NY District Court Declines to Enforce AT&T Arbitration Clause

In a recent opinion, Judge Block of the Eastern District of New York declined to enforce AT&T Mobility, LLC’s arbitration agreement.  The plaintiff had contracted with AT&T Mobility, LLC for wireless services.  The plaintiff then received unwanted phone calls from one of AT&T’s affiliates – AT&T Corp.  Plaintiff filed suit against AT&T Corp. under the TCPA.

AT&T Corp. asked the court to compel the dispute to arbitration based on the broad language in the AT&T Mobility contract.  Among other things, the contract purported to cover not only disputes with AT&T Mobility, but also any disputes with AT&T Mobility’s subsidiaries, affiliates, or any other related entity.

Declining to enforce the arbitration provision, Judge Block reasoned that

the words expressed [in the arbitration clause] must be judged according to “what an objective, reasonable person would have understood them to convey.” Leonard v. Pepsico, Inc., 88 F. Supp. 2d 116, 127 (S.D.N.Y. 1999) (citing Kay-R Elec Corp. v. Stone & Webster Constr. Co., 23 F.3d 55, 57 (2d Cir. 1994)). Notwithstanding the literal meaning of the clause’s language, no reasonable person would think that checking a box accepting the “terms and conditions” necessary to obtain cell phone service would

obligate them to arbitrate literally every possible dispute he or she might have with the service provider, let alone all of the affiliates under AT&T Inc.’s corporate umbrella—including those who provide services unrelated to cell phone coverage. Rather, a reasonable person would be expressing, at most, an intent to agree to arbitrate disputes connected in some way to the service agreement with Mobility. As explained above, Wexler’s claims are not so connected. If a company wishes to bind its costumers to something broader, it must take steps to secure something that a reasonable person would understand as an objective expression of his or her agreement.

(emphasis added).