• On July 25, 2011, the United States District Court for the Southern District of California dismissed another putative class action that was pending against AT&T Mobility on the basis of the Supreme Court’s decision in AT&T Mobility v. Concepcion that the Federal Arbitration Act preempts state laws or court rulings that invalidate class-arbitration waivers in consumer contracts. This class action alleged that AT&T fraudulently induced plaintiffs to purchase a $45/month data plan by telling them that the unlimited data plan for $30/month would not provide access to the same applications, when in fact it did. Plaintiffs attempted to avoid Concepcion by arguing that the arbitration clause should not apply in the circumstance of fraudulent inducement. The S.D. Cal. nonetheless ruled that “fraudulent inducement claims should be submitted to arbitration when the issue is fraud in the inducement of the contract itself, like the claim at issue here, rather than fraud in the inducement of the arbitration agreement.” The court likewise refused to “find the arbitration agreement unenforceable for public policy reasons,” relying on the Supreme Court’s statement in Concepcion that “States cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.” Boyer v. AT&T Mobility Servs., LLC, No. 10-cv-1258 JAH (S.D. Cal.).
  • On July 22, 2011, the United States Bankruptcy Court for the Southern District of New York granted in part and denied in part Global Crossing’s motion for summary judgment in the adversary proceeding between it and debtor CCT Communications, with the remaining issues to be addressed at a future trial. Global Crossing and CCT had entered into a series of agreements under which CCT agreed to resell certain of Global Crossing’s long-distance and international telecommunications services for a fixed, non-volume-sensitive price. Global Crossing apparently lost money on the deal and, as the court explained, “blocked calls and withheld service to limit its losses under an Amendment that it regretted from the moment it was signed. The consequence of the course Global Crossing chose to follow — assuming Global Crossing breached the parties’ agreements — is to pay damages, except to the extent that the limitation of liability in § 6.2 of the RCA frees it from the debt.” With regard to that limitation-of-liability provision, the court held that “the parties may agree to limit their respective damage remedies for violations of New York law and the Communications Act except in the case of gross negligence or willful misconduct.” The court found it undisputed that, though Global Crossing’s actions were willful, they were motivated by “financial self-interest” and thus did not constitute misconduct. The court thus concluded that the limitation-of-liability provision barred CCT’s recovery of consequential damages. But the court found the clause that limits liability for “lost revenues, lost savings, lost business opportunity or lost profits of any kind” to be ambiguous, and ordered that matter to be resolved at trial. In re CCT Commc’ns, Inc., No. 07-10210 (S.D.N.Y. Bankr.).