Bush v. AT&T Corp.

Filing 26

ORDER granting 5 motion to compel arbitration and to stay. This case shall be stayed while arbitration is pending. The parties shall file a joint status report every 120 days. Signed on 12/3/12 by District Judge Greg Kays. (Francis, Alexandra)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
ST. JOSEPH DIVISION
JIM BUSH d/b/a TRENTON CINEMA LLC
or BIG TIME CINEMA TRENTON 3,
Plaintiff,
v.
AT&T CORP. a/k/a AT&T Mobility National
Account LLC,
Defendant.

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No. 12-6106-CV-SJ-DGK

ORDER GRANTING MOTION TO COMPEL ARBITRATION
This case arises from Plaintiff cancelling a contract for wireless services with Defendant.
Now before the Court is Defendant’s Motion to Compel Arbitration and Stay Action (Doc. 5). For
the following reasons the Motion is GRANTED.
Background
Plaintiff Jim Bush does business as Trenton Cinema LLC, also known as Big Time Cinema
Trenton 3. On August 20, 20012, Plaintiff filed this lawsuit in the Circuit Court of Grundy County,
Missouri alleging breach of contract, a violation of Missouri’s Merchandising Practices Act,
misrepresentation, and “emotional distress/harassment.” On September 26, 2012, Defendant AT&T
Corp. timely removed the lawsuit to this Court based upon diversity jurisdiction and subsequently
moved to compel arbitration.
The Petition alleges that on June 11, 2011 Plaintiff entered into a contract, the AT&T Mobile
Business Agreement (“the Agreement”), with Defendant for wireless services. Attached to the
Petition is a copy of the Agreement. The first paragraph of the Agreement states that it,

consists of (a) the AT&T Mobile Business Program Description set
forth below (the “Program Description”), (b) the General Terms and
Conditions in effect on the Effective Date [June 11, 2011] and found
at the Program Website (the General Terms and Conditions’), and (c)
all materials incorporated by reference in the General Terms and
Conditions, such as applicable Sales information and Attachments
(collectively, the “Agreement”).
The Program Website is
att.com/amb.
The Agreement at 1 (Doc. 1-1 at 14). Section 9 of the General Terms and Conditions referenced in
the Agreement states in relevant part that:
Any dispute arising out of or relating to this Agreement that cannot
be resolved by negotiation shall be resolved by binding arbitration
administered by the American Arbitration Association (‘AAA’) under
its Commercial Arbitration Rules in effect at the time that a dispute is
submitted for resolution (the ‘Rules’), as modified by this Agreement.
. . . Such arbitration shall be held in New York, New York.
Discussion
Agreements to arbitrate are strongly favored under federal law. See Lyster v. Ryan’s Family
Steak Houses, Inc., 239 F.3d 943, 945 (8th Cir. 2001). Congress enacted the Federal Arbitration Act
(“FAA”) to overcome courts’ traditional reluctance to enforce arbitration agreements. Allied- Bruce
Terminix Cos. v. Dobson, 513 U.S. 265, 270 (1995). The FAA provides that arbitration agreements
are presumptively valid and enforceable,1 and embraces a “liberal federal policy favoring arbitration
agreements.” 9 U.S.C. § 2; Moses H Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24
(1983). It also provides for stays of proceedings in federal district courts when an issue is referable
to arbitration, and for orders compelling arbitration when one party has failed, neglected, or refused

1 “A written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.

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to comply with an arbitration agreement. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25
(1991).
To determine whether a particular dispute must be arbitrated, the court considers (1) whether
there is a valid agreement to arbitrate; and (2) whether the dispute falls within the scope of the
agreement. Lyster, 239 F.3d at 945. In construing contract language on arbitrability, any doubts are
resolved in favor of arbitration. CD Partners, LLC v. Grizzle, 424 F.3d 795, 798 (8th Cir. 2005).
The party resisting arbitration bears the burden of showing the agreement is unenforceable. Cf.
Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91-92 (2000). Of course, the “strong federal
policy in favor of arbitration . . . does not change the fact that one cannot be compelled to arbitrate
[its] disputes unless [it] has agreed to do so.” Fleet Boston Robertson Stephens, Inc. v. Innovex, Inc.,
264 F.3d 770, 773 (8th Cir. 2001) (citations omitted).
The issue here is not whether the dispute falls within the scope of the contract; all of
Plaintiff’s claims either arise out of or relate to the Agreement. Plaintiff is arguing he did not sign
any agreement to arbitrate, and that even if he did, the arbitration provision is invalid for a variety of
reasons.
The Court finds no merit to Plaintiff’s claim that he did not agree to arbitration. Under
Missouri law, parties to an agreement can incorporate unsigned terms and conditions in documents
that are referenced in their agreements. Intertel, Inc. v. Sedgwick Claims Mgmt. Servs. Inc., 204
S.W. 3d 183, 196 (Mo. App. 2006) (“So long as the contract makes clear reference to the document
and describes it in such terms that its identity may be ascertained beyond doubt, the parties to a
contract may incorporate contractual terms by reference to a separate, noncontemporaneous
document, including . . . a separate document which is unsigned.”) The fact that the documents
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referenced were made available to the Plaintiff via the internet does not alter the analysis. “A
customer on notice of contract terms available on the internet is bound by those terms.” Burcham v.
Expedia, Inc., No. 4:07CV1963CDP, 2009 WL 586513, at *2 (E.D. Mo. Mar. 6, 2009). In his
Petition, Plaintiff states he entered into the Agreement with Defendant. Consequently, as a matter of
law, when Plaintiff made the Agreement he accepted all of the terms that were incorporated into it,
including the arbitration provision, even though he did not physically sign any arbitration agreement.
There is also no merit to Plaintiff’s arguments that (1) a mandatory arbitration provision is
inherently unconscionable; (2) that Defendant cannot compel Plaintiff to arbitrate because Plaintiff
has alleged that Defendant misrepresented the Agreement’s cancellation provisions; and (3) that the
arbitration provision should not be enforced in the wake of two recent Missouri Supreme Court
decisions, Brewer v. Missouri Title Loan, 364 S.W.3d 486 (Mo. 2012) and Robinson v. Title
Lenders, Inc., 364 S.W.2d 505, 509 n.4 (Mo. 2012). With respect to the first argument, mandatory
arbitration agreements are permissible except in insurance contracts. See Thrivent Fin. for
Lutherans v. Lakin, 322 F. Supp. 2d 1017, 1024 (W.D. Mo. 2004) (Gaitan, J.) (noting that outside of
the insurance context, the FAA “come[s] into play.”). With respect to the second argument, in
determining whether an arbitration agreement is enforceable, a federal court may consider only
whether there was “fraud in the inducement of the arbitration clause itself.” Prima Paint Corp. v.
Flood & Conklin Mfg. Co., 388 U.S. 395, 403 (1967). Allegations like those made here, that there
was fraud or misrepresentation in the inducement of the contract, must be “considered by an
arbitrator, not a court,” because the arbitration provision is “enforceable apart from the remainder of
the contract.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 446 (2006). Finally, with
respect to the third argument, the Court notes the issue in the two Missouri Supreme Court cases
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cited by Plaintiff was whether the arbitration agreements were unconscionable because they waived
class treatment of claims and required arbitration on an individualized basis. Brewer, 364 S.W.3d at
492-96; Robinson, 364 S.W.3d at 507-08, 517-18. Plaintiff is not seeking to litigate his claim as part
of a class action, therefore these cases are inapplicable. Moreover, these cases have arguably been
superseded by the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion. 131 S.Ct. 1740
(2011).
There is merit, however, to Plaintiff’s claim that the arbitration agreement’s forum selection
clause is unenforceable. As Defendant concedes, a forum-selection clause which requires that the
arbitration take place in a defendant’s “corporate backyard” is unconscionable and unenforceable
under Missouri law, and a court may severe such a clause from the rest of the contract. Swain v.
Auto Services, Inc., 128 S.W.3d 103, 108-09 (Mo. Ct. App. 2003). Defendant recognizes that New
York City is its corporate backyard and has offered to arbitrate Plaintiff’s claims either in Missouri
or any other location that is convenient for the parties. Accordingly, the Court holds the forum
selection clause is unenforceable and should be severed. Given that this case could be fairly
arbitrated in many places, including Missouri, the Court holds the venue provision is not essential to
the rest of the arbitration clause and so the entire arbitration clause should not be stricken. Id. at
108.
Conclusion
Defendant’s Motion to Compel Arbitration and Stay Action (Doc. 5) is GRANTED. This
case shall be stayed while arbitration is pending. The parties shall file a joint status report every one
hundred and twenty days.
IT IS SO ORDERED.
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Date:

December 3, 2012

/s/ Greg Kays
GREG KAYS, JUDGE
UNITED STATES DISTRICT COURT

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