Court Opinion

ID: 2995943
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:23:40.077688+00
Date Added: 2024-06-11T15:03:09.490787
License: Public Domain

In the

      United States Court of Appeals
                    For the Seventh Circuit

No. 02-2667

FRANK H. BOOMER , ON BEHALF OF
HIMSELF AND ALL OTHERS SIMILARLY
SITUATED ,

                                                       Plaintiff-Appellee,

                                      v.

AT&T CORPORATION , A NE W YORK
CORPORATION ,

                                                   Defendant-Appellant.

                Appeal from the United States District Court
           for the N orthern District of Illinois, Eastern Division.
                 No. 02 C 0847—John W. Darrah, Judge.

  A RGUED S EPTEMBER 5, 2002 —D ECIDED O CTOBER 3, 2002*

  Before COFFEY , MANION , and DI A NE P. WOOD , Circuit
Judges.
  MANION , Circuit Judge. Frank Boomer filed a putative
class action lawsuit against AT&T, alleging that AT&T
overcharged its customers for contributions to the federal
Universal Services Fund.        AT&T moved to compel
arbitration and to dismiss or stay the pending action,
arguing that after the Federal Communications Commission
(“FCC”) discontinued the filing of tariffs by

       *
         This opinion is being immediately released in
typescript. The printed version will follow.
2                                               No. 02-2667

telecommunication providers, AT&T had entered into a
Consumer Service Agreement (“CSA”) with Boomer which
prohibited class actions and mandated arbitration. Boomer
argued that the arbitration clause was unconscionable under
Illinois law and he sought a declaratory judgment
accordingly. The district court denied Boomer summary
judgment on his declaratory judgment claim and denied
AT&T’s motion to compel arbitration and its motion to
dismiss or stay the case. AT&T appeals, arguing that
Boomer’s state law challenge to the terms and conditions of
the CSA is preempted by the Federal Communications Act
of 1934, and Boomer is therefore bound by the CSA’s
arbitration clause. We agree and accordingly REVERSE.
                             I.
  Prior to 2001, the Communications Act of 1934
(“Communications Act”), as amended by the
Telecommunications Act of 1996, required long distance
carriers like AT&T to set forth their charges and other terms
and conditions of service in tariffs filed with the FCC. 47
U.S.C. § 203. Under the “filed tariff doctrine,” customers
were bound by the terms of the tariff even if they had never
seen the tariff, and even if the consumers had been promised
service under different rates, terms or conditions. See AT&T
v. Central Office Telephone, Inc., 524 U.S. 214, 222 (1998).
Additionally, customers were bound by the rates, terms, and
conditions contained in the tariff unless the FCC determined
that a tariff provision violated the substantive requirements
of the Communications Act and the tariff was thereafter
modified. Id.
  Over time, however, the FCC began entering orders
exempting “nondominant carriers” (defined as those lacking
market power) from the tariff-filing requirements of Section
203 of the Communications Act. But the Supreme Court
invalidated these orders, holding that the FCC lacked the
authority under the Communications Act to exempt certain
carriers from the tariff-filing requirement of Section 203.
See MCI Telecommunications Corp. v. AT&T Corp., 512 U.S.
No. 02-2667                                                   3

218, 234 (1994). However, when Congress passed the
Telecommunications Act of 1996, it expressly gave the FCC
the authority to forbear from applying the tariff-filing
requirement if, among other things, the FCC determined
that the “enforcement of such regulation or provision is not
necessary to ensure that the charges, practices,
classifications, or regulations. . . are just and reasonable and
are not unjustly or unreasonably discriminatory.” 47 U.S.C.
§ 160(a)(1).
  Armed with this new authority, the FCC issued a series of
orders providing that AT&T and other long-distance carriers
were no longer required to file tariffs. See Interstate
Interexchange Marketplace, 11 FCC Rcd. 20,730 (1996);
Interstate Interexchange Marketplace, 12 FCC Rcd. 15,014
(1997); Interstate Interexchange Marketplace, 14 FCC Rcd.
6004 (1999) (“Detariffing Orders”). Instead, the carriers
were now required to provide customers with notice of the
rates, terms, and conditions of service, and to offer
customers service under such terms and conditions. The
customers in turn could accept or reject the carrier’s offer.
The FCC anticipated that carriers would enter into such
contracts through the use of “short, standard contracts.” 11
FCC Rcd. at 20,736 (¶ 57).
  After the FCC issued its detariffing orders, in June 2001
AT&T began mailing proposed Customer Service
Agreements (“CSAs”) to residential customers for their
consideration.    AT&T mailed each customer three
documents: the CSA, a letter explaining why the CSA was
being sent, and a list of anticipated frequently asked
questions with explanatory responses (“CSA Mailing”). The
CSA Mailing was sent to Boomer in June 2001 in an
envelope, separate from his monthly bill. On the outside of
the envelope was typed: “ATTENTION: Important
information concerning your AT&T service enclosed.”
  The letter included with the CSA Mailing explained that
AT&T was enclosing a “copy of the new AT&T Consumer
Services Agreement containing the terms and conditions for
4                                                No. 02-2667

our state-to-state and international consumer long distance
services,” and that “[t]his Agreement will begin to apply to
these AT&T services on August 1, 2001.” The letter also
explained that because of recent changes adopted by the
FCC, the details of the service agreement were being
provided directly to the customer. Additionally, the letter
informed customers that “[t]he Agreement also describes our
new binding arbitration process, which uses an objective
third party rather than a jury for resolving any disputes that
may arise.” The letter further informed customers that they
would “accept the terms of the Agreement simply by
continuing to use or pay for any AT&T state-to-state or
international consumer calling service.”
  The CSA included with the letter expanded on these
points. On the first page of the CSA, AT&T explained in
bold and capitalized text that:
    BY ENROLLING IN, USING, OR PAYING FOR THE
    SERVICES, YOU AGREE TO THE PRICES,
    CHARGES, TERMS AND CONDITIONS IN THIS
    AGREEMENT. IF YOU DO NOT AGREE TO THESE
    PRICES, CHARGES, TERMS AND CONDITIONS, DO
    NOT USE THE SERVICES, AND CANCEL THE
    SERVICES IMMEDIATELY BY CALLING AT&T AT
    1-888-288-4099* FOR FURTHER DIRECTIONS.
  Also significant for purposes of this appeal is Section 7,
entitled “dispute resolution.” That section began in bold and
capitalized text, stating:
    IT IS IMPORTANT THAT YOU READ THIS ENTIRE
    SECTION CAREFULLY. THIS SECTION PROVIDES
    FOR RESOLUTION OF DISPUTES THROUGH
    FINAL AND BINDING ARBITRATION BEFORE A
    NEUTRAL ARBITRATOR INSTEAD OF IN A COURT
    BY A JUDGE OR JURY OR THROUGH A CLASS
    ACTION. YOU CONTINUE TO HAVE CERTAIN
    RIGHTS TO OBTAIN RELIEF FROM A FEDERAL
    OR STATE REGULATORY AGENCY.
No. 02-2667                                                5

The CSA then detailed the arbitration requirement,
providing:
  a. Binding Arbitration. The arbitration process
  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
Consumer Arbitration Rules of the American Arbitration
Association, 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
6                                              No. 02-2667

    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 him for
the federal Universal Service Fee charge.1 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

       1
           In passing the Telecommunications Act of 1996,
Congress authorized the FCC to assess a “Universal Service
Fee” on long distance 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.
No. 02-2667                                                   7

pursuant to the Federal Arbitration Act. In support of its
motion, AT&T submitted the declaration of Ellen Rein, 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.
  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 clause.” AT&T appeals. 2
                              II.
  On appeal, AT&T argues that the district court erred in
denying its motion to compel arbitration and to dismiss or
stay Boomer’s suit pending arbitration. Boomer responded
to AT&T’s appeal by filing a motion to dismiss the appeal for
lack of jurisdiction. A motions panel of this court ordered
that Boomer’s motion to dismiss be considered by the merits
panel. Accordingly, before considering the merits of AT&T’s

       2
          At oral argument, AT&T agreed that this appeal
involves only Boomer’s individual claim against AT&T, and
not the putative class that Boomer sought to represent. See
Harold Washington Party v. Cook County, Illinois Democratic
Party, 984 F.2d 875, 878 (7th Cir. 1993) (if a putative class is
not certified by the district court, the plaintiff’s appeal
concerns only the plaintiff’s individual claim).
8                                                 No. 02-2667

appeal, we first consider Boomer’s motion to dismiss this
appeal for lack of jurisdiction.
    A. Motion to Dismiss for Lack of Jurisdiction
  In his motion to dismiss for lack of jurisdiction, Boomer
argues that this court lacks jurisdiction to consider AT&T’s
appeal because the district court had not conclusively ruled
on the validity of the arbitration clause, but had merely
concluded that it could not resolve the issue at the summary
judgment stage. Therefore, according to Boomer, the district
court’s order is not final and appealable.
  Although a decision must generally be final to be
appealable, there are several exceptions to this rule. Section
16 of the Federal Arbitration Act provides one such basis for
immediate appeal, providing: “(a) An appeal may be taken
from— (1) an order—(A) refusing a stay of any action under
section 3 of this title, (B) denying a petition under section 4
of this title to order arbitration to proceed.” 9 U.S.C.
§ 16(a)(1)(A) and (B).
  In this case, the district court entered an order expressly
stating: “AT&T’s Motion to Compel Arbitration and to
Dismiss or Stay Proceedings is denied.” The court reiterated
this point in its closing sentence, noting: “For the reasons
stated above, Plaintiff’s Motion for Partial Summary
Judgment is denied. Defendant’s Motion to Compel
Arbitration and to Dismiss or Stay Proceedings is denied.”
Nonetheless, Boomer contends that this court lacks
jurisdiction over this appeal because the district court also
entered a minute order which directed the parties “to confer
and advise the Court within 10 days as to whether a
separate trial should be ordered on [the arbitration counts]
before the remaining counts of Plaintiff’s Amended
Complaint . . . .” This, according to Boomer, demonstrates
that the district court intended to revisit the question of
arbitrability and thus had not rendered a final decision on
this issue.
No. 02-2667                                                   9

   We acknowledge that the district court intended to
reconsider the question of arbitrability following further fact-
finding and possibly a trial. However, that does not defeat
this court’s jurisdiction. The plain language of Section
16(a)(1) provides for an appeal from “an order refusing a
stay” or “denying a petition to order arbitration to proceed,”
and the district court in this case expressly did both.
Applying Section 16(a)(1) in Koveleskie v. SBC Capital
Markets, Inc., 167 F.3d 361, 363 (7th Cir. 1999), we held
that a district court’s denial of a motion to compel
arbitration was immediately appealable even though the
district court had held that further discovery was needed
before it could conclusively rule on a motion to compel
arbitration. In fact, jurisdiction is even clearer in this case
than in Koveleskie, because here the district court expressly
denied AT&T’s Motion to Compel Arbitration, whereas in
Koveleskie, the district court’s order merely stated that
discovery was needed “before a decision can be reached on
the arbitration issue.” Id. at 363. Nonetheless, in
Koveleskie, we held that because “there is no doubt from the
record that the district court denied the defendant's motion
and clearly meant to foreclose arbitration,” id., an
immediate appeal could proceed under Section 16(a) of the
Arbitration Act.
  Both the Third and Fourth Circuits have likewise
concluded that a denial of a motion to compel arbitration is
immediately appealable under Section 16(a)(1) of the FAA,
even if further discovery is required or the district court
intends to revisit the issue. See Snowden v. Checkpoint
Check Cashing, 290 F.3d 631, 635-36 (4th Cir. 2002);
Sandvik AB v. Advent Inter. Corp., 220 F.3d 99, 102-04 (3d
Cir. 2000). The Third Circuit’s decision in Sandvik provides
a thorough analysis of the issue and one that bears
repeating. The reason a denial of a motion to compel
arbitration is immediately appealable is because “[t]he
language of § 16 provides for appeals of orders denying
arbitration, and it makes no distinction between orders
denying arbitration and ‘final orders’ that accomplish the
10                                               No. 02-2667

same end.” Id. at 102. The language of Section 16(a)(1)(C)
further illustrates that point. As Sandvik explained, Section
16(a)(3) of “the FAA contains a catch-all provision regarding
any ‘final decision with respect to an arbitration that is
subject to this title,’ id. § 16(a)(3).” Id. at 103. Thus, to
interpret 16(a)(1) as Sandvik (and here Boomer) would have,
namely as applying only to “final decisions,” means “the
provision providing for appeals from denials of orders to
arbitrate [would become] surplusage in light of the more
expansive language in § 16(a)(3).” Id. Thus, “[t]he more
natural reading would therefore be to treat all orders
declining to compel arbitration as reviewable.”            Id.
Moreover, the language of § 16(a)(1)(C) “reflects that
Congress decided to use the word ‘final’ in one part of the
statute, but declined to do so in the section that declares
that orders denying motions to compel arbitration are indeed
appealable.” Id. This reasoning defeats Boomer’s argument
that the district court’s order denying a motion to compel
arbitration must be final to be appealable. Additionally, the
fact that “the statute provides a list of interlocutory
arbitration-related orders that are not appealable, see id. §
16(b),” demonstrates that Congress intended what it said in
subsection 16(a)—that a denial of the motion to compel
arbitration is immediately appealable.         Id. Finally, as
Sandvik noted, “jurisdiction comports with the purposes of
the FAA. Refusing [a defendant’s] appeal could circumvent
the FAA's clear purpose of enforcing binding arbitration
agreements,” by forcing the defendant to undergo a full-
blown trial before a determination as to “whether it was
legally obligated to participate in such a trial in the first
instance.” Id. at 104. For all of these reasons, we conclude
that Section 16(a) of the Arbitration Act allows for an
immediate appeal of the denial of a motion to compel
arbitration.3

       3
          Boomer also relies on this court’s decision in
McCaskill v. SCI Management Corp., 298 F.3d 677 (7th Cir.
                                           (continued...)
No. 02-2667                                                    11
  Alternatively, Boomer claims that this court lacks
jurisdiction because after the district court entered its order
denying AT&T’s motion to compel arbitration, the Judicial
Panel for Multi-District Litigation entered an order
transferring Boomer’s case to the District Court of Kansas.
Initially, we note that it is questionable as to whether the
Judicial Panel’s order transferring the case to the District
Court of Kansas was effective, because that transfer order
was not filed with the District Court of Kansas until the day
after AT&T filed its notice of appeal. Under 28 U.S.C. §
1407(c), a Multi-District transfer order becomes effective
only after it is “filed in the office of the clerk of the district
court of the transferee district.” 28 U.S.C. § 1407(c).
Because AT&T filed its notice of appeal prior to the filing of
the transfer order, it would seem that the transfer order is
ineffective. See, e.g., Kusay v. United States, 62 F.3d 192,
193 (7th Cir. 1995) (“[T]he filing of a notice of appeal . . .
divests the district court of its control over those aspects of
the case involved in the appeal.”).

       3
        (...continued)
2002), wherein we stated that “[a]n appeal may be taken
from a ‘final decision with respect to an arbitration’, but not
from an interlocutory order staying the action or ‘compelling
arbitration’. 9 U.S.C. §§ 16(a)(3), (b)(1), (b)(3).” Id. at 678.
However, this language does not help Boomer because this
case does not involve an order “staying the action or
compelling arbitration,” but rather an order denying a
motion to compel arbitration and denying the motion to stay
the action. While the FAA prohibits interlocutory appeals of
motions compelling arbitration and granting stays, 9 U.S.C.
§ 16(b)(1), (b)(3), Section 16(a)(1) allows immediate appeals
from the denial of such motions. 9 U.S.C. § 16(a)(1).
12                                                No. 02-2667

  However, we need not determine the validity of the
transfer order because even if a transfer order entered after
a notice of appeal is filed were valid, this court nonetheless
has jurisdiction under 28 U.S.C. § 1294(1) to hear AT&T’s
appeal from the district court’s order denying AT&T’s motion
to compel arbitration. That section provides that “appeals
from reviewable decisions of the district . . . courts shall be
taken [f]rom a district court of the United States to the court
of appeals for the circuit embracing the district.” 28 U.S.C.
§ 1294(1). In this case, the “reviewable decision” at issue
was entered by the Northern District of Illinois. Therefore,
jurisdiction is appropriate in this court.           See, e.g.,
TechnoSteel, LLC v. Beers Const. Co., 271 F.3d 151, 154 (4th
Cir. 2001) (holding that the Fourth Circuit had jurisdiction
to hear an appeal from a South Carolina district court’s
order denying a motion to compel arbitration, even though
the district court also transferred the case to a Georgia
district court).
  B. Motion to Compel Arbitration
  Having concluded that we have jurisdiction over this
appeal, we turn to the merits. As noted, AT&T argues on
appeal that the district court erred in denying its motion to
compel arbitration because Section 7 of the CSA required
arbitration. Boomer initially contends that because the CSA
does not constitute a valid contract under Illinois law, he
never agreed to the arbitration clause. Alternatively,
Boomer argues that the arbitration clause contained in the
CSA is invalid because it is unconscionable under Illinois
law and violates the Illinois Consumer Fraud Act. AT&T
responds by arguing that because Boomer continued using
his AT&T service, he accepted the terms of the CSA,
including the arbitration provision. AT&T further contends
that the Communications Act preempts Boomer’s state law
challenges to the validity of the arbitration clause. We first
consider whether the CSA constitutes a contract, and then
address the issue of preemption.
  1. Was the CSA a Contract?
No. 02-2667                                                13

  Boomer maintains that the CSA did not constitute a valid
contract under Illinois law.4 Initially we note that while
Boomer alleged in his complaint that he did not recall
receiving the CSA mailing, on appeal he does not claim that
did not receive the CSA Mailing. Nor does he claim that he
attempted to cancel his service with AT&T. Rather, Boomer
argues that the CSA Mailing did not constitute an offer, that
his silence did not constitute an acceptance, that there was
no consideration supporting the arbitration clause, and that
AT&T committed fraud.
  Boomer first claims that the CSA did not constitute an
offer because AT&T customers “would not recognize AT&T’s
mailing with the CSA as an offer to a contract.” However,
the letter accompanying the CSA clearly and explicitly
stated that “[e]nclosed is your copy of the new AT&T
Consumer Services Agreement containing the terms and
conditions for our state-to-state and international consumer
long distance services. This Agreement will begin to apply
to these AT&T services on August 1, 2001.” The cover letter
further explained that the consumer was “accept[ing] the
terms of the Agreement simply by continuing to use or pay
for any AT&T state-to-state or international consumer
calling service.” Additionally, the CSA explained in bold,
capitalized text at the beginning of the CSA that “BY
ENROLLING IN, USING, OR PAYING FOR THE
SERVICES, YOU AGREE TO THE PRICES, CHARGES,
TERMS AND CONDITIONS IN THIS AGREEMENT.”
This plain, unambiguous language makes clear that the
CSA constituted an offer. See Architectural Metal Sys., Inc.
v. Consolidated Sys., Inc., 58 F.3d 1227, 1229 (7th Cir.

       4
          Although AT&T argues that the Communications
Act preempts state law as to the validity of contractual terms
and conditions, AT&T and Boomer both maintain that
Illinois state law governs questions of contract formation.
Therefore for purposes of appeal we will assume that Illinois
state law determines whether a contract was formed.
14                                                 No. 02-2667

1995), citing McCarty v. Verson Allsteel Press Co., 411
N.E.2d 936, 943 (Ill. App. 1980) (“The test for an offer is
whether it induces a reasonable belief in the recipient that
he can, by accepting, bind the sender.”).         See also,
Restatement (Second) of Contracts § 24 (1981) (“An offer is
the manifestation of willingness to enter into a bargain, so
made as to justify another person in understanding that his
assent to that bargain is invited and will conclude it.”).
  Next, Boomer contends that his continued use of AT&T’s
long-distance service did not constitute an acceptance of
AT&T’s offer. In support of this argument, Boomer cites
Section 69 of the Restatement (Second) of Contracts, which
provides:
  (1) Where an offeree fails to reply to an offer, his silence
  and inaction operate as an acceptance in the following
  cases only:
     (a) Where an offeree takes the benefit of offered
     services with reasonable opportunity to reject them
     and reason to know that they were offered with the
     expectation of compensation.
  Boomer argues that he did not have a reasonable
opportunity to reject the offer, and therefore his continued
use of AT&T services did not constitute an acceptance. This
argument also fails because the CSA Mailing clearly
provided a mechanism for rejecting AT&T’s offer: The cover
letter stated in bold capitalized letters that “IF YOU DO
NOT AGREE TO THESE PRICES, CHARGES, TERMS
AND CONDITIONS, DO NOT USE THE SERVICES,
AND CANCEL THE SERVICES IMMEDIATELY BY
CALLING AT&T AT 1-888-288-4099.” Thus, Boomer had
a reasonable opportunity to reject AT&T’s offer, but
nonetheless continued to use his AT&T services—services
that were offered with the clear and explicit expectation of
compensation. Under these circumstances, Boomer’s silence
constituted an acceptance. See, e.g., Hill v. Gateway 2000,
Inc., 105 F.3d 1147, 1148-49 (7th Cir. 1997) (concluding that
under Illinois law the plaintiffs’ silence constituted an accept
No. 02-2667                                                 15
of the terms and conditions—including an arbitration
clause—set forth on a form contract included in the box
which contained the computer that the plaintiffs had ordered
from the defendant and which they accepted).5
  Boomer further challenges the existence of a contract by
arguing that there was no consideration for the CSA. In
support of this argument, Boomer first points to the
following language: “[B]e assured that your AT&T service
or billing will not change under the AT&T Consumer
Services Agreement.” Boomer claims that this language
shows that he received nothing in exchange for his

       5
          The district court distinguished Gateway by noting
that in Gateway the Hills had admitted to receiving the form
contract, but failed to read it, whereas in this case Boomer
does not admit that he received the CSA Mailing. However,
as noted above, Boomer does not contend that he did not
receive the mailing–just that he does not remember receiving
it. Where a letter is properly addressed and mailed, there is
“a presumption that it reached its destination in usual time
and was actually received by the person to whom it was
addressed.” See Hagner v. United States, 285 U.S. 427, 430
(1932). In this case, AT&T presented proof through the
Declaration of Ellen Reid, the AT&T employee who oversaw
the mailing of the CSA to AT&T customers, verifying that
proper mailing procedures were followed. Boomer does not
present any conflicting evidence in this regard. Thus, we
must presume that Boomer received the mailing. Id. See
also Godfrey v. United States, 997 F.2d 335, 338 (7th Cir.
1993) (a presumption exists that a mailing is received where
there is “proof of procedures followed in the regular course of
operations which give rise to a strong inference that the
[correspondence] was properly addressed and mailed”). In
any event, on appeal Boomer does not claim that the CSA did
not constitute an offer because he did not receive the CSA
mailing.
16                                               No. 02-2667

agreement to arbitration. This argument is misplaced—in
exchange for his agreement to arbitrate, AT&T agreed to
provide continued telephone services. It is true that when
there is an existing contractual obligation, a promise to
continue performing that legal obligation lacks
consideration. But AT&T had no legal obligation to continue
providing Boomer with telephone services. Therefore,
Boomer received something of legal value—continued
service—in exchange for his promise to arbitrate.
  That AT&T could have canceled Boomer’s telephone
services is actually Boomer’s second basis for claiming a lack
of consideration: Boomer asserts that because AT&T
expressly told him that if he did not agree to the terms of the
CSA, it would cancel his service, there was no “bargained-
for-exchange,” and thus no consideration. This argument
also fails, however, because, contrary to Boomer’s position,
the “bargained-for-exchange” requirement does not prohibit
the execution of form contracts presented on a take-it-or-
leave it basis. See Metro East Center for Conditioning and
Health v. Qwest Communications International, Inc., 294
F.3d 924, 926 (7th Cir. 2002) (“Yet we have held that form
contracts, offered on a take-it-or-leave-it basis, are
agreements for purposes of the Arbitration Act.”). See, e.g.,
Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361, 367
(7th Cir. 1999); Hill v. Gateway 2000, Inc., 105 F.3d 1147,
1148 (7th Cir. 1997). Rather, under general contract
principles a bargained-for exchange exists if one party’s
promise induces the other party’s promise or performance.
See Hartbarger v. SCA Services, Inc., N.E.2d 596, 604 (Ill.
App. 1990) (“A performance or return promise is bargained
for if it is sought by the promisor in exchange for his promise
and is given by the promisee in exchange for that promise.”)
(quoting Restatement (Second) of Contracts § 71 (1981)).
See also, Restatement (Second) of Contracts § 71, comment
b at 173 (1981) (“‘Bargained for.’ In the typical bargain, the
consideration and the promise bear a reciprocal relation of
motive or inducement: the consideration induces the making
of the promise and the promise induces the furnishing of the
No. 02-2667                                               17

consideration.”). In this case, AT&T’s promise to continue
telephone services (something it was not obligated to do)
induced Boomer’s corresponding promise (among other
things) to arbitrate, and thus there was a bargained-for
exchange and consideration. See, e.g., Metro East, 294 F.3d
at 926 (explaining that although the agreement’s provision
for arbitration may be non-negotiable, it is nonetheless an
agreement “because the person could have chosen to do
something else.”).
       Next Boomer argues that AT&T committed fraud by
deemphasizing the CSA and presenting it as a non-event,
whereas in reality by so inducing customers to agree to the
CSA they waived valuable rights. Boomer, however, fails to
point to any language in the CSA Mailing or in the
accompanying CSA that was false or misleading. Moreover,
the cover letter clearly and explicitly highlighted the
differences between the CSA and the previous terms
contained in the tariff, noting that “[t]he Agreement also
describes our new binding arbitration process, . . . .” Thus,
the plain language of the CSA Mailing negates Boomer’s
claim of fraud.
       In sum, the CSA Mailing constituted an offer and
Boomer’s continued use of AT&T services constituted an
acceptance. Consideration supported each party’s promises
and Boomer failed to present any evidence of fraud.
Accordingly, the CSA constituted a contract, and as such
established the terms and conditions governing AT&T’s
relationship with Boomer, one of which was an arbitration
clause. Based on this clause, AT&T moved to compel
arbitration of Boomer’s claims against it. Boomer, however,
contends that even if the CSA is a contract, the arbitration
clause should not be enforced because it is unconscionable
and violates the Illinois Consumer Fraud Act and the
Deceptive Business Practices. AT&T responds that the
Communications Act preempts Boomer’s state law
challenges to the validity of the arbitration clause. We now
turn to the question of preemption.
18                                                No. 02-2667

       2. Preemption of the Arbitration Clause
         The doctrine of preemption emanates from the
Supremacy Clause: “This Constitution, and the Laws of the
United States which shall be made in Pursuance thereof . .
. . shall be the Supreme Law of the land.” U.S. Const., Art.
VI, cl. 2. Because federal law is the supreme law of the land,
it preempts state laws that “interfere with, or are contrary
to, federal law.” Hillsborough County v. Automated Medical
Laboratories, Inc., 471 U.S. 707, 712 (1985). A federal law
may preempt a state law expressly, impliedly through the
doctrine of conflict preemption, or through the doctrine of
field (also known as complete) preemption. Gracia v. Volva
Europa Truck, N.V., 112 F.3d 291, 294 (7th Cir. 1997). With
express preemption, a federal statute explicitly provides that
it overrides state law. Id. Implied conflict preemption
occurs where “it is impossible for a private party to comply
with both state and federal requirements, . . . or where state
law stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress.”
Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995)
(internal quotations omitted). Finally, field (complete)
preemption exists when “Congress . . . so completely
preempt[s] a particular area, that any civil complaint raising
that select group of claims is necessarily federal in
character.” Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58,
63-64 (1987). On appeal, AT&T argues that Boomer’s state
law challenges to the validity of the arbitration clause are
preempted either impliedly through conflict preemption or
through the doctrine of field (complete) preemption, and
therefore, AT&T maintains, the arbitration clause governs
and the district court should have granted its motion to
compel arbitration and to stay the proceedings.
       a) Implied Preemption
        As summarized above, implied preemption exists if it
is either impossible to comply with both state and federal
law, or if state law conflicts with a federal objective. Gracia,
112 F.3d at 294. AT&T contends that a state law challenge
No. 02-2667                                                 19

to the validity of the arbitration clause violates Congress’s
objective in passing the Communications Act, and
specifically conflicts with the objectives of Sections 201(b)
and 202(a) of the Communications Act.
       Section 201(b) of the Communications Act provides:
       All charges, practices, classifications, and regulations
       for and in connection with such communication
       service, shall be just and reasonable, and any such
       charge, practice, classification or regulation that is
       unjust or unreasonable is declared to be unlawful.
47 U.S.C. § 201(b).
       Section 202(a) states:
       It shall be unlawful for any common carrier to make
       any unjust or unreasonable discrimination in
       charges, practices, classifications, regulations,
       facilities, or services for or in connection with like
       communication service, directly or indirectly, by any
       means or device, or to make or give any undue or
       unreasonable preference of advantage to any
       particular person, class of persons, or locality or to
       subject any particular person, class of persons, or
       locality to any undue or unreasonable prejudice or
       disadvantage.
47 U.S.C. § 202(a) (emphasis added).
       Based on these provisions, AT&T claims that a state
law challenge to the validity of the arbitration clause is
preempted. For three main reasons, we agree. First, these
provisions, and the Communications Act in general,
demonstrate a congressional intent that customers of
individual long-distance carriers receive uniform terms and
conditions of service; however, allowing a state law challenge
to the CSA’s arbitration clause would result in customers
receiving different terms based on their locality. Second, the
incorporation of the arbitration clause in the CSA allows
AT&T to offer lower rates, and allowing state law to
20                                                No. 02-2667
invalidate this clause will affect the rates AT&T offers,
resulting in discriminatory rate structures. Third, Section
201 declares unlawful rates, terms and conditions which are
not just and reasonable, demonstrating Congress’s intent
that federal law govern the validity of the terms and
conditions of long-distance service contracts.
        First, Sections 201 and 202, read together,
demonstrate a congressional intent that individual long-
distance customers throughout the United States receive
uniform rates, terms and conditions of service. See, e.g.,
American Telephone & Telegraph Co. v. Central Office
Telephone, Inc., 524 U.S. 214, 223 (1998) (“It is that
antidiscriminatory policy which lies at ‘the heart of the
common-carrier section of the Communications Act.’”) (citing
MCI Telecommunications Corp. v. American Telephone &
Telegraph Co., 512 U.S. 218 (1994)). Yet, a state law
challenge to the validity of the terms and conditions of a
telephone service agreement would result in the application
of fifty bodies of law, and this would inevitably lead to
customers in different states receiving different terms and
conditions. Boomer’s own lawsuit demonstrates this point,
as he not only challenges the validity of the arbitration
clause, but also the validity of the attorney’s fees provision
and the clause prohibiting class action lawsuits.6 Absent

       6
          While Boomer challenges the validity of the CSA’s
provision concerning the right to attorney’s fees and the
clause prohibiting the use of a class action, because we
conclude that arbitration is required, these other challenges
must be decided by the arbitrator in the first instance. Metro
East, 294 F.3d at 929. See also Larry’s United Super, Inc. v.
Werries, 253 F.3d 1083, 1086 (8th Cir. 2001) (holding that on
appeal from an order denying a motion to compel arbitration,
a court may only determine whether a dispute is subject to
arbitration; other contractual challenges must be determined
by the arbitrator). Of course in considering Boomer’s other
                                                 (continued...)
No. 02-2667                                                 21
preemption, there is nothing to prevent similar state law
challenges to the CSA’s other terms and conditions. This
will result in patchwork contracts, because under some
states’ laws some clauses will be upheld and other
invalidated, while under other states’ laws, it may well be
the opposite. This conflicts with Section 202's prohibition on
providing advantages or preferences to customers based on
their “locality.” 47 U.S.C. § 202.
         Second, a state law challenge to an arbitration clause
(or for that matter a provision prohibiting class actions) not
only affects the uniformity of that term, but it also threatens
to destroy the consistency of rates offered consumers
throughout the United States. As we recognized in Metro
East, 294 F.3d 924, arbitration offers cost-saving benefits to
telecommunication providers and “these benefits are
reflected in a lower cost of doing business that in competition
are passed along to customers.” Id. at 927. However, if in
some states arbitration clauses are stricken as
unconscionable or illegal under various states’ consumer
protection laws, whereas in other states such provisions are
validated, the overall cost savings will be reduced. AT&T
and other providers would then be faced with three

       6
         (...continued)
challenges, the arbitrator will be required to apply the
appropriate law, which given our holding today means that
the Communications Act preempts other state law challenges
to the validity of the terms and conditions contained in the
CSA. Cf. Metro East, 294 F.3d at 929 (“An arbitrator has no
more power to alter a tariff's rate than does a judge; and
because Central Office Telephone treats conditions and other
tariff terms as part of the rates, it may follow that an
arbitrator must take the whole tariff as he finds it, in order
to avoid any possibility of discriminatory application (that
bugbear of rate-regulation systems, and the main target of
the filed-rate doctrine).”).
22                                                No. 02-2667
options—increase the rates of those living in litigation (as
opposed to arbitration) states, increase everyone’s rates, or
leave rates the same. The first option results in differing
rates which violates the intent (if not the terms, see infra at
___ n.8), of the Communications Act. See AT&T v. Central
Office Telephone, Inc., 524 U.S. 214, 223 (1998) (“[T]he policy
of nondiscriminatory rates is violated when similarly
situated customers pay different rates for the same
services.”). The second and third options (the latter of which
is economically unrealistic),7 while on their face do not vary

       7
           It is unreasonable to assume that rates would
remain the same even if the arbitration clause were
invalidated because, as Metro East recognized, arbitration
offers cost-saving benefits to telecommunication providers
and “these benefits are reflected in a lower cost of doing
business that in competition are passed along to customers.”
Id. at 927. Realistically, then, without the arbitration
provision, AT&T and other carriers would be forced to
increase rates across the board in order to prevent
discriminatory pricing. Besides being unfair to customers
who must now pay higher rates while still subject to
arbitration clauses (held valid in their home states), this
outcome conflicts with Congress’s intent in passing the
Telecommunications Act of 1996. Specifically, in passing the
Telecommunications Act of 1996, Congress sought “to
promote competition and reduce regulation in order to secure
lower prices and higher quality services for American
telecommunications consumers . . . .” Preamble,
Telecommunications Act of 1996, Pub. L. No. 104-104, 110
State. 56 (1996). Moreover, IF the detariffing provisions of
the Telecommunications Act subject the terms of nationwide
long-distance form contracts to state law attack, the
transactional costs and litigation expenses would also
increase. Carriers would then face the continuous cost of
                                               (continued...)
No. 02-2667                                                    23

the rates consumers receive, nonetheless constitute
“discrimination in charges.” As the Supreme Court
recognized in Central Office, “rates . . . do not exist in
isolation,” id. at 223, and “‘discrimination in charges’ . . . can
come in the form of a lower price for an equivalent service or
in the form of an enhanced service for an equivalent price.”
Id. at 223 (quoting Competitive Telecommunications Assn. v.
FCC, 998 F.2d 1058, 1062 (D.C. Cir. 1993)). Thus, if AT&T
charges its customers the same rate, but provides different
terms and conditions for service, that too is a form of
“discrimination in charges.” Accordingly, even if AT&T
leaves its rates the same (or increases everyone’s rates),
consumers will still face discriminatory charges, as some
customers will be bound by the arbitration clause and others
will not be. Those not bound will obtain that same rate
without subjecting themselves to the terms and conditions
which made that rate possible. See Metro East, 294 F.3d at
927 (“Customers therefore are compensated through lower
rates for any net loss they may experience in arbitration.
They can’t accept the lower rates . . . while avoiding the
means that made lower rates possible.”).
      Of course, Section 202(a) only prohibits “undue” or
“unreasonable” discrimination, and thus it is possible that

       7
         (...continued)
court challenges and the added expense of revising and
distributing modified CSAs which conform with new state
court rulings. Consumers would bear the brunt of this
through higher prices for telephone service. This too is at
odds with Congress’s intent. It also belies the FCC’s belief
that the transactional costs of detariffing would be fixed and
short-lived. See, 11 FCC Rcd. at 20,736 (¶ 57) (recognizing
that detariffing would result in some “increased
administrative costs,” but anticipating those costs to be
initial (and fixed) costs only resulting from “the shift to a
detariffed environment . . . (such as the cost of developing
short, standard contracts)”).
24                                               No. 02-2667

AT&T could justify its disparate charges because state law
caused the discrimination by invalidating the arbitration
clause in some states, but not others. See, e.g., Panatronic,
USA v. AT&T Corp., 287 F.3d 840, 844 (9th Cir. 2002) (“A
difference in price is not unreasonable if there is a neutral,
rational basis underlying [the disparity].”) (internal quotes
omitted). However, allowing state law to determine the
validity of the various terms and conditions agreed upon by
long-distance providers and their customers will create a
labyrinth of rates, terms and conditions and this violates
Congress’s intent in passing the Communications Act.8
       Third, it is clear from Section 201(b) that Congress
intended federal law to govern the validity of the rates,
terms and conditions of long-distance service contracts. As
excerpted above, that section requires all charges and
practices related to communication service to be just and
reasonable, and it declares unlawful any unjust or
unreasonable charges or practices. 47 U.S.C. § 201(b). This
language demonstrates Congress’s intent that federal law
determine the reasonableness of the terms and conditions of
long-distance contracts. See also In re Long Distance
Telecomm. Lit., 831 F.2d 627, 631 (6th Cir. 1987) (“Section
201(b) speaks in terms of reasonableness, and the very
charge of Count I is that the defendants engaged in
unreasonable practices. This is a determination that
‘Congress has placed squarely in the hands of the [FCC]’”)
(quoting Consolidated Rail Corp. v. National Ass’n of

       8
           On the other hand, if the resulting discrimination
was not considered “reasonable,” then AT&T would be in
violation of Section 202(a). In that case, state law would not
just conflict with a federal objective, but it would directly
conflict with federal law because it would be impossible for
AT&T “to comply with both state and federal requirements,
. . . .” Freightliner Corp. v. Myrick, 514 U.S. at 287.
No. 02-2667                                                25
Recycling Indust. Inc., 449 U.S. 609, 612 (1981)).9 While
Boomer challenges the arbitration clause under the state
law doctrine of unconscionability and various state consumer
protection statutes, in essence the question is the
same—whether the term is fair and reasonable. Permitting
such state law challenges would open the door for direct
conflicts between federal and state law on the validity of
terms and conditions contained in a long-distance service
contract. For example, the FCC specifically adopted a policy

       9
          Section 207 of the Communications Act authorizes
“[a]ny person claiming to be damaged by any common carrier
subject to the provisions of this chapter” to file a complaint
with the FCC. 47 U.S.C. § 207. Additionally, Section 208
provides: “(a) Any person, any body politic or municipal
organization, or State commission, complaining of anything
done or omitted to be done by any common carrier subject to
this chapter, in contravention of the provisions thereof, may
apply to said Commission by petition which shall briefly state
the facts, whereupon a statement of the complaint thus made
shall be forwarded by the Commission to such common
carrier, who shall be called upon to satisfy the complaint or
to answer the same in writing within a reasonable time to be
specified by the Commission.” 47 U.S.C. § 208. Boomer could
have filed a complaint with the FCC under Section 207 or
Section 208, arguing that the arbitration clause violates
Section 201(b) because it is unjust or unreasonable. Cf. In re
Long Distance, 831 F.2d at 631 (concluding that FCC has
primary jurisdiction to determine if a term and condition of
a long-distance service contract constitute an unreasonable
practice); Metro East, 294 F.3d at 927 (holding that FCC
possesses exclusive authority to set aside an arbitration
clause contained in a filed tariff). However, Boomer did not
pursue this course of action.
26                                               No. 02-2667

encouraging the use of alternative dispute resolution in its
administrative procedures. 47 C.F.R. § 1.18. Also, in the
past, tariffs filed by other carriers have include arbitration
clauses and those clauses have been enforced. See Metro
East, 294 F.3d at 926-27. The FCC has also concluded that
class actions are “neither contemplated by, nor inconsistent
with” the Communications Act’s complaint remedies. Krauss
v. MCI, 14 FCC Rcd. 2770, 2775-76 (¶ 10). Yet, if Boomer
would have his way, arbitration provisions and clauses
prohibiting class actions would be illegal under state law,
even if they were considered “just and reasonable” under
federal law. The Supremacy Clause prohibits such an
outcome.
        Boomer argues in response that following detariffing
federal law no longer preempts state law challenges to the
validity of contractual provisions. Specifically, Boomer
claims that because the FCC no longer requires long-
distance providers to file tariffs, 47 U.S.C. § 160, the cases
which had held that the Communications Act preempts state
law are now inapplicable. In support of his position, Boomer
cites Ting v. AT&T, 182 F. Supp. 2d 902 (N.D. Cal. 2002), a
class action suit challenging, among other things, the
validity of AT&T’s arbitration clause under California law.
The court in Ting rejected AT&T’s preemption argument
and its reliance on decisions rendered before detariffing,
concluding that “[i]n light of the clear purpose of the filed
rate doctrine, AT&T’s reliance on these cases is misplaced.”
Id. at 937.
         Boomer is correct that the filed-rate doctrine and the
tariff-filing requirement demonstrated Congress’s intent to
preempt state law challenges to the terms and conditions
contained in the tariff. However, Section 203, which
required the filing of tariffs, merely served as a mechanism
by which the FCC could assure compliance with the
standards set forth in Sections 201 and 202. See MCI, 512
U.S. 230 (“[T]his Court has repeatedly stressed that rate
filing was Congress’s chosen means of preventing
unreasonableness and discrimination in charges.”). Thus,
No. 02-2667                                                    27

the filing requirement furthered the Communications Act’s
purpose of prohibiting and punishing unequal rates and
preventing discrimination. Id. Following detariffing, those
goals remain, as do the substantive requirements of Sections
201 and 202. It is just that now Congress believes that
these goals can be met without tariffs. In fact, in
authorizing the FCC to forego the tariff-filing requirement,
Congress required the FCC to first assure itself that the
filing of a tariff was “not necessary to ensure that the
charges, practices, classifications, or regulations . . . are just
and reasonable and are not unjustly or unreasonably
discriminatory.” 47 U.S.C. § 160(a)(1). Thus, even though
the FCC no longer mandates the filing of tariffs, the
congressional objective of providing uniform rates, terms and
conditions remains, as does the federal prohibition on terms
and conditions which are unjust or unreasonable. Moreover,
following detariffing, the FCC intended customers to retain
the right to challenge the justness and reasonableness of
long-distance providers’ charges and practices under Section
208. Interstate Interexchange Marketplace, 11 FCC Rcd. at
20,730 (¶ 21). Additionally, the FCC made clear that its
decision eliminating the tariff requirement did “not affect
[the FCCs] enforcement of carriers’ obligations under
sections 201 and 202.” Interstate Interexchange Marketplace,
12 FCC Rcd. at 15,057 (¶ 77). Therefore, detariffing does
not alter the fundamental design of the Communications
Act, nor modify Congress’s objective of uniformity in terms
and conditions for all localities. Accordingly, we reject
Boomer’s argument and his reliance on Ting.10

       10
          Boomer also argues that Ting collaterally estops
AT&T from challenging the validity of the arbitration clause
because the court in Ting held that the arbitration clause
was unconscionable. However, for collateral estoppel to bar
subsequent litigation, among other things, the issue sought
to be precluded must be the same as involved in the prior
                                              (continued...)
28                                               No. 02-2667
        Boomer next contends that the FCC’s detariffing
orders support his position that federal law does not preempt
his state law challenges to the validity of the arbitration
clause. Specifically, Boomer cites to the FCC’s response to
AT&T, Sprint and WorldCom’s request that the FCC
“[c]larify that federal, and not state, law governs the
determination as to whether a nondominant interexchange
carrier’s rates, terms, and conditions . . . are lawful,” 12
FCC Rcd. at 15,057 (¶ 76), wherein the FCC stated:

       10
          (...continued)
case. Chicago Truck Drivers, Helpers & Warehouse Union
(Independent) Pension Fund, 125 F.3d 526, 530 (7th Cir.
1997). In Ting, the question of unconscionability involved
California law, whereas in this case it involves Illinois law,
and therefore the issues are not the same. In fact, because we
conclude that Boomer’s state law challenge to the arbitration
clause is preempted by the Communications Act, the issue of
unconscionability is not even in play. Moreover, while on
appeal Boomer perfunctorily states in a footnote that Ting
collaterally estops AT&T from arguing that the
Communications Act preempts his state law challenges to the
arbitration clause, he fails to support this position with any
legal analysis or citation. Therefore he has waived that
argument. Rekhi v. Wildwood Indust., Inc., 61 F.3d 1313,
1317 (7th Cir. 1995). Finally, even had Boomer not waived
this argument, because the issue of preemption involves a
pure question of law and because Ting is currently on appeal
to the Ninth Circuit, we would still conclude that Ting has
no preclusive effect. See, e.g., Chicago Truck Drivers, 125
F.3d at 532-33 (holding that collateral estoppel did not bar
the defendant from relitigating a pure question of law, and
noting that that is especially true “when the issue is of
general interest and has not been resolved by the highest
appellate court that can resolve it”) (internal quotation
omitted).
No. 02-2667                                               29

       We therefore agree with AT&T, Sprint, and
       WorldCom that the Communications Act continues to
       govern determinations as to whether rates, terms,
       and conditions for interstate, domestic, interexchange
       services are just and reasonable, and are not unjustly
       or unreasonably discriminatory. While the parties
       only sought clarification that the Communications
       Act governs the determination as to the lawfulness of
       rates, terms, and conditions, we note that the
       Communications Act does not govern other issues,
       such as contract formation and breach of contract,
       that arise in a detariffed environment. As stated in
       the Second Report and Order, consumers may have
       remedies under state consumer protection and
       contract laws as to issues regarding the legal
       relationship between the carrier and customer in a
       detariffed regime.
12 FCC Rcd. at 15,057 (¶77).
       Boomer focuses on the FCC’s pronouncement that “the
Communications Act does not govern other issues, such as
contract formation and breach of contract,” as well as its
statement that “consumers may have remedies under state
consumer protection and contract laws.” Boomer argues that
this language demonstrates that federal law does not
preempt his state law challenge to the validity of the
arbitration clause. That argument, however, ignores the
earlier language wherein the FCC stated that “the
Communications Act continues to govern determinations as
to whether rates, terms, and conditions . . . are just and
reasonable, and are not unjustly or unreasonably
discriminatory,” and the FCC’s statement that “the
Communications Act governs the determination as to the
lawfulness of rates, terms and conditions, . . .” Thus, while
state law may determine whether a contract has been
30                                               No. 02-2667
formed, federal law still governs the validity of the rates,
terms and conditions of the contract.11
       Finally, Boomer cites to the historical notes to 47
U.S.C. § 152 which provide: “This Act and the amendments
made by this Act shall not be construed to modify, impair, or
supersede Federal, State, or local law unless expressly so
provided in such Act or amendments.” 47 U.S.C. § 152,
Historical Statutory Notes. Boomer contends that this
savings clause demonstrates that Congress did not intend to
preempt state law challenges to the terms and conditions of
the CSA. However, Section 152 was passed as part of the
Telecommunications Act of 1996 and by its own terms applies
only to “[t]his Act and the amendments made by this Act.”
“This Act” is the Telecommunications Act of 1996, and not
the Communications Act of 1934, of which Section 201 and
202 are part. Therefore, rather than support Boomer’s
position, the historical notes to Section 152 confirm that the
Telecommunications Act did not “modify, impair or
supersede” Sections 201 and 202, and their goals of
uniformity and non-discrimination.
       In sum, in passing the Communications Act Congress
sought to ensure that consumers would receive uniform rates
and that consumers would not be discriminated against

        11
           In Ting, the district court concluded that under
California law the doctrine of unconscionability concerns the
formation of a contract. However, whether state law treats
unconscionability as a doctrine preventing the formation of
a contract or as a defense barring enforcement of a term of a
contract, the effect is the same—a contractual provision is
declared illegal under state law. Either way, the outcome
conflicts with the federal objective of the Communications
Act. Accordingly, even if under state law a challenge to the
validity of a term or condition of a long-distance service
contract is characterized as an issue of contract “formation,”
that state law challenge is nonetheless preempted.
No. 02-2667                                                  31

based on their locality. Allowing state law challenges to the
validity of the terms and conditions contained in long-
distance contracts, however, results in the very
discrimination Congress sought to prevent. Moreover, the
arbitration clause serves to lower customers’ rates, and thus
an indirect result will be price discrimination, either directly
or indirectly (i.e. because customers paying the same price
receive different contractual rights). Finally, Section 201(b)
clearly demonstrates Congress’s intent that federal law
determine the fairness and reasonableness of contractual
terms, as opposed to state law principles such as
unconscionability. For all of these reasons, we conclude that
Boomer’s state law challenges to the validity of the
arbitration clause are impliedly preempted by the
Communications Act.
       b) Field Preemption
        In addition to arguing that Boomer’s state law
challenges to the arbitration clause are preempted because
they conflicts with the federal objective of the
Communications Act, AT&T also contends that in passing
the Communications Act, Congress completely preempted
any state law regulation of long-distance contracts. Prior to
detariffing, this court held that the Federal Communications
Act completely preempted state law challenges to the terms
and conditions contained in a filed tariff. Cahnmann v.
Sprint Corp., 133 F.3d 484, 489-90 (7th Cir. 1998). However,
following detariffing, there appears to be some role for state
law, see 12 FCC Rcd. at 15,057 (¶77), although it cannot
operate to invalidate the rates, terms or conditions of a long-
distance service contract. It would therefore seem that under
the new detariffed regime federal law no longer completely
preempts state law. But we need not resolve this issue today
as Boomer’s state law challenges to the arbitration clause are
nonetheless preempted under the doctrine of impliedly
conflict preemption. Accordingly, Boomer is bound by the
arbitration clause and his claims must be submitted to
arbitration.
32                                                No. 02-2667

                             III.
        Following detariffing, AT&T mailed Boomer an offer
(in the form of the CSA) to provide long-distance services.
Boomer accepted this offer by continuing to use AT&T’s
services, and therefore the CSA constitutes a contract.
Among other things, the CSA included an arbitration clause.
While Boomer contends that that clause is unconscionable
under state law and violates the Illinois Consumer Fraud Act
and the Deceptive Business Practices Act, the
Communications Act preempts state law challenges to the
validity of contractu al provisions because the
Communications Act seeks to promote the uniformity of
rates, terms and conditions, and state law challenges to the
legality of contractual provision would destroy that objective.
Accordingly, Boomer cannot challenge the validity of the
arbitration clause under state law, and instead must submit
to arbitration.     We therefore REVERSE and compel
arbitration of Boomer’s claims. The underlying proceedings
are further stayed pending the outcome of arbitration.