Opinion ID: 2996012
Heading Depth: 3
Heading Rank: 1

Heading: Binding Arbitration. The arbitration process

Text: established by this section is governed by the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1-16. You have the right to take any dispute that qualifies to small claims court rather than arbitration. All other disputes arising out of or related to this Agreement (whether based in contract, tort, statute, fraud, misrepresentation or any other legal or equitable theory) must be resolved by final and binding arbitration. This includes any dispute based on any product, service or advertising having a connection with this Agreement and any dispute not finally resolved by a small claims court. The arbitration will be conducted by one arbitrator using the procedures described by this Section 7. Section 7 then detailed the arbitration filing procedures and explained that any disputes involving $10,000 or less would be conducted in accordance with the rules of the 6 No. 02-2667 Consumer Arbitration Rules of the American Arbitration Association (“AAA”), and claims in excess of that amount would be resolved under the AAA’s Commercial Arbitration Rules. The CSA further provided that consumers filing an arbitration claim for less than $1,000 would only be required to pay a $20 filing fee, and that AT&T would cover the remaining costs of arbitration. AT&T later amended the CSA to further reduce the potential arbitration expense, providing that AT&T would pay all but a $20 filing fee for customers with disputes up to $10,000 and all but $375 for claims between $10,000 and $75,000. Additionally, Section 7 of the CSA provided—once again in bold and capitalized text—that: NO DISPUTE MAY BE JOINED WITH ANOTHER LAWSUIT, OR IN AN ARBITRATION WITH A DISPUTE OF ANY OTHER PERSON, OR RESOLVED ON A CLASS-WIDE BASIS, THE ARBITRATOR MAY NOT AWARD DAMAGES THAT ARE BARRED BY THIS AGREEMENT AND MAY NOT AWARD PUNITIVE DAMAGES OR ATTORNEYS’ FEES UNLESS SUCH DAMAGES OR FEES ARE EXPRESSLY AUTHORIZED BY A STATUTE, YOU AND AT&T BOTH WAIVE ANY CLAIMS FOR AN AWARD OF DAMAGES THAT ARE EXCLUDED UNDER THIS AGREEMENT. Boomer did not contact AT&T to cancel his services, but instead continued to use AT&T’s long-distance services. Notwithstanding the CSA’s prohibition of class actions and its arbitration clause, Boomer filed a putative class action against AT&T, alleging that AT&T was overbilling No. 02-2667 7 1 him for the federal Universal Service Fee charge. In his amended putative class action complaint, Boomer presented six counts: Count I requested an accounting of the Universal Service Fee Charge; Count II alleged a violation of the Illinois Consumer Fraud Act and the Deceptive Business Practices Act; Count III alleged unjust enrichment; Count IV sought a declaratory judgment that the arbitration clause contained in Section 7 of the CSA was unconscionable and otherwise invalid; Count V alleged that the arbitration clause violated the Illinois Consumer Fraud Act and the Deceptive Business Practices Act; and Count VI alleged that the CSA violated the Communications Act. AT&T responded to Boomer’s suit by filing a motion to compel arbitration and to dismiss or stay the proceedings pursuant to the Federal Arbitration Act. In support of its motion, AT&T submitted the declaration of Ellen Reid, the AT&T employee who had overseen the mailing of the CSAs to AT&T customers. Reid’s declaration authenticated the CSA Mailing material and established that AT&T had in fact mailed Boomer the CSA Mailing in June 2001 and that the mailing was sent by third-class mail with forwarding service. AT&T did not receive notice from the postal service indicating that Boomer had not received the mailing. Her declaration also stated that Boomer continued to be enrolled in AT&T’s long-distance service. 1 In passing the Telecommunications Act of 1996, Congress authorized the FCC to assess a “Universal Service Fee” on longdistance carriers based on a percentage of the carrier’s past revenues, 47 U.S.C. § 254, although carriers may charge consumers to recover the cost of these contributions. See 12 FCC Rcd. 8776 (¶773). The Universal Service Fees are then used to subsidize telecommunication services for customers in high cost areas, schools and libraries. 47 U.S.C. § 254. 8 No. 02-2667 Boomer for his part filed a motion for partial summary judgment on Counts IV and V, arguing that the arbitration clause was, as a matter of law, unconscionable and violated the Illinois Consumer Fraud Act and the Deceptive Business Practices Act. The district court denied Boomer’s motion for partial summary judgment and denied AT&T’s motion to compel arbitration and to dismiss or stay the proceedings, on the grounds that “[g]enuine issues of material fact exist as to the validity of the arbitration 2 clause.” AT&T appeals.