Let me see if I understand this. In AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011), decided by the United States Supreme Court in April, the Court held in a 5-4 decision that the Federal Arbitration Act preempted California’s judicial rule prohibiting class-wide arbitration waivers, such as AT&T’s, on the grounds they were unconscionable. So AT&T’s position, endorsed by the Court, was that a consumer must (1) arbitrate, not litigate, his or her claim against AT&T; and (2) may not arbitrate as part of a class, but must do so as an individual.
The decision attracted a tremendous amount of commentary and analysis about its effect on the viability of class actions. For a sampling, here is a post by the firm of Morelli Ratner that collected ten of the best posts on the decision; a detailed discussion from the employer’s perspective by Seyfarth Shaw’s Workplace Class Action Blog; and this analysis by Daniel Schwartz at the Connecticut Employment Law Blog. So you get the idea.
Fast forward a few months, when a few hundred of AT&T’s customers are attempting to arbitrate their disputes on an individual basis, just as the Supreme Court required. But now, AT&T claims – you guessed it – that those individuals should not be allowed to arbitrate their claims.
According to this article by Reuters in yesterday’s New York Times, AT&T has filed eight lawsuits directed at two law firms that AT&T claims are trying to derail its takeover of T-Mobile by organizing customers to file hundreds of demands for arbitration and notices of dispute (as required by AT&T’s contract). AT&T claims that the law firms are hoping that an arbitrator in one of the arbitrations will rule that the takeover cannot take place, although there is some question as to whether an arbitrator in an individual arbitration would have that authority.
I don’t know all the districts where AT&T filed its lawsuits, but here is one that was filed in the Southern District of New York. AT&T Mobility LLC v. Gonnello, et al., Civil Action No. 1:11-CV-05636 (S.D.N.Y. August 12, 2011). The complaint seeks injunctive and declaratory relief against five individual defendants.
AT&T is extremely frustrated that its own arbitration-only requirement is being used against it:
Although the claim [for arbitration] is meritless, the Bursor and Faruqi [law] firms are hoping that thousands of “bites at the same apple” will turn up just one arbitrator willing to entertain it—and that [AT&T Mobility] will hedge against that risk by entering into an extortionate settlement.
I think it’s unlikely that an arbitrator will rule that AT&T cannot pursue its takeover of T-Mobile; that’s the sort of decision that would need to be made in another forum, whether it’s the Federal Communications Commission, the Department of Justice’s Antitrust Division, or various state regulators. But it’s ironic – and more than a little satisfying – that AT&T is so vigorously fighting the effect of the very agreement that AT&T went all the way to the Supreme Court to enforce against its customers.
