Opinion ID: 2008036
Heading Depth: 1
Heading Rank: 3

Heading: Relevant Provisions of the Service Agreement

Text: The second sentence of the standard service agreement states that service is subject to CINGULAR's standard business policies, practices and procedures that CINGULAR may change at any time without notice. The fourth sentence states: IMPORTANT NOTICE: THIS AGREEMENT CONTAINS MANDATORY ARBITRATION AND OTHER IMPORTANT PROVISIONS LIMITING THE REMEDIES AVAILABLE TO YOU IN THE EVENT OF A DISPUTE. PLEASE REFER TO THE SECTION ENTITLED `ARBITRATION' FOR DETAILS. The provision that is the subject of plaintiff's claim provides: SERVICE COMMITMENT You have agreed to maintain service for a minimum term, the Service Commitment specified on the signature portion of this Agreement. The Service Commitment begins on the day your service is activated. If you have contracted for a Service Commitment greater than a month, in exchange you have received certain benefits from CINGULAR. You understand and agree that you now have certain contractual obligations and that CINGULAR's damages arising out of a breach thereof will be difficult, if not impossible, to determine. Therefore, if you terminate your service for any reason other than a change of terms, conditions, or rates as set forth below, or if CINGULAR terminates your service for nonpayment or other default before the end of the Service Commitment, you hereby agree to pay CINGULAR, as liquidated damages, and not as a penalty, in addition to all other amounts owed, the termination charge of $150 per wireless phone on the account (`Termination Fee'). The arbitration clause provides, in pertinent part: INDEPENDENT ARBITRATION Please read this paragraph carefully. It affects rights that you may otherwise have. (a) CINGULAR and you shall use our best efforts to settle any dispute or claim arising from or relating to this Agreement. To accomplish this, CINGULAR and you agree to arbitrate any and all disputes and claims (including but not limited to claims based on or arising from an alleged tort) arising out of or relating to this Agreement, or to any prior Agreement for products or services between you and CINGULAR   . The arbitration of any dispute or claim shall be conducted in accordance with the wireless industry arbitration rules (`WIA Rules') as modified by this agreement and as administered by the American Arbitration Association (`AAA'). The WIA Rules and fee information are available from CINGULAR or the AAA upon request. CINGULAR and you acknowledge that this agreement evidences a transaction in interstate commerce and that the United States Arbitration Act and Federal Arbitration Law shall govern the interpretation and enforcement of, and proceedings pursuant to, this or a prior agreement.    Except where prohibited by law, CINGULAR and you agree that no arbitrator has the authority to: (1) award relief in excess of what this agreement provides; (2) award punitive damages or any other damages not measured by the prevailing party's actual damages; or (3) order consolidation or class arbitration. The Arbitrator(s) must give effect to the limitations on CINGULAR's liability as set forth in this agreement, any applicable tariff, law, or regulation.    You agree that CINGULAR and you each is waiving its respective right to a trial by jury. You acknowledge that arbitration is final and binding and subject to only very limited review by a court. If for some reason this arbitration clause is at some point deemed inapplicable or invalid, You and CINGULAR agree to waive, to the fullest extent allowed by law, any trial by jury.    Notwithstanding any of the foregoing, either party may bring an action in small claims court. Defendant's brief states that the service agreement also provides that all fees and expenses of the arbitration shall be equally borne by [the customer] and CINGULAR. Repeated reading of the fine print of the TERMS AND CONDITIONS page, however, has failed to reveal the existence of this provision. The only provision relating to the cost of arbitration incorporates the WIA Rules by reference and informs the customer that fee information is available from Cingular or the AAA upon request. Under the WIA Rules promulgated by the AAA, a claimant must pay a fee at the time he or she files a claim. If, as in the present case, the claim does not exceed $10,000, the claimant must pay one-half of the arbitrator's fees, up to a maximum of $125. Any funds not used are refunded to the claimant. For claims under $10,000, the business pays all fees that are not the responsibility of the claimant. Wireless Industry Arbitration Rules of the American Arbitration Association, Supplementary Procedures for Consumer-Related Disputes (eff. March 1, 2002), available at http://www.adr.org/sp.asp?id= 22014# CONC-8 (hereinafter WIA Rules). While this matter was still before the trial court, Cingular offered to reimburse plaintiff for her reasonable attorney fees and costs if her claim were to proceed to arbitration and the arbitrator were to award her an amount equal to or greater than her $150 claim. In response to a question by the trial court, Cingular's counsel represented that Cingular would apply the terms of the new arbitration provision to all customers, current and former, including plaintiff and members of the purported class. In July 2003, Cingular revised the arbitration provision in its standard service agreement, notifying all then-current customers of the change by mail and posting the new terms on its website. Under the new provision, Cingular agrees to pay all AAA filing, administration and arbitrator fees, unless the claim filed or the relief sought is so improper as to be subject to sanctions under Federal Rule of Civil Procedure 11(b) (Fed.R.Civ.P. 11(b)). If a claimant recovers the amount of his demand or more, Cingular agrees to reimburse him for his reasonable attorney fees and expenses incurred in bringing the claim to arbitration. The location of arbitration has been changed to the county of the claimant's billing address, rather than the city in which Cingular's switching office is located. Unlike the earlier provision, the new arbitration provision does not include a confidentiality requirement and does not limit the remedies that an arbitrator may award, so that the possibility exists for an award of punitive damages. In addition, the new arbitration provision states: 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 representative 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, and that if this specific proviso is found to be unenforceable, then the entirety of this arbitration clause shall be null and void. The trial court rejected Cingular's argument that this new provision should be applied to plaintiff's claim. The appellate court agreed with the trial court's ruling, concluding that giving Cingular the benefit of a piecemeal reworking of the contract that was in effect when the plaintiff cancelled her service would not meet the ends of justice. 357 Ill.App.3d at 568, 293 Ill. Dec. 502, 828 N.E.2d 812, citing Spinetti v. Service Corp. International, 324 F.3d 212, 217 n. 2 (3d Cir.2003) (concluding that `reviewing courts should not consider after-the-fact offers' to pay a plaintiff's share of arbitration costs `where the agreement itself provides that the plaintiff is liable, at least potentially, for arbitration fees and costs'), quoting Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 676 (6th Cir.2003).