On Monday of this week, the United States Court of Appeals for the Seventh Circuit held that a putative class action complaint filed against Sprint alleging that it had violated the Telephone Consumer Protection Act (“TCPA”) must be submitted to arbitration. The appellate court overturned a prior ruling of the district court which refused to compel arbitration. In doing so, Sprint overcame the plaintiffs’ argument that arbitration was not mandatory because the offending calls were unrelated to Sprint’s contract with the plaintiffs. The appellate court disagreed with plaintiff’s position and, as such, inherently granted Sprint an ability to defeat the potential class action status of the claim by compelling arbitration.
Can TCPA claims be arbitrated?
Seventh Circuit Orders Arbitration in TCPA Class Action Filed Against Sprint
According to the opinion of the Seventh Circuit, the plaintiffs contracted to receive cellular service from U.S. Cellular in 2000. The contract, which had an arbitration provision, was last renewed in 2012. U.S. Cellular had a contractual right to assign the subscriber plaintiffs’ contracts without notice and it did just that, assigning the contracts to Sprint in May 2013. However, it turned out that the plaintiff subscribers’ cellular phones were incompatible with Sprint’s services and, therefore, Sprint decided that it would terminate the agreements. Prior to terminating the service contracts, Sprint called the plaintiffs’ respective cellular phones on six occasions to suggest new Sprint compatible cellular phones which the plaintiffs could use to remain with Sprint. The plaintiffs then commenced a putative class action against Sprint for calling their phones without having obtained the requisite TCPA prior express consent to do so.
The Seventh Circuit compelled arbitration in this instance because the original U.S. Cellular subscriber contract had both an assignment and arbitration clause, protecting Sprint. The Court rejected the plaintiffs’ argument that the calls were made after the plaintiffs canceled their services with Sprint and acquired new cell phone providers (unknown to Sprint at the time of the calls). As the Court noted, “[i]t was to prevent the loss of all these customers because of the incompatibility that Sprint had told them in the calls that it could offer them a substitute service. The calls gave rise to the dispute; and so the [plaintiffs] were required to arbitrate the dispute.” In compelling arbitration, the Court noted that Sprint “wants arbitration because the arbitration clause disallows class action arbitration.” Nevertheless, the Court issued an order compelling arbitration.