A federal district court in the Northern District of Illinois recently refused to compel arbitration of a consumer’s complaint brought in relation to the purchase of an iPhone. The case is shocking for at least two reasons. It is shocking because the lead attorney for AT&T engaged in shameful, clearly sanctionable behavior during the course of the litigation. And the case is shocking because the court felt compelled to spend considerable time and space justifying its (correct) refusal to compel arbitration.
In the case, Trujillo v Apple Computer, ___ F.Supp.3d ___, 2008 WL 4368937 (N.D. Ill. 2008), Trujillo alleged fraud stemming from Apple’s failure to disclose information about the performance and longevity of the iPhone battery. Apple removed the case from Illinois state court to the Northern District of Illinois, and then moved to compel arbitration under the FAA.
These days, of course, a court must engage in extraordinary gymnastics if it is to refuse to enforce an arbitration agreement. Even so, this one should have been easy.
Trujillo never agreed to arbitrate.
“Well,” you might think, “that happens all the time, what with adhesion contracts printed in small fonts. Courts often enforce such arbitration agreements. Nothing special here.”
But the arbitration agreement wasn’t in the paperwork Trujillo received before he made the purchase or at the time he made the purchase.
“Well,” you might think, “as long as the store had a copy available for him to review, he might not have needed his own copy…”
But the store he bought it from had no copy of the agreement.
“Well,” you might think, “this is a high-tech world, and I’m sure he could have found it online.”
But he would have had no reason to know to look online for something that was not part of his purchase.
And even if he had looked, he would have found only an outdated arbitration agreement.
This should have been the easiest case of procedural unconscionability ever. Perhaps even a companion to the easiest substantive unconscionability case ever — Hooters v. Phillips, 173 F.3d 933 (4th Cir 1999).
And yet, I wonder whether the court’s lengthy treatment was actually unnecessary. “Consent” in arbitration has come to mean so little, and the preemption doctrine has come to encompass so much, it may be that there are no easy cases…
Michael Moffitt
I was surprised about other aspects of contracts of adhesion not addressed – I wrote an entire iPhone review. I felt compelled after discovering that consumers had no choice but to hand over their credit card information to Apple, even though they may have purchased all equipment and service from AT&T. The arbitration issue is probably the smallest of all of them that I discovered and is the tip of the iceberg.
Seeing that arbitration is a creature of contract, it would seem that in this case there was no contract formed to arbitrate. When courts refuse to compel arbitration under circumstances such as the ones found in this case, it lends credibililty to the arbitration process, in my opinion. If only U.S. courts would invalidate arbitration agreements in the adhesion contracts found in consumer products. If consumers were given a choice whether to arbitrate, likely a surprising number of people would agree to do so. Being forced to arbitrate by virtue of a purchase at the local Best Buy or Circuit City only builds distrust into the process.