Ronald and Anna Andermann filed suit against Sprint Spectrum L.P., alleging violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”), arising out of several service phone calls they received from Sprint regarding the termination of their cellular service. The Andermanns sought to represent a class of similarly situated individuals.
The plaintiffs originally obtained mobile phone service from U.S. Cellular in 2000, which contained an arbitration provision. U.S. Cellular later assigned the contract to Sprint. Sprint informed the plaintiffs that, because their phones were not compatible with Sprint’s network, they would have to obtain new cellular phones or obtain service from another company. Sprint subsequently initiated several telephone calls to the plaintiffs, reminding them that their service was about to expire, and offering them several new devices to maintain service. The plaintiffs alleged that these telephone calls were unsolicited and in violation of the TCPA.
Sprint moved to compel arbitration under the terms of the customer service agreement. The Seventh Circuit, reversing the district court’s denial of the motion, held that arbitration was compelled under the terms of the agreement. Andermann, et al. v. Sprint Spectrum, L.P., No. 143478 (7th Cir. May 11, 2015). Specifically, the Court held that although the original arbitration provision was between the plaintiffs and U.S. Cellular, Sprint had “stepped into U.S. Cellular’s shoes” when it acquired the contract. The plaintiffs argued that the actual assignee of the contract was Sprint Solutions, Inc., rather than the named defendant, Sprint Spectrum L.P. The Seventh Circuit likewise rejected this argument, noting that Sprint Spectrum was designated to be Sprint Solutions’s agent to hold the contracts assigned by U.S. Cellular.
While the Court ordered that arbitration was proper, Judge Posner, author of the decision, noted that, even though there is long-standing precedent regarding the judicial preference for arbitration, “[i]t’s not clear that arbitration … should be preferred to litigation” because of the expense and inability to create precedent, especially when it appeared that Sprint had a strong defense on the merits. (Though Judge Posner concluded by also noting that Sprint likely sought arbitration in this matter because the arbitration provision disallowed class arbitration.)
Accordingly, the Seventh Circuit reversed the district court’s decision. A full copy of the Seventh Circuit’s decision is available here.