Campbell v. SI Wireless, LLC et al
Filing
13
ORDER DENYING 10 Motion to Dismiss for Improper Venue, or in the Alternative, to Compel Arbitration. Signed by Judge Nancy J. Rosenstengel on 9/5/2017. (jkb2)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
ANDREA CAMPBELL, individually and )
on behalf of all others similarly situated, )
)
)
Plaintiffs,
)
)
vs.
)
)
SI WIRELESS, LLC, and DOES 1-25,
)
)
Defendants.
Case No. 3:16-CV-1320-NJR-SCW
MEMORANDUM AND ORDER
ROSENSTENGEL, District Judge:
Defendant SI Wireless’s Motion to Dismiss for Improper Venue or, in the
Alternative, to Compel Arbitration (Doc. 10) is pending before the Court. For the reasons
set forth below, the Motion to Dismiss is denied.
FACTUAL AND PROCEDURAL BACKGROUND
In November 2014, Andrea Campbell entered into a service agreement with
SI Wireless, LLC (d/b/a MobileNation) to obtain a telephone line. (Doc. 11-1, pp. 4-8;
Doc. 12, p. 2). The original agreement did not contain an arbitration clause or class action
waiver. (Doc. 11-1, pp. 1-3). The contract, however, did contain the following provision:
Your service is subject to our business policies, practices, and procedures,
which may need to change without notice. Unless otherwise prohibited by
law, we can also change prices and any other conditions in this agreement
at any time by sending you notice prior to the billing period in which the
changes would take effect. If you choose to use your service after we send
you the notice of changes, you accept the changes. However, you can end
the affected service, without any early termination fee, by contacting us
within 30 days after we send you the notice of change.
(Doc. 11-1, p. 2).
Page 1 of 8
SI Wireless amended its Terms and Services to add a paragraph entitled
“ARBITRATION/WAIVER OF CLASS ACTION” on August 24, 2015. (Doc. 11-1, pp.
2-3). The Arbitration Clause states:
20. ARBITRATION/WAIVER OF CLASS ACTIONS. Most customer
concerns or disputes can be resolved through our customer service
representatives. However, if either of us has an issue which cannot be
resolved without third party intervention, you and we both agree to
submit to binding arbitration before the American Arbitration Association.
This means that all disputes arising from or relating in any way to your
Services, whether under these Terms & Conditions or not, will be
resolved through arbitration, not in court or through judge or jury.
Moreover, to the fullest extent allowed by law both of us agree to waive
any rights to pursue a claim arising from or relating to these Terms &
Conditions or the Services as a class action; that is, you or we will not join a
claim with the claim of any other person or entity or pursue a claim on
behalf of any other person or entity. The arbitration shall take place in
McCracken County, Kentucky or Madison County, Tennessee, at your
option. The waivers in this section continue in force and effect after the
termination of this agreement. Only actions relating to failure to timely
pay billed charges, such as service charges and related fees and taxes
(collection claims), may be brought in a court; provided that all such
actions will be brought in small claims or another court with jurisdiction;
and further provided that if any counterclaims or claims unrelated to
collection are asserted in the action by any party then the case shall be
transferred to arbitration.
(Doc. 11-1, pp. 2-3) (emphasis added).
To notify customers of this modification to the contract, SI Wireless purportedly
sent the following text message on either August 24 or August 25, 2015:
SMS: MobileNation Updated Terms and Policies – Please review by
visiting http://mymobilenation.com/terms/ Thanks for being a
MobileNation member.
(Doc. 11-1, p. 2).
Page 2 of 8
In her Memorandum in Opposition, Campbell asserts the link provided in the text
message did not actually connect to the arbitration clause language. (Doc. 12, p. 6).
Rather, it linked to a page titled “Policies & Terms” that contained two paragraphs
relating to “Network Management” and “Surcharges.” (Doc. 12, p. 6; Doc. 12-1, p. 2).1
Further, Ms. Campbell states she does not recall ever seeing this text message or the
arbitration clause language. (Doc. 12, p. 3).
About nine months later, Campbell entered into a second contract with
SI Wireless for a different phone line. (Doc. 11-1, p. 3). Nothing in the second contract
appears to refer to the prior contract or incorporate the prior phone line into the new
contract. (Doc. 11-1, pp. 4-8). The second contract contains an arbitration clause.
(Doc. 11-1, pp. 13-18).
At some point in 2016, Campbell apparently fell behind on her payments.
(Doc. 12, p. 3). SI Wireless began sending automated text messages to the phone
associated with the first contract, telling her to make a payment or risk having her
service suspended. (See Doc. 12, p. 3; See also Doc. 12, p. 11, n. 9). Campbell alleges the
text messages were disruptive and that she replied to one of the texts with the single
word “stop,” but the texts continued. (Doc. 12, p. 3). Campbell then called SI Wireless
and spoke with a representative who told her there was no way to stop the texts.
(Doc. 12, p. 3). Thus, on December 8, 2016, Campbell filed a putative class action
complaint against SI Wireless under the Telephone Consumer Protection Act, 47 U.S.C.
1
Included on the same web page are three hyperlinks, one of which is titled “terms and conditions.”
(See Doc. 12-1, p. 2). It is unclear from the memorandum whether this second hyperlink connects to the
arbitration language at issue. The Court finds, however, that even if the hyperlink did connect to the
arbitration information, it is not sufficient to provide notice to Campbell. Sgouros v. TransUnion Corp., 817
F.3d 1029, 1034-35 (7th Cir. 2016) (court cannot presume a person who clicks on a box on a computer
screen has notice of content that requires further action).
Page 3 of 8
§227, et seq. (Doc. 1). In response, SI Wireless filed the pending Motion to Dismiss for
Improper Venue or, in the Alternative, to Compel Arbitration. (Doc. 10).
ANALYSIS
Under Rule 12(b)(3), a party may move to dismiss an action when it is filed in an
improper venue. FED. R. CIV. P. 12(b)(3). The plaintiff bears the burden of proving venue
is proper. See Moore v. AT&T Latin America Corp., 177 F. Supp. 2d 785, 788 (N.D. Ill. 2001);
Grantham v. Challenge-Cook Bros., Inc., 420 F.2d 1182, 1184 (7th Cir. 1969). When assessing
a motion to dismiss for improper venue, however, the Court must take the allegations in
the complaint as true unless they are contradicted by affidavits, construe facts and draw
reasonable inferences in favor of the plaintiff, and must resolve factual disputes in the
plaintiff’s favor. See Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 806 (7th Cir.
2011).
Here, the claim of improper venue is based on an arbitration clause. (Doc. 10,
pp. 1-2). The arbitration language includes a forum selection clause, requiring any
arbitration to take place in McCracken County, Kentucky, or Madison County,
Tennessee. (Doc. 11, pp. 2-3). If the arbitration clause is enforceable, venue would not lie
with this Court because only a district court in one of the forums selected has authority
to compel arbitration. Haber v. Biomet, Inc. 578 F.3d 553, 558 (7th Cir. 2009) (citing 9 U.S.C.
§ 4). Thus, the question before the Court is whether the arbitration clause is enforceable.
Under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16 et seq., the party
demanding arbitration has the burden of proving: (1) the existence of a written
agreement to arbitrate; (2) the parties’ dispute falls within the scope of the arbitration
Page 4 of 8
agreement; and (3) a refusal to arbitrate. Zurich Am. Ins. Co. v. Watts Indus., Inc., 417 F.3d
682, 687 (7th Cir. 2005).2 The Supreme Court has repeatedly emphasized that arbitration
is a creature of contract. Sgouros v. TransUnion Corp., 817 F.3d 1029, 1033 (7th Cir. 2016)
(citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011); Stolt–Nielsen S.A. v.
AnimalFeeds Int’l Corp., 559 U.S. 662, 684 (2010)). The FAA’s provisions therefore only
bind parties for those disputes they have agreed to arbitrate. First Options of Chi., Inc. v.
Kaplan, 514 U.S. 938, 943 (1995); Am. United Logistics, Inc. v. Catellus Dev. Corp., 319 F.3d
921, 929 (7th Cir. 2003).3
Here, the text message and link used by SI Wireless to notify Campbell of the
arbitration clause were inadequate to create an agreement to arbitrate. The Seventh
Circuit, addressing a similar issue in Sgouros v. TransUnion Corp., applied a “reasonable
communicativeness test” to determine whether a particular form of electronic notice is
sufficient. 4 Sgorous, 563 U.S. at 1034-35. Under that test, the Court must determine
whether the web pages presented to the consumer adequately communicate all the
terms and conditions of the agreement, and whether the circumstances support the
2
Campbell does not dispute she has refused to arbitrate. (Doc. 12, p. 4). Thus, the Court finds the third
element conceded.
3
The question of whether the parties have agreed to arbitrate is governed by state-law principles of
contract formation. First Options, 514 U.S. at 944. Normally, the law applicable to a contract is that which
the parties intended. Hofeld v. Nationwide Life Ins. Co., 322 N.E.2d 454, 458 (Ill. 1975). Here, the contract at
issue does not appear to have a choice of law provision. (Doc. 11-1). SI Wireless cites only to Illinois law in
its underlying motion and makes no argument to the Court indicating another state’s laws are applicable.
(Doc. 11). Campbell states a question over which state’s contract law applies may exist. (Doc. 12, p. 4, n.1).
As a result, she briefs both Illinois and Tennessee law. (Doc. 12). The Court finds, however, that the cases
cited by Campbell indicate that Tennessee applies a similar legal standard to Illinois and therefore a
similar analysis would exist under either state’s laws. (Doc. 12, p. 5, n. 3). In the absence of a specific
request by the parties to apply another state’s law, and given the similarities in the law at issue here, the
Court finds it appropriate to apply Illinois law to the question of whether the parties agreed to submit this
dispute to arbitration. See S. Ill. Riverboat Casino Cruises, Inc. v. Triangle Insulation & Sheet Metal Co., 302 F.3d
667, 672 (7th Cir. 2002).
4 This test is based on Illinois case law relating to cruise-ship tickets. Sgouros, 817 F.3d at 1034 (referencing
Walker v. Carnival Cruise Lines, Inc., 889 N.E.2d 687, 694 (Ill. App. Ct. 2008)). A similar test is utilized by the
State of Tennessee. See Barbachym v. Costa Line, Inc., 713 F.2d 216, 219 (6th Cir. 1983).
Page 5 of 8
assumption that the purchaser received reasonable notice of those terms. Id. Although
the original agreement of the parties allowed SI Wireless to change the terms of the
contract simply by notifying Campbell prior to the billing period in which the change
would take effect (Doc. 11-1, p. 2), SI Wireless has failed to show the text message sent to
Campbell provided any such notice. The evidence5 presented indicates the link in the
relevant text connected to a web page that did not contain the arbitration language.
(Doc. 12, p. 6; Doc. 12-1, p. 2). SI Wireless has provided no evidence or argument to the
contrary. (Doc. 11, pp. 8-10). There is no evidence, therefore, that the terms of the
arbitration clause were communicated to Campbell or that she was provided with notice
that SI Wireless intended to add an arbitration clause. Thus, there is no enforceable
arbitration agreement arising out of the first contract.
The Court notes Campbell entered into a second contract with SI Wireless in 2016.
(Doc. 11-1, pp. 13-18). The second contract includes an arbitration clause, but relates to
different phone number than the one at issue in Campbell’s complaint for violation of
the Telephone Consumer Protection Act. (Doc. 11-1, pp. 13-18). SI Wireless provided the
Court with a copy of the second contract, but failed to explain why an arbitration
agreement in a contract for a different phone is relevant. (Doc. 11, pp. 1-15). The Court
infers SI Wireless is attempting to argue the arbitration clause in the second contract
somehow relates back to the phone covered by the first contract.
Whether a particular claim is arbitrable depends on the relationship of the claim
to the subject matter of the arbitration clause. In re Oil Spill by Amoco Cadiz off Coast of
5
Here, Campbell introduces evidence of an Internet Archive Wayback Machine snapshot of the website
linked to in SI Wireless’s text five days after the text was allegedly sent. (Doc. 12, p. 6, n. 5).
Page 6 of 8
France, 659 F.2d 789, 795 (7th Cir. 1978). Nothing in the second contract expressly states
the intent of the parties to modify or incorporate the arbitration clause into the earlier
contract. Assuming for the sake of argument that the arbitration clause in the second
contract can relate back to the subject of the first, the arbitration clause here contains
language applying it to “all disputes arising from or relating in any way to your
Services…” (Doc. 11-1, p. 17) (emphasis added). Unfortunately for SI Wireless, the
arbitration clause also contains an exception for “actions relating to failure to timely pay
billed charges…” (Doc. 11-1, p. 17). Such actions are explicitly allowed to be brought in
“small claims or another court with jurisdiction.” (Doc. 11-1, p. 17). If the texts sent by SI
Wireless arise from or relate to Campbell’s failure to pay her bill on time, the arbitration
clause will be applicable, but so will the exception. Thus, even if the arbitration clause in
the second contract can relate back to the phone line in the first contract, the explicit
terms of the arbitration clause exclude Campbell’s complaints from the mandatory
arbitration provision.
CONCLUSION
The text sent by SI Wireless was inadequate to communicate its intent to add a
mandatory arbitration clause to the original contract or to support a finding that
Campbell received reasonable notice of such terms. Thus, SI Wireless’s attempt to
modify the first contract by adding the arbitration clause fails. Further, the second
contract does not mandate arbitration because the plain language of the clause carves
out a specific exception for actions related to the failure to pay bills in a timely manner.
Page 7 of 8
Because SI Wireless has failed to prove an arbitration agreement binds the parties
in these circumstances, and no other claims of improper venue are raised, SI Wireless’s
Motion to Dismiss for Improper Venue, or in the Alternative, to Compel Arbitration
(Doc. 10) is DENIED.
IT IS SO ORDERED.
DATED: September 5, 2017
____________________________
NANCY J. ROSENSTENGEL
United States District Judge
Page 8 of 8
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?