. AT&T of Parties The parties in this case were Patrick Hendricks of Alameda County who was the plaintiff acting for himself and others similarly situated. For the purposes of the suit the plaintiff was a customer of the defendant. The defendant was AT &T MOBILITY LLC’S a company incorporated under the United States law. The company provides a full range of wireless, data services, messaging to consumers and also enterprise customers. After Verizon AT & T mobility services is the second largest wireless data and voice carrier in the United States. American journal on wireless voice and data carriers, 2011, shows that the company gives its services to an estimated 95 million people nationwide. Summary of facts The plaintiff a customer of the defendants received an extra charge for his cell phone bill and from then on began to suspect the company was not doing things right. The plaintiff had subscribed for defendants offer low-end data plan. As per the plan he paid fifteen dollars per month for using 200 MB data for use in his i-Phone, which as the plaintiff claimed, he never surpassed. The plaintiff was however charged an extra 15 dollars in one of his monthly bills, for 23 MB data which was above his allotted 200. The plaintiff then started investigating the defendants. He hired an independent consulting firm to help him in the investigations. The investigations revealed that the defendant’s bill overstated systematically web server traffic by seven percent to fourteen percent for the i-Pad and i-Phone users. In some of the cases investigated it was found that that the web traffic could be even overstated by 300 percent. The consulting firm alleged to have taken a new i-phone and disabled all push notifications and the location services, did not configure to an email account and generally closed all the application. After ten days according to the defendant’s data plan the phone had allegedly used 2,292KB of data. The defendants denied the allegations. Proceedings and issue in the lower court The plaintiff on the same day he served the defendants with his law suit filed a motion for orders appointing as the interim co-lead counsel of the potential class (others affected by the overbilling). This was decided to be improper and premature and was denied. The court found the motion improper at that particular stage under the Federal Arbitration Act. This is because the defendants had already stated that he move the court seeking to compel the dispute to arbitration. In that case the plaintiff’s motion did not give the defendant time to determine whether the case should be taken to arbitration. The court founding was that the Federation Arbitration Act expressly precluded consideration of any matters of merits when arbitrarily had been raised. The defendant responded by filling a motion to compel arbitration of the dispute as per the terms of the arbitration provision in the wireless service agreement between the plaintiff and the defendant. The suits was filed in January was however stayed pending the Supreme Court’s ruling of in the conception case. After the ruling of the Supreme Court in the Conception Case, the complainant filed an amended complaint. The complaint included 5 causes of action. The main contentious issue at the hearing by the trial court was whether or not it was appropriate to compel the dispute between the parties to arbitration and stay of the case during arbitration. The defendant argued using the precedence of AT & T Mobility LLC v Conception and contended that the plaintiff could not in any way avoid arbitration. Lower court ruling and reasoning The trial court ruled in favour of the defendants and ordered that the matter be referred to arbitration. The plaintiffs appealed against this decision. In its ruling the court found that the contract governing the agreement between the defendant and the plaintiff contained an express provision referring any disputes between the parties to arbitration. The arbitration clause required that the disputes be resolved by arbitration in exclusion of the jury trial and class actions. According to the courts finding the clause barred class action which the plaintiff purported to institute against the defendants. The court further found that the plaintiff despite the contract language purported to bring a court suit against the defendants. Class action is whereby one person, who is affected by the acts of another person usually (organizations offering certain services), offers to sue for himself and on behalf of all other persons affected in a similar manner by the similar acts of the same person (Cheeseman, 2007). Law applicable The trial court in its ruling relied on the Federal Arbitration Act which provided that any agreement to take a commercial dispute to arbitration is “valid, irrevocable, and enforceable, save upon such grounds as exist at law or Equity for revocation of any contract.” The court found that the intention of the Act was to make the arbitration agreements have the same force as the other agreements or terms as a way of reversing the ages when the arbitration had no effect whatsoever. The trial court was guided by previous cases on the same matter. The court considered the case of Moses H. Cone Mem’I Hosp v Mercury Constr. Co, in which the Supreme Court emphasized that courts were always to refer matters to arbitration there was a positive assurance that the arbitration provision did not cover the matter in contention. The trial court also relied on the case of United Steel Workers of am v Warrior Gulf Navigation Co. In which it was ruled that only very forceful evidence excluding the claim for arbitration could prevail where there was no express provision excluding a particular dispute from arbitration. Whittaker j a dissenting judge found in the same case said that where there was a doubt as to application of arbitration clause, the case must be resolved in favour of arbitration. The court also relied on the case of AT&T v Comm’ns worker of Am, where the Supreme Court emphasized that arbitration was a contract matter and parties could not be compelled to submit to arbitration any dispute not covered by an arbitration clause. The Supreme Court quoted United Steel Workers case and decided that a court’s task in deciding applicability of arbitration in a particular issue was to determine whether the parties had agreed to have the dispute determined by arbitration. The decision in Simula, Inc v Autoliv Inc, was also considered by the trial court. In Simula it was held that the Act left no space for the courts to exercise any discretion in matters relating to arbitration agreements. The trial court also considered the provision of section 2 of the Federal Arbitration Act which provided that arbitration agreements would be unenforceable only on grounds that exist at Law and Equity. Before the enactment of Federal Arbitration Act, arbitration clauses on contracts had for a long time been treated as if they were not and had no effects whatsoever as parties could ignore them and take their disputes to the courts of law which despite the express arbitration clause would give its ears to the dispute (Nelson, 2006). Lower courts discussion The plaintiff put across four arguments against an order compelling arbitration. The court found that the plaintiffs did not meet the burden of proving that claims made arbitration unsuitable. The court discussed the plaints claims as follows; Excessive cost The primary argument advanced by the plaintiff was that the arbitration agreement was not enforceable as it would be too expensive for the plaintiff and it would hinder him from fighting for his rights. The plaintiff further asserted that despite the defendant it provided cost free arbitration there existed loopholes that helped the defendant to avoid paying arbitration fees which were that the defendant would allege that the customer was the one who breached the contract and secondly that whenever a customer claimed a big monetary relief the defendant could claim that the payment of cost was to be governed by the AAA rules. The court found that the plaintiff’s claims were not valid. The second loophole was not in the particular case according to the court as the defendant had expressly stated that they would pay filing fees, administration fees and arbitrators fees unless the claim was for an amount greater than $ 75,000 dollars or the plaintiffs case was found frivolous by the arbitrator. Unconscionability The plaintiff also argued that the arbitration argument was not enforceable as it was unconscionable. The argument was like a repackaging of the plaintiff’s former argument on fees. He even admitted as much. This failed for the same reasons as the first argument. The court found that unconscionability had both substantive and procedural components and both had to be present if a court would fail to enforce a contract on its basis. On Procedural unconscionability the plaintiff claimed that it began and ended with determination that the contract was adhesive. The defendants did not dispute this point. The court found that this was an accurate statement of law as was found in the Conception case. But there was no dispute that the contract was adhesive so the court found that it was minimally procedurally unconscionable. For the substantive unconscionability the plaintiff argued that that the agreement was unconscionable for three reasons. The plaintiff said that the agreement required him to pay excess fees and that it restricted his ability to grant of an injunctive relief under the UCL and the CLRA. Lastly the agreement prohibition of class suits combined with arbitral cost barred the plaintiff from seeking a suitable remedy. The plaintiff did not give further details nor did he cite any authority to this effect. The court relying on Armendariz Case found that an arbitral agreement was substantially unconscionable if it was very harsh a standard which the plaintiff failed to establish. Unclean hands The plaintiff’s third argument was that the arbitration agreement could not be enforced as it was based on unclean hands. The plaintiff provided four instances when the defendants repeated the deceptive and unequal conduct. The first was representing customers could initiate arbitration proceeding without paying the filing fee unless it was for injunctive relief when they were required to pay some money. The second was the defendant representing that they would pay fees for arbitrator, administration and filing and failing to do so. The second was failing to pay fees and thus AAA would refuse to provide an arbitrator. Lastly, defendants impairing of customers arbitration rights through intimidating and pressuring the AAA administrators to impede the progress on a customers demand. The court relying on the case of Vacco Industries Inc, found that a misconduct which brings in the doctrine of unclean hands had to directly relate to a matter in issue and also affect the equitable relations between litigants. Thus the misconduct that the plaintiffs claimed related to third parties and not the transaction in dispute and that did not affect the equitable relation between him and the defendant. The equity doctrine of unclean hands assists a party who has been affected by the act of unclean hand but not a part claim unclean hand affecting a third party (Halbert, Ingulli 2003) UCL and CLRA Claims The plaintiff lastly sought relief under the CLRA and UCL. The court found that this argument has failed in the Conception case. The plaintiff advanced several public policy claims stating reason why his claims under UCL and CLRA could not be arbitrated. The trail court relied on the ruling on Arellano case, where the judge ruled that FAA prompted California’s preclusion of any public injunctive reliefs, for at least the actions in Federal Courts. Thus the trial court dismissed the plaintiff’s argument. Conclusion The trial court ruled in favour of the defendants compelling the dispute to arbitration and staying the proceedings until the matter was resolved through arbitration. This was to make the arbitration clause in the party’s agreement effective. My recommendation is that the court’s ruling was appropriate. Parties should always be bound by their agreements and courts should not interfere with their contractual freedom by purporting to imply terms where expressly the contract states otherwise. The arbitration clauses for that matter are part of the agreement and courts have no power to strike them out as this will be interfering with the contractual freedom of parties. References Cheeseman. Henry. 2007. Business law. United States. Pearson prentice hall. Nelson, Brian. 2006. Law and ethics in global business. United States. McGraw Hill Professional. Halbert. Terry, Ingulli Elaine. (2003) Law & Ethics in the Business Environment. United States. Cengage learning. American journal on wireless voice and data carriers. 2011. New York. Elsevier publishers Read More