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Barbara Division v. Cingular Wireless LLC

March 23, 2007

BARBARA DAVIDSON PLAINTIFF
v.
CINGULAR WIRELESS LLC, D/B/A CINGULAR WIRELESS DEFENDANT



The opinion of the court was delivered by: Wm. R. Wilson, Jr. United States District Judge

ORDER

Plaintiff subscribes to wireless telephone service provided by Defendant ("Cingular"). In her Amended Complaint and Request for Class Action, she alleges that Cingular has "consistently charged late payment charges on past due accounts" that "are interest under Arkansas law and violate usury provisions of Article 19, § 13 of the Arkansas Constitution."*fn1 Cingular maintains that by obtaining service, Plaintiff agreed to the arbitration agreement found in its Wireless Service Agreement ("WSA"). Based on the WSA, Cingular has filed a Motion to Compel Arbitration (Doc. No. 10). Plaintiff has responded (Doc. No. 28 and 41).

I. Background

A. Procedural

This case was first filed on March 20, 2003, in the circuit court of Phillips County, Arkansas, alleging that Defendant engaged in deceptive and misleading marketing and billing practices. Defendant removed the case on May 14, 2003.*fn2 The case was remanded to state court after a hearing on September 3, 2003.

Plaintiff amended her complaint on April 18, 2006, adding a usury claim. Plaintiff argued that the late fees charged by Defendant were usurious in violation of Article 19, Section 13 of the Arkansas Constitution. On May 17, 2006, Defendant filed a second Notice of Removal.*fn3 Plaintiff responded by once again filing a Motion to Remand (Doc. No. 16). After an October 11, 2006 hearing on the Motion to Remand, the motion was denied by Order (Doc. No. 32) entered on October 12, 2006.

B. Factual

After the case had been remanded to the Phillips County Circuit Court in 2003, Cingular moved to compel Plaintiff to arbitrate her claims under the terms of the WSA. Plaintiff objected, claiming that she had never signed a WSA containing an arbitration agreement. Plaintiff was right. Cingular searched its records and located a WSA between Plaintiff and Southwestern Bell Wireless (Cingular's predecessor) that did not contain an arbitration provision. Based on that finding, Cingular withdrew its motion to compel arbitration, but did so "without prejudice to its moving for arbitration in the future should it discover that plaintiff has, in fact, signed a contract containing an arbitration provision."*fn4

Before removal, on April 18, 2006, Plaintiff filed an Amended Complaint, in which, Cingular argues, she "purported to represent an entirely new class with entirely new claims" and abandoned her "prior challenges to Cingular's arbitration provision."*fn5 After receiving the Amended Complaint, Cingular searched its records again looking for any WSA that Plaintiff may have executed since the 2003 Motion to Compel Arbitration had been withdrawn. Cingular discovered that Plaintiff signed a WSA on July 12, 2004, in which she acknowledged having read the agreement that included the following arbitration provision:

Please read this carefully. It affects your rights. Cingular and you . . . agree to arbitrate all disputes and claims arising out of or relating to this Agreement, or to any prior oral or written agreement for Equipment or services between Cingular and you. . . . You agree that, by entering into this Agreement, you and Cingular are waiving your right to trial by jury. . . . 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 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 . . . .*fn6 Plaintiff renewed her service again on October 21, 2005 either over the phone or by computer;*fn7 therefore, a signed WSA for October 21, 2005, does not exist.*fn8 Nevertheless, the arbitration provision in the October WSA was identical to the one Plaintiff signed in July 12, 2004.*fn9

Based on these findings, Cingular has once again moved to compel arbitration. Arguments were heard from both parties in a hearing held on March 16, 2007.

II. Standard of Review

The Federal Arbitration Act ("FAA") was created to establish "a liberal federal policy favoring arbitration agreements."*fn10 As I noted at the March 16th hearing, I doubt an informed general public would be enthusiastic about giving up the right to trial by jury; nevertheless, Congress has declared mandatory arbitration to be the policy of the land -- and the Courts have honored this Congressional "finding." In the Eighth Circuit, arbitration is required if a valid agreement exists and the dispute falls within the scope of the agreement.*fn11 The FAA mandates that courts "shall direct parties to arbitration on issues to which a valid arbitration agreement has been signed."*fn12

Whether an arbitration agreement has been entered into is a question of law, controlled by the applicable state contract law.*fn13 Arkansas law provides that the essential elements of a contract are: (1) competent parties; (2) subject matter; (3) legal consideration; (4) mutual agreement; and (5) mutual obligations.*fn14

III. Analysis

Defendant maintains that the WSA agreed to by Plaintiff governs this matter and requires arbitration. Defendant argues that the arbitration agreement in the WSA is valid and written in compliance with the FAA.*fn15 Before determining whether the FAA applies, the validity of the contract must first be determined.*fn16

Arbitration agreements are governed by general principles of contract law and determinations as to their terms and limits are questions of law.*fn17 A threshold inquiry is whether an agreement to arbitrate exists; that is, whether there has been mutual agreement, with notice as to the terms and subsequent assent.*fn18 A court cannot make a contract for the parties but can only construe and enforce the contract that they have made.*fn19 If there is no meeting of the minds,*fn20 there is no contract.*fn21 ...


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