Tuesday, December 3, 2013

Gatton v. T-Mobile USA, Inc. case brief

Gatton v. T-Mobile USA, Inc. case brief summary
152 Cal. App. 4Th 571 (2007)


CASE SYNOPSIS
Plaintiffs, cellular telephone service subscribers, challenged defendant provider's practices of charging a termination fee and of selling locked handsets that a subscriber could not use when switching carriers. The Superior Court of Alameda County, California, denied the provider's motion to compel arbitration under the service agreements. The provider brought consolidated appeals.

ARGUMENT
The provider argued that there was no surprise, and thus no procedural unconscionability, in the arbitration agreement and class action waiver contained in its service agreements.

DISCUSSION

  • The reviewing court agreed that there was no surprise but held that the adhesive nature of the service agreement established a minimal degree of procedural unconscionability, despite the availability of market alternatives. 
  • Courts were not obligated to enforce highly unfair provisions that undermined important public policies simply because there was some degree of consumer choice in the market. 
  • Applying a sliding scale analysis, the court found that the evidence of substantive unconscionability was strong enough to tip the scale and render the arbitration provision unconscionable under Civ. Code, § 1670.5. 
  • A class action waiver was unconscionable under California law when the waiver was found in a consumer contract of adhesion in a setting in which disputes predictably involved small amounts of damages and when it was alleged that the party with the superior bargaining power had carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money.

CONCLUSION
The court affirmed the trial court's order denying the motion to compel arbitration.


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