1/ In re Revision of the Commission’s Rules to Ensure Compatibility with

Enhanced 911 Emergency Calling Systems, 14 F.C.C.R. 10954 (1999) (“Second Report

and Order”). 

03-2597.052-JCD October 20, 2005

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

)

 )

In re WIRELESS TELEPHONE ) MDL-1521

911 CALLS LITIGATION ) 03 C 2597

)

)

MEMORANDUM OPINION

Before the court is the motion of defendant Cellco Partnership

d/b/a Verizon Wireless (“Verizon”) to compel arbitration and to

stay these proceedings. For the reasons explained below, the

motion is denied. 

DISCUSSION

In this multidistrict litigation, plaintiffs contend that the

wireless telephones manufactured and sold by defendants fail to

comply with the Second Report and Order of the Federal

Communications Commission (“FCC”) concerning the revision of the

FCC’s rules to ensure compatibility with Enhanced 911 emergency

calling systems.1 The background and procedural history of this

litigation is set forth in our Memorandum Opinion of June 3, 2005

and will not be repeated here. 
- 2 -

Verizon, one of the “carrier” defendants, has filed a motion

to compel arbitration of plaintiffs’ claims against it and stay

these proceedings as against Verizon. The motion is based on the

arbitration clauses contained in the service agreements governing

the relationship between Verizon and four of the six plaintiffs

whose claims are based on phones sold or service provided by

Verizon. Those four plaintiffs are Christina Nguyen, Jed Becker,

Donna Clarke, and Advanced Systems Integration, Inc. (“ASI”).

Verizon has been unable to locate the service agreements of the

remaining two Verizon plaintiffs, Alissa Liff and Stephen Hubbard.

With respect to those plaintiffs, Verizon submits the declaration

of Carline Hill, a Verizon Advertising Manager, who states that all

Verizon customer service agreements since December 2000 have

contained some type of mandatory arbitration clause. In their

responses to discovery requests, Liff and Hubbard indicated that

they purchased their phones and service in 2001 and 2002.

Therefore, Hill states, Liff and Hubbard would have signed

arbitration agreements containing mandatory arbitration clauses

similar to those of the four other Verizon plaintiffs. 

The arbitration clauses contained in the “Customer Agreements”

of plaintiffs Nguyen, Becker and Clarke and the “Cellular Service

Agreement” of plaintiff ASI are all very similar. (No party

contends that there are any significant differences among the

clauses.) The clauses provide in relevant part that Verizon and
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2/ The Federal Arbitration Act provides that a “written provision in . .

. a contract . . . to settle by arbitration” any future controversy 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. A party can be compelled to arbitrate only those matters that it has

agreed to submit to arbitration. See James v. McDonald’s Corp., 417 F.3d 672,

677 (7th Cir. 2005). 

the plaintiff agree to “arbitrate” or to “settle disputes only by

arbitration” to the fullest extent permitted or provided by law,

and that “any controversy or claim arising out of or relating to”

the agreement or any product provided under or in connection with

the agreement will be settled by one or more neutral arbitrators on

an “individual” basis (or, in the case of ASI, “independent

arbitration involving a neutral arbitrator”). (Motion to Compel

Arbitration, Exs. 4, 8, 9, 12.) 

Verizon argues that the Federal Arbitration Act2 compels the

arbitration of plaintiffs’ claims because the parties have agreed

to the mandatory arbitration of all disputes arising out of or

relating to their contractual relationship, and plaintiffs’ claims

arise from or relate to products--phones--provided by Verizon under

or in connection with the contracts. 

Plaintiffs present four arguments in response: (1) Verizon has

waived any arbitration rights it may have had; (2) the arbitration

clauses in the agreements are unconscionable and therefore

unenforceable; (3) certain of plaintiffs’ claims are inarbitrable
- 4 -

3/ After Verizon filed its reply, plaintiffs filed a surreply (without

prior leave of court and apparently without requesting leave to file the surreply

instanter). Thereafter, the court received correspondence from Verizon

requesting that plaintiffs’ surreply be stricken. The court has read and

considered both submissions, but neither the surreply nor Verizon’s letter

discusses the waiver issue, which is the only issue that we find necessary to

address, see infra. Therefore, Verizon’s request to strike plaintiffs’ surreply

is denied as moot. Plaintiffs are reminded that they must seek prior leave of

court before filing surreplies and the like. 

as a matter of law; and (4) Verizon’s request for a stay is

improper.3 

We begin with plaintiffs’ argument that Verizon waived its

right to arbitrate by actively litigating the case in this court

for six months before filing the instant motion. “Courts may

refuse to enforce arbitration agreements on a number of grounds,

and federal courts have consistently held that among those grounds

is waiver of the right to arbitrate.” St. Mary’s Med. Ctr. of

Evansville, Inc. v. Disco Aluminum Prods. Co., 969 F.2d 585, 587

(7th Cir. 1992). “Such a waiver can be implied as well as

express.” Cabinetree of Wisconsin, Inc. v. Kraftmaid Cabinetry,

Inc., 50 F.3d 388, 390 (7th Cir. 1995). “Courts must examine the

totality of the circumstances and determine whether based on all

the circumstances, the party against whom the waiver is to be

enforced has acted inconsistently with the right to arbitrate.

Although several factors may be considered in determining waiver,

diligence or the lack thereof should weigh heavily in the decision

. . . .” Ernst & Young LLP v. Baker O’Neal Holdings, Inc., 304

F.3d 753, 756 (7th Cir. 2002) (quotation and citations omitted).
- 5 -

We ask whether the party did all it could reasonably have been

expected to do to make the earliest feasible determination of

whether to proceed judicially or by arbitration. See id. Although

prejudice to the party asserting waiver is a relevant factor for

the court to consider, it is not necessary for that party to show

that it would be prejudiced were a stay to be granted and

arbitration ensue. See St. Mary’s, 969 F.2d at 590; Cabinetree, 50

F.3d at 390.

Plaintiffs contend that “Verizon vigorously invoked the

judicial process in an attempt to obtain a favorable resolution of

plaintiffs’ claims against it,” Opposition at 2, and they point to

four instances of Verizon’s participation in this forum since

Verizon was first named as a defendant in plaintiffs’ Consolidated

Amended Complaint of October 15, 2004 and served with that

complaint on October 18, 2004. First, on October 19, 2004, Verizon

joined in defendants’ motion for partial summary judgment (the

motion that we suggested defendants file based on the FCC’s

decision, using the phrase “partial summary judgment” as shorthand

for a pretrial order to the effect that the FCC’s decision

regarding the 17-Second Rule would be the law of the case).

Second, on November 10, 2004, Verizon’s counsel filed the carrier

defendants’ motion to dismiss plaintiffs’ claims against Verizon,

Sprint, and AT & T. Third, on the same date, Verizon joined in

defendants’ separate motion to dismiss plaintiffs’ claims. Fourth,
- 6 -

4/ We would add another instance of Verizon’s participation in this

litigation. On April 6, 2005, Verizon’s counsel actively participated in oral

argument before the court regarding discovery issues. 

Verizon joined the other defendants in propounding the Second Set

of Interrogatories to plaintiffs on January 27, 2005, to which

plaintiffs responded on March 15, 2005.4 In plaintiffs’ view,

waiver can be inferred from these actions, taken together with the

six months that Verizon waited to file its motion to compel

arbitration. 

We agree with plaintiffs that considering these circumstances,

Verizon has waived its right to arbitrate. Verizon’s

characterization of its participation in this litgation as

“minimal” is incorrect. Most significant is the fact that Verizon

filed its own dispositive motion on behalf of the carrier

defendants that went to the merits of plaintiffs’ entire case

against the carriers. (One of Verizon’s contentions, among others,

was that the FCC’s Second Report and Order applies only to the

manufacturer defendants and not to the carriers.) The Seventh

Circuit has emphasized that “[s]ubmitting a case to the district

court for decision is not consistent with a desire to arbitrate.”

St. Mary’s, 969 F.2d at 589. 

Verizon points out that the Seventh Circuit has observed that

“a party does not waive its right to arbitrate merely by filing a

motion to dismiss,” quoting Sharif v. Wellness International

Network, Ltd., 376 F.3d 720, 726 (7th Cir. 2004). Verizon,
- 7 -

however, did more than file a single motion to dismiss: it joined

in the motion for partial summary judgment and thus tried to obtain

the benefit of the FCC’s ruling as the law of the case; it joined

in the other defendants’ separate motion to dismiss; and it

propounded written discovery and participated in oral argument

concerning discovery matters. 

Verizon argues that this case can be distinguished from other

cases in which parties invoked their arbitration rights only after

an adverse ruling in that Verizon filed its motion to compel

arbitration before we issued our ruling on its motions on the

merits. We are unpersuaded. Verizon clearly did not do all it

could reasonably have been expected to do to make the earliest

feasible determination of whether to proceed judicially or by

arbitration. Verizon’s explanation for the delay in invoking its

arbitration rights is that it was “searching its records and

weighing its options.” (Reply at 5.) We have noted that Verizon

has submitted the declaration of one of its employees, who states

that all customer agreements since late 2000 contained some type of

mandatory arbitration clause. Surely this fact was well-known to

Verizon at the time it was served with plaintiffs’ complaint.

Verizon did not have to do a “records search” to discover its right

to arbitrate. And as for “weighing its options,” the Seventh

Circuit has noted that this is the “worst possible reason for

delay.” Cabinetree, 50 F.3d at 391. “It amounts to saying that [a
- 8 -

party] wanted to see how the case was going in federal district

court before deciding whether it would better off there or in

arbitration. It wanted to play heads I win, tails you lose.” Id.

It is doubtful that plaintiffs would be greatly prejudiced by

a forum change, but that does not alter our conclusion. Prior to

filing its motion to compel arbitration, Verizon extensively

participated in this litigation, and it failed to act diligently to

make the earliest possible determination of whether to proceed in

this forum or by arbitration. Therefore, Verizon waived its right

to arbitrate.

In view of our ruling, it is unnecessary to address the

remainder of plaintiffs’ arguments in response to Verizon’s motion.

CONCLUSION

For the foregoing reasons, the motion of Cellco Partnership

d/b/a Verizon Wireless to compel arbitration and to stay these

proceedings is denied.

DATE: October 20, 2005

ENTER: ___________________________________________

John F. Grady, United States District Judge