Class Actions: T-Mobile's Mandatory Arbitration Clause Ruled "Unconscionable"

A class action lawsuit can proceed in Washington after the Ninth U.S. Circuit Court of Appeals ruled T-Mobile’s mandatory binding arbitration clause “unconscionable and unenforceable under Washington state law.”

From the Seattle Post-Intelligencer:

T-Mobile customers Kathleen Lowden and John Mahowald sued T-Mobile in King County Superior Court in 2005, alleging that the wireless carrier wrongly charged them for roaming, long distance, night-time and other fees that should have been free. They said T-Mobile also levied other charges, such as “a universal service fund fee,” that weren’t advertised.

T-Mobile removed the case to federal district court and tried to compel mandatory arbitration, noting that the consumers had signed a contract agreeing to resolve their disputes in this manner.

This isn’t the first time Ninth Circuit Court of Appeals has ruled in favor of consumers on this issue. Last year a class action involving Cingular was allowed to proceed when that company’s “class action waiver” was ruled unconscionable.

T-Mobile customers can sue, court rules [Seattle P-I]
Opinion by Judge Gould (PDF)
(Photo:swruler9284)

Comments

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  1. riverstyxxx says:

    A corrupt cell phone company? Impossible!

  2. cde says:

    Damn you 9th court. When will you lead a revolt and take over the country with your sane and logical legal reasoning? /srs.

  3. P41 says:

    Ten years ago the WA state supreme court decision would have been far off in left field. Nowdays with the documented bias against consumers it’s more like an academic debate whether the problem is the arbitration or just the arbiters.

    Proponents of mandatory arbitration point out how much load it takes off the legal system. The problem is it shouldn’t be biased, and it shouldn’t produce judgments based not on law but some whim of the “judge”.

  4. TechnoDestructo says:

    With cases going both ways now, [consumerist.com] , I hope/fear this issue will reach the supreme court soon.

  5. doctor_cos wants you to remain calm says:

    @p41: “how much load it takes off the legal system” and how much money it saves big companies from having to pay out when they screw up or screw their customers.
    How can anyone look at the way this arbitration thing is set up and fool themselves into believing it’s impartial or even close to fair?
    Company xxx screws me over. I want to sue, we go to arbitration.
    The arbitration board is chosen by…Company xxx!
    Guess what happens next (9 times out of 9.000001)?

  6. goller321 says:

    While this is definitely good news. We still need legislation banning binding arbitration.

  7. goller321 says:

    @TechnoDestructo: I think “fear” is the appropriate word… unfortunately.

  8. firefoxx66 says:

    Good! A victory for the consumer! Screw arbitration!

  9. P41 says:

    @doctor_cos: And those are exactly the abuses that produce these court decisions. Impartial studies show the results are unfair, so obviously there’s something wrong with the process. (Ps the number is more like 9 out of 9.7) Like Technodestruction implies, this is headed for the Supreme Court. Surprisingly Congress is less behind the curve than normal, they’re already talking about banning mandatory binding arbitration clauses. So even if SC overturns this, the tide could still turn the other way.

  10. Slade1411 says:

    Let’s not get ahead of ourselves: the court didn’t strike down the arbitration clause simply because it was an arbitration clause. It struck it down because it included a waiver of any class action lawsuits. Any and all arbitration clauses out there (e.g. in your cell phone or credit card contracts) are still going to be upheld by these courts. Watch for the companies to make this small correction and still go on forcing you into arbitration (unless you go to the trouble of forming a class action lawsuit).

  11. AD8BC says:

    Finally, the Ninth Circus Court does something good!

  12. Curiosity says:

    @doctor_cos:

    Not really defending arbitration in cases where there is an imbalance of power or bias, but frequently the consumer can have as much of a say in the choice of an arbitrator if they are informed of the “rules” for arbitration (either by contract, or by a secondary text found at the association’s web site).

    Not saying that there may not be an inherent bias within the pool of arbitrators.

  13. Curiosity says:

    @firefoxx66: Not sure if you want to just offhandedly screw arbitration either. It is actually quite good at if there is a balance of power (say in divorce proceedings or between corporations).

  14. Brad2723 says:

    I can’t wait until mandatory binding arbitration becomes outlawed everywhere.

  15. lowden says:

    The concept of arbitrating a single case would have been a gross injustice to the thousands/millions(?) of T-Mobile customers who were being systematically defrauded.

    According to their own customer service department – and echoed by no less than three company employees -
    ‘We have no software/bookkeeping’ to separate out anytime and ‘evening-weekend minutes’ Yes, that is what I was told – several times.

    A main factor for most customers’ choice of cell carrier is ‘the plan’. The minutes covered under basic service agreement AND those offered for free, i.e. nights and weekends.

    The innaccuracies continued for 6-7 months requiring 1-2 indepth conversations with T-Mobile sometimes lasting 3 hours – and the problem was not fixed.
    At the close of my association with T-Mobile – they refused to adjust the fraudulent billing, forbade employees to speak with me in regard to my account, and forced me to pay charges not owed or face service cancellation accompanied by early termination fee.

    ‘Arbitration’ ???? would that have been the communications they would only accept from me via US mail?
    Possibly the ‘higher ups’ addressing the issue by refusing to contact me?

    Cut and dried – this company offered a plan which ‘did not exist’ within their billing system. The ‘bait and switch’ would apply to any and everyone who had an agreement offering ‘free nights/weekends’

    It was only several hundred dollars for me personally -
    and simple math gives a much larger figure when that number is multiplied by the thousands/millions of consumers who’s accounts were not properly billed because the company could not/ would not deliver the product/service as advertised and agreed to.

    And now we can move forward for ‘justice’ – as in ‘for all’ – not just huge corporations attempting to cover their tracks and hold on to fraudulently acquired income.

    Gee – I wonder how much T-Mobile paid for ‘Voice Stream’…. with income/earnings based on fraud?

  16. rhombopteryx says:

    @goller321:

    “Fear” is definitely the appropriate word for this Supreme Court. Fortunately that case was over Washington law, so a state can still stand up for its citizens, even if Congress sold out to the arbitrators. (Until the Supremes say that the federal law pwns state law, anyway.)