Postpichal v. Cricket Wireless, LLC

Background

The plaintiffs brought a proposed class action alleging that Cricket Wireless, LLC falsely advertised “unlimited” and “nationwide” 4G/LTE wireless service between 2012 and 2014. Their claims included alleged violations of state false-advertising laws and the Racketeer Influenced and Corrupt Organizations Act, as well as unjust enrichment and negligence.

Cricket moved to compel arbitration for three named plaintiffs. One of those plaintiffs later voluntarily dismissed herself from the action, so the order addressed only Jermaine Thomas and Sarah Waters.

Jermaine Thomas

Thomas became a Cricket customer in 2006 and purchased 4G/LTE-capable phones and service from a Cricket store in Missouri in 2012 and 2013. In 2014, after Cricket’s terms were updated, Cricket sent Thomas two text messages linking to the updated agreement. The messages expressly stated that the agreement included binding individual arbitration instead of jury trials or class actions. The updated terms said that paying for or using Cricket’s service constituted acceptance.

Applying Missouri contract law, the court held that Thomas had reasonable, at least constructive, notice of the updated terms. Thomas did not submit a declaration denying that he received or read the text messages. He continued using Cricket’s service and making payments through 2015, which the court held manifested his acceptance of the updated agreement.

The court also held that Thomas’s claims fell within the arbitration clause because it covered all disputes and specifically included claims relating to advertising. The court therefore granted Cricket’s motion to compel arbitration of Thomas’s claims.

Sarah Waters

Waters became a Cricket customer in 2013 after purchasing a Samsung Galaxy S4 and accompanying 4G/LTE service. She later signed AT&T Mobility wireless-service agreements in 2018 and 2019. Those agreements required arbitration of all disputes and claims and stated that references to AT&T, the customer, and the parties included affiliates and other listed entities.

The court held that Cricket could invoke those agreements because Cricket and AT&T Mobility were affiliated companies when Waters signed them. The court also held that the agreements covered Waters’s claims against Cricket because they expressly included claims concerning advertising and claims arising under prior agreements.

The court nevertheless held that the arbitration provisions were unconscionable and unenforceable under California law. In the court’s view, the provisions purported to require arbitration of all disputes between Waters and AT&T Mobility’s affiliates, even disputes unrelated to the wireless-service agreements she signed. Waters’s claims concerned Cricket’s alleged advertising from 2012 to 2014, while the agreements were signed with AT&T Mobility years later and were unrelated to those claims.

The court rejected Cricket’s argument that the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion barred this unconscionability ruling. It explained that generally applicable contract defenses, including unconscionability, may invalidate arbitration agreements, and that Concepcion did not address the overbreadth of the arbitration clause in the circumstances presented here.

Disposition

Judge William Alsup’s December 10, 2020 order granted Cricket’s motion to compel arbitration as to Thomas and denied the motion as to Waters. Under the Federal Arbitration Act, the court stayed the action as to Thomas only, pending the outcome of his arbitration.