Arbitration News

Three Separate Lawsuits Were Initially Brought Against Defendant AT&T Wireless And Other Providers Of Wireless Telephone

In Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094 (Szetela), the Court of Appeal held an arbitration clause prohibiting class-wide arbitration to be unconscionable and unenforceable. The trial court in the present case relied upon Szetela to rule that the arbitration clause at issue here is likewise unconscionable. Recognizing that the issue is
pending before our Supreme Court, we will not follow Szetela and will conclude instead that under the facts in the present case the contractual ban on class-wide arbitration is not unduly one-sided, harsh, or in violation of public policy.1
FACTUAL AND PROCEDURAL BACKGROUND Three separate lawsuits were initially brought against defendant AT&T Wireless and other providers of wireless telephone service, challenging the “early termination fee” charged to customers who end their wireless telephone service before the expiration of the term of the service agreement.
First, Porsha Meoli and two other named plaintiffs brought a class action in Alameda County to challenge both the early termination fee and AT&T’s locked handsets that preclude the use of competitors’ networks. Plaintiffs alleged that the early
termination fee constituted an unlawful liquidated damages provision and thereby violated the Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.) and the Consumers’ Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.). Second, Diane Tucker sued in Orange County under similar theories as a private attorney general under the UCL. And, in the third lawsuit, Jerilyn Marlowe and seven other named plaintiffs brought a class action in Alameda County alleging violations of the UCL and the CLRA. These three lawsuits were coordinated with other lawsuits pending against other wireless service providers.

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	Did You Know?
	There is one drawback to arbitration. There are no guarantees that arbitration will be a fair process. Once a decision is rendered in a binding arbitration, the parties are generally stuck with that decision. Without the right to appeal, there is always the risk of being subject to the whims and prejudices of the arbitrator. Overall, this is probably the biggest drawback to the arbitration process.