U.S. Seventh Circuit - The FindLaw 7th Circuit Court of Appeals Opinion Summaries Blog

Seventh Circuit Sides with Alltel in Arbitration Case

You have a cell phone, and most likely a contract for the service plan that goes with that cell phone. So when you run into problems with your wireless provider, are you tempted to use your legal know-how to challenge the arbitration clause in your cell phone contract? If you are, keep in mind that the Seventh Circuit Court of Appeals, like the Supreme Court, favors arbitration clauses.

This Seventh Circuit arbitration case hits close to home because we can remember a time where we faced a similar battle.

Back in the early aughts, we entered a contract for a new cell phone plan with a regional mobile provider. The problem with this plan was that our home was located in the center of the "local calling area," but phone calls we made from home were somehow routed through a tower in Puerto Rico. Every month, we had to call the company and have our phone bill, four times the contracted rate, adjusted.

Then a big, national mobile carrier bought our tiny regional company, and informed us that they would no longer correct the bill. We finally decided that it was more cost-effective to pay a fine to end the contract early. But, if we had sued, like today's plaintiff Christopher Gore, we probably would have been kicked out of the courts and into arbitration.

Gore brought a class action against Alltel Communications, LLC for failing to honor the terms of an agreement he previously made with a company Alltel acquired. Alltel moved to compel arbitration in light of a broad arbitration clause included in its service agreement with Gore.

A district court denied Alltel's motion, concluding that a genuine dispute existed regarding the scope of the arbitration clause. The Seventh Circuit Court of Appeals disagreed, finding that Gore's claims were based, in part, on the products and services he received under the Alltel Agreement, so the arbitration clause applied.

While Gore never specifically agreed to Alltel's arbitration clause, his monthly invoice included the following statement: These services are subject to Alltel's terms and conditions, which are found on the back of your customer service agreement and at www.alltel.com. By paying this bill, you acknowledge that you are bound by these terms and conditions.

The terms and conditions, of course, included an arbitration clause.

If you have a client who wants to fight the good fight against a cell phone provider in Illinois, warn your client that jurisprudence in the Seventh Circuit Court of Appeals favors the provider's arbitration clause.

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