MEMORANDUM
TO: Professor Risch
FROM: Christopher Lanks
DATE: April 23, 2008
RE: Cyber Law Case Brief – Writing Assignment
CASE
TRUJILLO v. AT&T MOBILITY, LLC, 2008 U.S. Dist. LEXIS 32128 (D. Ill. 2008)
Decided April 18, 2008
BACKGROUND
Trujillo, as part of a class action law suit, alleged that AT&T and Apple had a hidden mandatory fee for a replacement battery for his iPhone. AT&T move the court to dismiss the claim to arbitration based on the service agreement Trujillo was required to accept in order to activate his iPhone. Trujillo responded to AT&T alleging that the arbitration agreement is unconscionable and unenforceable.
FACTS
Trujillo was required to accept AT&T’s service agreement to activate the wireless service for his iPhone. Using the iTunes program over the internet, Trujillo was entering information and selecting his service plan when a screen containing the service agreement appeared. The agreement was several pages long, with the arbitration agreement at the very end. During this screen, the customer is required to click on a box “I have read and agree to the AT&T Service Agreement.†If the customer does not check the box the customer can not activate his iPhone. If the customer may return the iPhone within 14 days if there is a disagreement with the Service Agreement. AT&T contends that the service agreement is available in the stores where customers purchase the iPhones and over the internet.
ANALYSIS
The enforceability of an arbitration agreement is determined by referencing to state law. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995). AS such, fraud, duress, or unconscionability may operate as a defense to invalidate the arbitration agreement.
In the present case, the relevant state law in Illinois requires either procedural or substantive unconscionability, or a combination of both in order for the arbitration clause to be considered unconscionable. Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1, 22, 857 N.E.2d 250, 263, 306 Ill. Dec. 157 (2006).
There is procedural unconscionability when the service agreement is to difficult to locate, read, or understand so that the customer cannot fairly be said to have been aware he was agreeing to the agreement. Courts will consider several factors in making a determination under procedural unconscionability such as whether key terms are hidden in a maze of fine print.
Although AT&T contents that the Service Agreement was available prior to the purchase of the iPhone, Trujillo alleges that he had no access to the Service Agreement until he purchased the iPhone and began signing up for wireless service. The Court notes that there is insufficient evidence to determine whether the Agreement was available prior to Trujillo, but states that this factor may be “critical ... in determining the issue of procedural unconscionability.â€
The Court also rejected AT&T’s argument that the Agreement was always available online at www.wireless.att.com. It is insufficient to have a customer go somewhere else prior to or after purchasing a product to view a service agreement. The Court then gave an analogous example where a customer purchases a TV and a service agreement governing the terms for the TV service are not provided to the customer until the service is activated. However, the Court mentions that this example is from Bess v. DirecTV, Inc., and the court in that case held that this was not procedurally unconscionable because the agreement provided that it was not binding until after the customer read it and continued to receive the service.
In the present case, the Court notes that the Bess case is not dispositive as there is not enough evidence to determine when the service agreement was provided. Trujillo had already purchased the iPhone from Apple, before accepting the Service Agreement online. Since there was not record of what Trujillo could have done, had he no agreed to the Agreement at that time, like in Bess where the customer could return the TV and be given a full refund. The Court hints that if there is nothing in the agreement to indicate how someone like Trujillo would be aware of how he could not accept the agreement and receive a refund for purchasing the iPhone, like in Bess, the Court would tilt in favor of a finding of procedural unconscionability.
In conclusion, the Court stated that at this time there is not enough evidence to determine the unconscionability and unenforceability of the arbitration agreement. Although the Court did not rule on these issues, the Court provides several critical factors in determining procedural due process. First, when was the service agreement provided to the customer. This is a critical, but not dispositive factor. Second, once the service agreement was made, what notice did it provide the customer as to what they could do to reject the service agreement and receive a full refund.
TO: Professor Risch
FROM: Christopher Lanks
DATE: April 23, 2008
RE: Cyber Law Case Brief – Writing Assignment
CASE
TRUJILLO v. AT&T MOBILITY, LLC, 2008 U.S. Dist. LEXIS 32128 (D. Ill. 2008)
Decided April 18, 2008
BACKGROUND
Trujillo, as part of a class action law suit, alleged that AT&T and Apple had a hidden mandatory fee for a replacement battery for his iPhone. AT&T move the court to dismiss the claim to arbitration based on the service agreement Trujillo was required to accept in order to activate his iPhone. Trujillo responded to AT&T alleging that the arbitration agreement is unconscionable and unenforceable.
FACTS
Trujillo was required to accept AT&T’s service agreement to activate the wireless service for his iPhone. Using the iTunes program over the internet, Trujillo was entering information and selecting his service plan when a screen containing the service agreement appeared. The agreement was several pages long, with the arbitration agreement at the very end. During this screen, the customer is required to click on a box “I have read and agree to the AT&T Service Agreement.†If the customer does not check the box the customer can not activate his iPhone. If the customer may return the iPhone within 14 days if there is a disagreement with the Service Agreement. AT&T contends that the service agreement is available in the stores where customers purchase the iPhones and over the internet.
ANALYSIS
The enforceability of an arbitration agreement is determined by referencing to state law. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995). AS such, fraud, duress, or unconscionability may operate as a defense to invalidate the arbitration agreement.
In the present case, the relevant state law in Illinois requires either procedural or substantive unconscionability, or a combination of both in order for the arbitration clause to be considered unconscionable. Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1, 22, 857 N.E.2d 250, 263, 306 Ill. Dec. 157 (2006).
There is procedural unconscionability when the service agreement is to difficult to locate, read, or understand so that the customer cannot fairly be said to have been aware he was agreeing to the agreement. Courts will consider several factors in making a determination under procedural unconscionability such as whether key terms are hidden in a maze of fine print.
Although AT&T contents that the Service Agreement was available prior to the purchase of the iPhone, Trujillo alleges that he had no access to the Service Agreement until he purchased the iPhone and began signing up for wireless service. The Court notes that there is insufficient evidence to determine whether the Agreement was available prior to Trujillo, but states that this factor may be “critical ... in determining the issue of procedural unconscionability.â€
The Court also rejected AT&T’s argument that the Agreement was always available online at www.wireless.att.com. It is insufficient to have a customer go somewhere else prior to or after purchasing a product to view a service agreement. The Court then gave an analogous example where a customer purchases a TV and a service agreement governing the terms for the TV service are not provided to the customer until the service is activated. However, the Court mentions that this example is from Bess v. DirecTV, Inc., and the court in that case held that this was not procedurally unconscionable because the agreement provided that it was not binding until after the customer read it and continued to receive the service.
In the present case, the Court notes that the Bess case is not dispositive as there is not enough evidence to determine when the service agreement was provided. Trujillo had already purchased the iPhone from Apple, before accepting the Service Agreement online. Since there was not record of what Trujillo could have done, had he no agreed to the Agreement at that time, like in Bess where the customer could return the TV and be given a full refund. The Court hints that if there is nothing in the agreement to indicate how someone like Trujillo would be aware of how he could not accept the agreement and receive a refund for purchasing the iPhone, like in Bess, the Court would tilt in favor of a finding of procedural unconscionability.
In conclusion, the Court stated that at this time there is not enough evidence to determine the unconscionability and unenforceability of the arbitration agreement. Although the Court did not rule on these issues, the Court provides several critical factors in determining procedural due process. First, when was the service agreement provided to the customer. This is a critical, but not dispositive factor. Second, once the service agreement was made, what notice did it provide the customer as to what they could do to reject the service agreement and receive a full refund.