Hendricks v. AT&T Mobility LLC

Filing 56

ERRATA re 53 MOTION for Leave to File Response to Objections to Declaration of Jan Mendel CORRECTED DECLARATION OF JAN MENDEL (WITH EXHIBITS) by AT&T Mobility LLC. (Ranlett, Kevin) (Filed on 10/19/2011)

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Donald M. Falk (CA Bar No. 150256)
[e-mail]
MAYER BROWN LLP
Two Palo Alto Square, Suite 300
3000 El Camino Real
Palo Alto, CA 94306-2112
Telephone: [phone]
Facsimile: [phone]
John Nadolenco (CA Bar No. 181128)
[e-mail]
MAYER BROWN LLP
350 South Grand Avenue, 25th Floor
Los Angeles, CA 90071-1503
Telephone:
[phone]
Facsimile:
[phone]
Attorneys for Defendant
AT&T Mobility LLC

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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Case No. CV 11-00409-CRB
PATRICK HENDRICKS, on behalf of himself
and all others similarly situated,
Plaintiff,

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vs.
AT&T MOBILITY, LLC,
Defendant.

SUPPLEMENTAL DECLARATION OF
JAN MENDEL IN SUPPORT OF
DEFENDANT AT&T MOBILITY LLC’S
MOTION TO COMPEL ARBITRATION
AND STAY CASE
Date: October 21, 2011
Time: 10:00 a.m.
Courtroom 8
Honorable Charles R. Breyer

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SUPPLEMENTAL DECLARATION OF JAN MENDEL IN SUPPORT OF DEFENDANT ATTM’S
MOTION TO COMPEL ARBITRATION AND STAY CASE; CASE NO. CV 11-00409-CRB

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I, Jan Mendel, hereby declare as follows:
1.

The following facts are of my own personal knowledge, and if called as a witness

I could and would testify competently as to their truth.
2.

I submitted a declaration in this case to respond to plaintiff Patrick Hendricks’s

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contention that AT&T Mobility LLC (“ATTM”) routinely prevents consumers from pursuing

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arbitration by refusing to pay the American Arbitration Association (“AAA”) for a consumer’s

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filing fee or other arbitration costs when required to do so by the arbitration provision in the

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consumer’s wireless service agreement.

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3.

In my earlier declaration, I explained that I am the Lead Discovery Manager with

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the AT&T Mobility LLC (“ATTM”) Legal Department and am involved with the resolution of

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customer disputes under ATTM’s arbitration provision. I also explained that, since ATTM

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committed itself to paying its customers’ share of arbitration costs in qualifying cases in mid-

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2003, ATTM had never prevented a customer from obtaining relief via the arbitration process by

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refusing to pay those costs, with the sole exception of the arbitration demands recently submitted

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by the law firm of Bursor & Fisher, P.A. seeking to enjoin the proposed AT&T/T-Mobile

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merger.

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4.

I have read Mr. Hendricks’s objection to my declaration, which asserts that I have

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not sufficiently explained how it is that I have personal knowledge of the facts in my declaration.

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I am submitting this supplemental declaration to respond to that objection.

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5.

To begin with, I have personal knowledge of ATTM’s arbitrations with

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consumers because, since I joined the Litigation Group in the summer of 2004, after having been

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hired by the Legal Department in August 2003, I have been tracking every such arbitration.

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Although my title has changed over time, I have been involved with the ATTM consumer

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arbitration program since joining the Litigation Group.

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6.

ATTM was previously known as Cingular Wireless LLC (“Cingular”). One of

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my first tasks when I joined the Litigation Group of the Legal Department was to track the then-

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pending consumer arbitrations brought under the then-current Cingular arbitration provision

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(which had been implemented in July 2003). And I have continued to track those arbitrations.
SUPPLEMENTAL DECLARATION OF JAN MENDEL IN SUPPORT OF DEFENDANT ATTM’S
MOTION TO COMPEL ARBITRATION AND STAY CASE; CASE NO. CV 11-00409-CRB

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Since late 2006, I have also been the designated person at ATTM to receive service of consumer

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demands for arbitration and to handle communications with the AAA about the arbitration

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program, including communications about billings for ATTM consumer arbitrations.

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In addition, I maintain or have access to records of ATTM’s arbitrations with

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consumers from mid-2003 to the present, including records of payments to the AAA and

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invoices from the AAA. According to those records, every invoice from the AAA during the

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relevant time period, with no exception of which I am aware or that I could find, was paid.

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Given my role in ATTM’s consumer arbitration program, I would have been

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aware of any attempt by ATTM since I joined the Litigation Group to prevent an arbitration from

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being administered by the AAA by deliberately refusing to pay the costs of that arbitration. For

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example, I would be aware if the AAA had terminated ATTM’s consumer arbitration program; I

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have been informed by the AAA that if a business were to fail to pay arbitration costs that the

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AAA concludes that the business owes, the AAA will refuse to administer any arbitrations for

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that business.

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In addition, it is my understanding that the AAA agrees that—with the sole

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exception of the recent arbitrations challenging the AT&T/T-Mobile merger filed by the Bursor

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& Fisher, P.A. law firm—ATTM consistently pays the costs of consumer arbitration. Attached

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as Exhibit 1 is a true and correct copy of a letter, which I retrieved from ATTM’s files, from Eric

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Tuchmann, the AAA’s General Counsel, to a lawyer representing an ATTM customer who had

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brought an arbitration under ATTM’s consumer arbitration provision.

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Tuchmann explained that the AAA had selected ATTM (among other companies) for a pilot

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program under which consumer cases would be accepted for administration even before the

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business had paid the fees because those companies had “historically complied” with their

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obligation under the AAA’s Consumer Due Process Protocol to pay those fees.

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10.

In the letter, Mr.

Finally, in my earlier declaration, I had noted that ATTM had paid the costs of

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arbitration even when the consumer had breached the arbitration provision by first filing a

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lawsuit in a court before initiating arbitration. I have personal knowledge of that fact because I

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also track consumer lawsuits against ATTM, including at least one that led to a consumer
SUPPLEMENTAL DECLARATION OF JAN MENDEL IN SUPPORT OF DEFENDANT ATTM’S
MOTION TO COMPEL ARBITRATION AND STAY CASE; CASE NO. CV 11-00409-CRB

EXHIBIT 1

EXHIBIT 2

Slip Copy
Slip Copy, 2007 WL 896349 (E.D.Ark.)
(Cite as: Slip Copy)

Davidson v. Cingular Wireless LLC
E.D.Ark.,2007.
Only the Westlaw citation is currently available.
United States District Court,E.D. Arkansas,Eastern
Division.
Barbara DAVIDSON, Plaintiff
v.
CINGULAR WIRELESS LLC, d/b/a Cingular
Wireless, Defendant.
No. 2:06CV00133-WRW.
March 23, 2007.

Brian David Reddick, Deborah Truby Riordan,
Wilkes & McHugh, P.A., Mark W. Nichols, Nichols
& Campbell, P.A., Little Rock, AR, for Plaintiff.
Philip E. Kaplan, Kaplan, Brewer, Maxey &
Haralson, P.A., Little Rock, AR, Seamus C. Duffy,
William M. Connolly, Drinker Biddle & Reath, LLP,
Philadelphia, PA, for Defendant.
ORDER
WM. R. WILSON, JR., United States District Judge.
*1 Plaintiff subscribes to wireless telephone service
provided by Defendant (“Cingular”). In her Amended
Complaint and Request for Class Action, she alleges
that Cingular has “consistently charged late payment
charges on past due accounts” that “are interest under
Arkansas law and violate usury provisions of Article
19, § 13 of the Arkansas Constitution.” FN1 Cingular
maintains that by obtaining service, Plaintiff agreed
to the arbitration agreement found in its Wireless
Service Agreement (“WSA”). Based on the WSA,
Cingular has filed a Motion to Compel Arbitration
(Doc. No. 10). Plaintiff has responded (Doc. No. 28
and 41).
FN1. Doc. No. 5.

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the case on May 14, 2003. FN2 The case was
remanded to state court after a hearing on September
3, 2003.
FN2.
Davidson
v.
Cingular,
No.
2:03CV00067-WRW (E.D.Ark. May 14,
2003).
Plaintiff amended her complaint on April 18, 2006,
adding a usury claim. Plaintiff argued that the late
fees charged by Defendant were usurious in violation
of Article 19, Section 13 of the Arkansas
Constitution. On May 17, 2006, Defendant filed a
second Notice of Removal.FN3 Plaintiff responded by
once again filing a Motion to Remand (Doc. No. 16).
After an October 11, 2006 hearing on the Motion to
Remand, the motion was denied by Order (Doc. No.
32) entered on October 12, 2006.
FN3. Doc. No. 1.
B. Factual
After the case had been remanded to the Phillips
County Circuit Court in 2003, Cingular moved to
compel Plaintiff to arbitrate her claims under the
terms of the WSA. Plaintiff objected, claiming that
she had never signed a WSA containing an
arbitration agreement. Plaintiff was right. Cingular
searched its records and located a WSA between
Plaintiff and Southwestern Bell Wireless (Cingular's
predecessor) that did not contain an arbitration
provision. Based on that finding, Cingular withdrew
its motion to compel arbitration, but did so “without
prejudice to its moving for arbitration in the future
should it discover that plaintiff has, in fact, signed a
contract containing an arbitration provision.” FN4
FN4. Doc. No. 11; See also Doc. No. 10-3.

I. Background
A. Procedural
This case was first filed on March 20, 2003, in the
circuit court of Phillips County, Arkansas, alleging
that Defendant engaged in deceptive and misleading
marketing and billing practices. Defendant removed

Before removal, on April 18, 2006, Plaintiff filed an
Amended Complaint, in which, Cingular argues, she
“purported to represent an entirely new class with
entirely new claims” and abandoned her “prior
challenges to Cingular's arbitration provision.” FN5
After receiving the Amended Complaint, Cingular
searched its records again looking for any WSA that
Plaintiff may have executed since the 2003 Motion to

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Slip Copy, 2007 WL 896349 (E.D.Ark.)
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Compel Arbitration had been withdrawn. Cingular
discovered that Plaintiff signed a WSA on July 12,
2004, in which she acknowledged having read the
agreement that included the following arbitration
provision:
FN5. Doc. No. 11.
Please read this carefully. It affects your rights.
Cingular and you ... agree to arbitrate all disputes and
claims arising out of or relating to this Agreement, or
to any prior oral or written agreement for Equipment
or services between Cingular and you.... You agree
that, by entering into this Agreement, you and
Cingular are waiving your right to trial by jury....
You and Cingular agree that YOU AND CINGULAR
MAY BRING CLAIMS AGAINST THE OTHER
ONLY IN YOUR OR ITS INDIVIDUAL
CAPACITY, and not as a plaintiff or class member in
any purported class or representative proceeding.
Further, you agree that the arbitrator may not
consolidate proceedings or more than one person's
claims, and may not otherwise preside over any form
of a representative or class proceeding.... FN6

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from both parties in a hearing held on March 16,
2007.
II. Standard of Review
The Federal Arbitration Act (“FAA”) was created to
establish “a liberal federal policy favoring arbitration
agreements.” FN10 As I noted at the March 16th
hearing, I doubt an informed general public would be
enthusiastic about giving up the right to trial by jury;
nevertheless, Congress has declared mandatory
arbitration to be the policy of the land-and the Courts
have honored this Congressional “finding.” In the
Eighth Circuit, arbitration is required if a valid
agreement exists and the dispute falls within the
scope of the agreement.FN11 The FAA mandates that
courts “shall direct parties to arbitration on issues to
which a valid arbitration agreement has been signed.”
FN12

FN10. Bob Schultz Motors, Inc. v. Kawasaki
Motors Corp., U.S.A., 223 F.3d 721, 724
(8th Cir.2003) (quoting Moses H. Cone
Mem. Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24 (1983)).

FN6. Doc. No. 10-2 (emphasis in original).
*2 Plaintiff renewed her service again on October 21,
2005 either over the phone or by computer; FN7
therefore, a signed WSA for October 21, 2005, does
not exist.FN8 Nevertheless, the arbitration provision in
the October WSA was identical to the one Plaintiff
signed in July 12, 2004.FN9
FN7. Doc. No. 11.
FN8. See Daisy Mfg. Co., Inc. v. NCR Corp.,
29 F.3d 389, 292 (8th Cir.1994) (Applying
Arkansas law to arbitration dispute, the
Eighth Circuit held that parties can become
contractually
bound
absent
their
signatures.); see also Genesco, Inc. v. T.
Kakiuchi & Co., Ltd., 815 F.2d 840, 846 (2d
Cir.1987) (citing 9 U.S.C. § 3) (Holding
that although the FAA requires a writing, it
does not require that the writing be signed
by the parties.).
FN9. Id.

FN11.
Casteel
v.
Clear
Channel
Broadcasting, Inc., 254 F.Supp.2d 1081,
1087 (W.D.Ark.2003) (quoting Lyster v.
Ryan's Family Steak Houses, Inc., 239 F.3d
943, 945 (8th Cir.2001)).
FN12. Id. (citing Dean Witter Reynolds, Inc.
v. Byrd, 470 U.S. 213, 218 (1985)).
Whether an arbitration agreement has been entered
into is a question of law, controlled by the applicable
state contract law.FN13 Arkansas law provides that the
essential elements of a contract are: (1) competent
parties; (2) subject matter; (3) legal consideration; (4)
mutual agreement; and (5) mutual obligations.FN14
FN13. Id.
FN14. Id. (citing Williamson v. Sanofi
Winthrop Pharm., Inc., 60 S.W.3d 428
(2001)).
III. Analysis

Based on these findings, Cingular has once again
moved to compel arbitration. Arguments were heard

Defendant maintains that the WSA agreed to by
Plaintiff governs this matter and requires arbitration.

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Defendant argues that the arbitration agreement in the
WSA is valid and written in compliance with the
FAA.FN15 Before determining whether the FAA
applies, the validity of the contract must first be
determined.FN16
FN15. 9 U.S.C. § 2.
FN16. Linville v. ConAgra, Inc., No.
1:04CV00004-WRW, 2004 WL 3167119
(E.D.Ark. May 19, 2004) (citing Lyster, 239
F.3d 943).
Arbitration agreements are governed by general
principles of contract law and determinations as to
their terms and limits are questions of law.FN17 A
threshold inquiry is whether an agreement to arbitrate
exists; that is, whether there has been mutual
agreement, with notice as to the terms and subsequent
assent.FN18 A court cannot make a contract for the
parties but can only construe and enforce the contract
that they have made.FN19 If there is no meeting of the
minds,FN20 there is no contract.FN21 Both parties must
manifest assent to the particular terms of the contract
in order for there to be a meeting of the minds.FN22
FN17. Alltel Corp. v. Sumner, 203 S.W.3d
77, 79 (2005).
FN18. Id. at 576-577.
FN19. Id.
FN20. I was taught in law school that
Corbin & Williston condemned the phrase
“meeting of the minds” because it suggested
an “outdated subjective theory of
contracts”-but since appellate courts
continue to use it apace, I'll use it.
FN21. Id.
FN22. Id. (citing Van Camp v. Van Camp,
969 S.W.2d 184 (1998)).
A. WSA
Plaintiff first argues that the there was no mutual
agreement; therefore, the WSA is not mutually
binding.FN23 Plaintiff contends her usury claims
cannot be brought in small claims court, which forces
her into arbitration. Even if Plaintiff were to arbitrate,
she argues the WSA “effectively precludes her from

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receiving any meaningful recovery” FN24 because of
the “hold harmless” provision which precludes
money damages only allowing injunctive relief. The
agreement also precludes indirect, special,
consequential, incidental, and punitive damages.
Finally, Plaintiff argues that the WSA lacks mutuality
because it disallows any consolidation of claims or
class actions.
FN23. Scherry v. A.G. Edwards & Sons,
Inc., No. 02-2286, 2003 U.S. Dist. LEXIS
11010, *10 (W.D. Ark. April 15, 2003)
(“[M]utuality of obligation is not required
for arbitration clauses so long as the contract
as a whole is supported by consideration.”).
FN24. Doc. No. 28-1.
*3 Plaintiff argues that the small claims provision
destroys any mutuality of obligation because
“Cingular has the option of pursuing all claims it
could possibly have against a customer in small
claims court” but subscribers cannot sue Cingular in
small claims court because “constitutional” and
“statutory construction” claims cannot be brought
there.FN25 Defendant argues that although Plaintiff's
claims arise from a consumer protection statute FN26
and the Arkansas Constitution, she is not challenging
their validity or questioning their “construction;”
instead, she is arguing that a portion of the contract is
usurious. However, the only limitations that currently
exist on small claims actions is that Plaintiff may not
be represented by counsel and can seek no more than
$5000. There is simply nothing currently in the law
that prevents Plaintiff from raising a contract claim in
small claims court-even if it alleges that a provision
of that contract is usurious.FN27
FN25. Doc. No. 29-1.
FN26. Plaintiff claims violations of the
Arkansas Consumer Trade Practices Act,
Ark.Code Ann. §
4-88-201-4-88-607
(Repl.2001 and Supp.2005).
FN27. Ark.Code Ann. § 16-17-206(a) and
Ark. Const. amend. 80, § 7 (small claims
courts have exclusive jurisdiction over in all
matters of contract where the amount of
controversy does not exceed $100, and it has
concurrent jurisdiction with circuit courts in
matters of contract where the amount in
controversy does not exceed $5,000).

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March 11, 2005).
Plaintiff cites several check cashing cases recently
decided by the Arkansas Supreme Court, in which it
struck down the arbitration provisions in form
contracts because there was a demonstrated lack of
mutuality of contract. FN28 “Mutuality of contract
means that an obligation must rest on each party to
do or permit to be done something in consideration of
the act or promise of the other; that is, neither party is
bound unless both are bound.” FN29 A contract,
therefore, that leaves it entirely optional with one of
the parties as to whether or not he will perform his
promise would not obligate the other.” FN30
FN28. See The Money Place, LLC v. Barnes,
78 S.W.3d 714 (2002), Cash in a Flash
Advance of Arkansas, LLC. v. Spencer, 74
S.W.3d 600 (2002); Showmethemoney
Check Cashers, Inc. v. Williams, 27 S .W.3d
361 (2000).
FN29. The Money Place, LLC v. Barnes, 78
S.W.3d 714, 716-717 (2002).
FN30. Id.

FN33. Id.
In 2006, Cingular amended the arbitration provision
of its WSAs. Every subscriber was sent a copy of the
revised arbitration provision in their December 2006
bills. The amended section was also posted on
Cingular's website. Plaintiff and her counsel received
a copy of the amendment.
*4 The 2006 arbitration provision allows subscribers
the exclusive right to choose the manner in which the
arbitration will be carried out: they can select an
in-person hearing, a telephone hearing, or a “desk”
arbitration decided solely on documents provided to
the arbitrator. If the subscriber is awarded greater
relief than Cingular's last written settlement offer,
“Cingular will ... pay [the subscriber's] attorney, if
any, twice the amount of attorneys' fees [the
subscriber's] attorney reasonably accrues for
investigating, preparing, and pursuing [the
subscriber's] claim in arbitration.” FN34
FN34. Doc. No. 34.

Cingular notes that the series of check-cashing cases
relied on by Plaintiff had arbitration agreements
which were facially unilateral; they required the
customer to submit all disputes to arbitration, while
the check casher reserved the right to seek judicial
redress. Cingular points that its WSA provides that
“either party” may seek relief before a small claims
court or before an arbitrator. Defendant cites an
Eleventh Circuit opinion, in which the court rejected
a mutuality argument like Plaintiff's, finding that
“[t]he promises are mutual: both parties are required
to arbitrate covered claims, and neither is required to
arbitrate non-covered claims.” FN31 Likewise,
Defendant maintains that it is equally required to
arbitrate, and is therefore mutually bound. I agree.FN32
“The arbitration clause at issue allows arbitration at
the election of either party. Therefore plaintiff as well
as defendant has the choice to require the other to
litigate and resolve any dispute by arbitration.
Accordingly, Plaintiffs lack of mutuality argument
fails.” FN33
FN31. Caley v. Gulfstream Aerospace
Corp., 428 F.3d 1359, 1378 (11th Cir.2005).
FN32. Evans, et al. v. Direct General
Insurance, No. 4:04CV00942 (E.D. Ark

Plaintiff argues that because the July 2004 WSA has
been amended, changed, and withdrawn, it is no
longer applicable. Cingular points out that it has
amended its WSAs to make them more
consumer-friendly and that by posting it on its
website, it has unilaterally made the 2006 arbitration
provision “the governing provision.” FN35 Plaintiff
maintains that she is not bound by any of the WSAs
because “there can be no mutual obligation when one
party to the agreement can unilaterally change the
terms of the arbitration provision.” FN36 Plaintiff
argues that a party's express reservation of the ability
to make a substantial, unilateral amendment to its
contract after the fact to improve its position in
litigation is itself unconscionable and should not be
enforced.FN37
FN35. Doc. No. 41.
FN36. Id. (quoting Asbury Automotive Used
Car Center, LLC v. Brosh, 364 Ark. 386
(2005) (“neither party to an arbitration is
bound unless both are bound.”)).
FN37. See Kinkel v. Cingular Wireless,
LLC, 857 N.E.2d 250 (Ill.2006).

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In response, Cingular argues that it cannot
unilaterally change its arbitration provision, but
submits that it can properly amend the other terms
and conditions of the WSA. If Cingular attempts to
amend the arbitration provision of the WSA, a
subscriber may, if they disagree with the amendment,
refuse to submit to the change. With millions of
subscribers, Cingular highlights the difficulty of
Plaintiff's suggestion that it should receive the
consent of each of its customer's to change its
contracts.
Cingular argues that assent to the terms of the WSA
was indicated by the continued use and benefit of its
cellular services.FN38 For a party to assent to a
contract, the terms of the contract must be effectively
communicated.FN39 Plaintiff argues that the terms
were not effectively communicated; therefore,
holding her to the terms would be unconscionable.
FN38. See Hill v. Gateway 2000, Inc., 105
F.3d 1147 (7th Cir.1997) (Court held that
plaintiff that ordered a computer over the
telephone, was bound by the terms and
conditions, which contained an arbitration
clause, that were included in the box with
the computer because he kept the
computer.).
FN39. Id. (citing Crain Indus., Inc. v. Cass,
810 S.W.2d 910 (1991)).
In response to Plaintiff's argument that she had no
knowledge of the arbitration provision or any choice
in entering into it, Cingular points out that it had
already filed a motion to compel arbitration 480 days
before Plaintiff opted to enter a Cingular store and
sign the July 14, 2004 WSA agreement. Cingular
asserts that it did not amend the terms and conditions
and “foist” them on Plaintiff as she contends; instead,
Cingular says she readily and voluntarily agreed to
them by signing the WSA. Furthermore, although
Plaintiff received the 2006 revision to the WSA
months ago, Cingular notes that “she has not chosen
to reject that provision, as she is free to do.” FN40

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B. Unconscionability
*5 An agreement to arbitrate is enforceable unless a
recognized
contract
defense,
such
as
unconscionability exists.FN41 Plaintiff, the party
opposing arbitration, has the burden of proving the
arbitration provision is unconscionable.FN42 The
Arkansas Supreme Court has adopted the following
test for determining unconscionability in contract
cases:
FN41. Doctor's Associates, Inc. v.
Casarotto, 517 U.S. 681, 686-687 (1996).
FN42. Pro Tech Industries, Inc. v. URS
Corp., 377 F.3d 868, 873 (8th Cir.2004).
In assessing whether a particular contract or
provision is unconscionable, the courts should review
the totality of the circumstances surrounding the
negotiation and execution of the contract. Two
important considerations are whether there is a gross
inequality of bargaining power between the parties to
the contract and whether the aggrieved party was
made aware of and comprehended the provision in
question.FN43
FN43. State ex rel. Bryant v. R & A Inv. Co.,
Inc., 985 S.W.2d 299, 302 (1999) (quoting
Arkansas Nat'l Life Ins. Co. v. Durbin, 623
S.W.2d 548, 551 (1981)).
When addressing the alleged unconscionability of an
arbitration agreements, courts have divided their
analysis into two categories: (1) procedural and (2)
substantive. “Procedural unconscionability refers to a
situation where a term is so difficult to find, read, or
understand that the plaintiff cannot fairly be said to
have been aware he was agreeing to it.” FN44 Courts
look to the circumstances surrounding the transaction
including the manner in which the contract was
entered into, whether each party had a reasonable
opportunity to understand the terms of the contract,
and whether important terms were hidden in a maze
of fine print.FN45

FN40. Doc. No. 44.
Based on the above, Cingular has established the
elements of contract exist under Arkansas law, and
that there was mutual assent to the terms through
Plaintiff's continued used of its services.

FN44. Kinkle v. Cingular Wireless LLC, 857
N.E.2d 250, 254 (Ill.2006).
FN45. Id.

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Substantive unconscionability looks to the actual
terms of the contract to see if they are one-sided.
Substantiative unconscionability includes questions
such as waiver of a class action, arbitration
provisions, and requirements to seek redress in small
claims court.FN46
FN46. Id.

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agreement.
In Iberia Credit Bureau,FN50 plaintiffs brought
putative class actions against several cellular
telephone service providers, including Cingular,
alleging that certain deceptive billing practices
constituted breaches of contract and violations of the
Louisiana Unfair Trade Practices Act. The action was
removed to federal court on the basis of diversity.

1. Procedural Unconscionability
Plaintiff argues that she should not be bound by “a
litany of ‘Terms and Conditions' which are buried on
the reverse of an invoice....” FN47 Plaintiff goes on to
argue that Cingular prepared its arbitration terms
“unilaterally from a grossly-superior bargaining
position.” FN48 Here, the contract is presented on a
“take-it-or-leave-it” basis; but, Cingular maintains
that Plaintiff had plenty of time to read and review
the contract and the arbitration provision was clearly
marked.

FN50. Iberia Credit Bureau, Inc. v.
Cingular Wireless, LLC., 379 F.3d 159 (5th
Cir.2004).
The plaintiffs in Iberia Credit attempted to prove
procedural unconscionability based on the contract's
fine print. The court of appeals found type size to be
a relevant consideration, but held that fine print alone
does not automatically mean that an arbitration clause
procedurally unconscionable, as long as the type used
in the arbitration provision is the same size as that
used in the rest of the contract.FN51

FN47. Doc. No. 28-1.
FN51. Id. at 172.
FN48. Id.
Plaintiff compares her case to Alltel Corp. v.
Sumner,FN49 in which Alltel sought to have a lawsuit
stayed and arbitration compelled arguing that the
plaintiffs had signed a service contract that included
an arbitration clause. In support of its motion, Alltel
filed an affidavit stating that according to Alltel's
practices and procedures, plaintiffs would have been
given the terms and conditions to the contract and no
service would have been provided until the terms and
conditions were in place. The trial court denied
Alltel's motion to compel arbitration stating that
Alltel offered insufficient proof that the arbitration
clause was communicated to the plaintiffs. The
Arkansas Supreme Court affirmed, holding that no
agreement to arbitrate existed because it had not been
shown that plaintiffs had received the agreement.
FN49. 203 S.W.3d 77 (2005).
*6 Plaintiff's reliance on Alltel is misplaced because
Plaintiff acknowledges that she signed a WSA on
July 12, 2004, and that its terms and conditions
appear on the reverse of the document. Furthermore,
the terms and conditions that appear on the reverse of
the WSA, and the reverse of the carbon copy she was
given for her records, contained a written arbitration

Defendant maintains that Plaintiff's argument that the
arbitration provision was “buried in fine print” is
unsubstantiated. The language of an arbitration
provision need only be as prominent as the language
in the rest of the contract; it need not be more
prominent and is not required to be separately
executed or initialed.FN52 In this case, the arbitration
provision is not less conspicuous but more
prominent. Arbitration is written in bold and in all
caps followed by the warning “Please read this
carefully. It affects your rights.”
FN52. Arkcom digital Corp. v. Xerox Corp.,
289 F.3d 536 (8th Cir .2002) (relying on
Doctor's Assocs., Inc. v. Casarotto, 517 U.S.
681, 687 (1996) (holding that § 2 of the
FAA preempted state statute that imposed
typography requirements on arbitration
notices)).
Defendant argues that although its WSA is a form
contract, such contracts are “an integral part of
modern commerce.” FN53 The use of a form contract,
alone, does not evidence unconscionability.FN54
Again, I agree with Defendant. The WSA is not
procedurally unconscionable, because Plaintiff had
time to consider the arbitration provision, she agreed

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to two more contracts since this case arose, and she
has not opted to reject the arbitration provision as
allowed in the 2006 revision. Finally, because the
2006 WSA was “effective on receipt” FN55 and
Plaintiff did not opt to reject the new WSA, the 2006
WSA governs.
FN53. Doc. No. 29-1.
FN54. See Geldermann & Company, Inc. v.
Lane Processing, Inc., 527 F.2d 571, 576
(8th Cir.1975 (“the fact that the provision is
part of a printed ‘form’ contract does not
render it automatically unenforceable....”).
FN55. Doc. No. 34, Ex. A.

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avoiding liability altogether.” FN58
FN58. Id. at 174.
The Iberia Court rejected plaintiffs' claim of
substantive unconscionability for many reasons, not
the least of which was that Cingular's arbitration
clause expressly permitted customers “to bring
inexpensive small-claims actions.” FN59
FN59. Id. at 175 n. 19.
Small claims actions in Arkansas, by definition,
prevent legal representation. FN60 However, a
subscriber could have an attorney if she opted to go
to arbitration.

2. Substantive Unconscionability
As previously stated, substantive unconscionability
depends on the actual terms of the contract; i.e., are
they one-sided? Plaintiff argues that the WSA is
substantively unconscionable because it precludes
class actions and damages.
Plaintiff alleges that because her claims are so small,
class litigation provides the most “economically
feasible avenue,” FN56 and that Cingular has
effectively protected itself against all potential
litigation. In sum, Plaintiff states:
FN56. Doc. No. 28-1.
... the bar of collective proceedings has the effect of
immunizing the Defendant from low-value claims, no
matter how meritorious those claims might be.
Cingular can, accordingly, wrong its customers with
impunity so long a it does not harm any particular
person to a degree that makes it worthwhile to pursue
an arbitration case-and even then, the hold harmless
provisions prevent any recovery.FN57
FN57. Id.
*7 In Iberia Credit, cited above, the Fifth Circuit also
addressed preclusions of class actions. The plaintiffs
in Iberia Credit argued that the bar on collective
proceedings had “the effect of immunizing the
defendants from low-value claims, no matter how
meritorious those claims might be,” and that the
arbitration clause was “not so much an alternative
method of dispute resolution” as it was “a system for

FN60. The district courts have the following
subject matter jurisdiction in civil cases:
exclusive in all matters of contract where the
amount of controversy does not exceed
$100, excluding interest, costs, and
attorneys' fees; concurrent with circuit
courts in matters of contract where the
amount in controversy does not exceed
$5,000, excluding interest, costs, and
attorneys fees; concurrent with circuit courts
in actions for the recovery of personal
property whose value does not exceed
$5,000; and concurrent with circuit courts in
matters of damage to personal property
where the amount in controversy does not
exceed $5,000, excluding interest and costs.
Arkansas Civil Practice and Procedure §
2-5.
In Hutcherson v. Sears Roebuck & Co.,FN61 the
Illinois Court of Appeals applying Arizona law,
found a provision in a credit card agreement that
required the claimant to choose between small claims
court or arbitration of any claim was not
substantively unconscionable. The agreement
provided that the claimant could not participate as a
representative or a member of a class of claimants.
The Hutcherson Court based its findings on the fact
that the arbitration provision containing the class
action waiver required the credit card company to
advance any fees required of the claimant by the
National Arbitration Forum and provided that the
claimant could not be required to refund the
advanced fees unless the arbitrator determined that
the claim was frivolous. Thus, the cost to the

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claimant of submitting a nonfrivolous claim to
arbitration would be minimal.
FN61. 793 N.E.2d 886 (Ill.App.2003).
The Illinois Court of Appeals reaffirmed the
Hutcherson decision in Kinkle v. Cingular Wireless,
LLC.FN62 In Kinkle, the Court, having reviewed case
law from around the country, noted a pattern-“a class
action waiver will not be found unconscionable if the
plaintiff had a meaningful opportunity to reject the
contract term or if the agreement containing the
waiver is not burdened by other features limiting the
ability of the plaintiff to obtain a remedy for the
particular claim being asserted in a cost-effective
manner.” FN63
FN62. 857 N.E.2d 250 (Ill.App.2006).
FN63. Id. at 274.
Plaintiff next argues that no ordinary consumer
should be expected to appreciate that punitive
damages are prohibited under the arbitration
agreement. Cingular responds that, although its
contracts once limited damages, the July 14, 2004
WSA signed by Plaintiff contains “only a general
limitation of liability that applies primarily to service
interruptions and personal injury claims.” FN64
Cingular argues the limitation only prevents
customers from recovering punitive damages when
the customer suffers as a result of the customer's use
or inability to use the service. Defendant contends
that the current WSA does not prohibit customers
like Plaintiff from recovering punitive damages.
Moreover, the limitation only applies if “applicable
law precludes parties from contracting to so limit
liability.” FN65
FN64. Doc. No. 29-1.

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permits subscribers to reject future substantive
changes to the arbitration provision.
B. FAA
In order for the FAA to apply, arbitration agreements
must meet two conditions: (1) they must be in
writing; and (2) they must be part of a “contract
evidencing a transaction involving commerce.” FN66
Cingular argues that both elements have been met.
The arbitration provision of the WSA is in writing,
and cellular phone service is a transaction in
interstate commerce.FN67
FN66. 9 U.S.C. § 2.
FN67. See United States v. Weathers, 169
F.3d 336, 341 (6th Cir.1999) (“It is well
established that telephones, even when used
intrastate, constitute instrumentalities of
interstate commerce.”).
Plaintiffs usury claims fall within the scope of the
agreement because it specifically encompasses “all
disputes and claims arising out of or relating to this
Agreement, or any prior oral or written agreement”
between the parties. FN68 When an arbitration
agreement is governed by the FAA and a dispute is
within its scope, the court must compel arbitration
and
stay
further
judicial
proceedings.FN69
“[Q]uestions of arbitrability must be addressed with a
healthy regard for the federal policy favoring
arbitration.” FN70 As a general matter, courts are
required to “rigorously enforce agreements to
arbitrate.” FN71
FN68. Doc. No. 10-2.
FN69. Ascension Orthopedics, Inc. v.
Curasan AG, No. A-06-CA-424, 2006 WL
2709058, *2 (W.D.Tex. Sept. 20, 2006).

FN65. Id.
*8 I find that the 2006 WSA (1) affords subscribers a
convenient arbitral forum, (2) requires Cingular to
pay the full cost of arbitrating any non-frivolous
claims; (3) permits subscribers to proceed in small
claims court if they prefer that means of dispute
resolution; (4) does not require confidentiality; (5)
does not prohibit punitive damages; (6) provides that
arbitration will be conducted under the procedures set
out by the American Arbitration Association; (7) and

FN70. ING Financial Partners v. Johansen,
446 F.3d 777, 779 (8th Cir.2006) (quoting
Moses H. Cone Mem'l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24 (1983)).
FN71. White v. J.C. Penney Co., Inc., No.
5-2977, 2006 WL 736965 (D.Minn. March
21, 2006) (quoting Shearson/American
Express, Inc. v. McMahon, 482 U.S. 220,
226 (1987)).

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IV. Conclusion
I find that Plaintiff entered into a valid contract under
Arkansas law, that a valid arbitration agreement
exists, and that the controversies in this case fall
within the scope of the arbitration agreement. All of
the elements required for a contract are present.
There is no evidence that Plaintiff did not enter into
the contract freely and intelligently. The contract and
the arbitration provision impose mutual obligations
and are not unconscionable.
The case administratively terminated. The parties
may reopen the case if necessary at the close of
arbitration. Defendant's Motion to Compel
Arbitration is GRANTED.
IT IS SO ORDERED.
E.D.Ark.,2007.
Davidson v. Cingular Wireless LLC
Slip Copy, 2007 WL 896349 (E.D.Ark.)
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EXHIBIT 3

EXHIBIT 4

EXHIBIT 5

EXHIBIT 6