Friday, August 19, 2011

Be Careful What You Wish For? AT&T Seeks To Block Arbitrations

Four months ago, AT&T won a closely-watched Supreme Court case involving mandatory arbitration provisions that forbid classwide arbitration proceedings. The Court in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), held that the Federal Arbitration Act compelled enforcement of a contract that required “arbitration of all disputes between the parties, but required that claims be brought in the parties’ ‘individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding.’” Id. at 1744.

In light of Concepcion, AT&T customers wishing to challenge AT&T’s pending merger with T-Mobile on antitrust grounds have done so via individual demands for arbitration. AT&T has now filed multiple lawsuits in federal court seeking to enjoin those arbitrations. AT&T’s argument seems to be that these arbitrations are really classwide arbitrations (and hence forbidden under the arbitration agreement) even though each arbitration demand is initiated separately by an individual customer.

AT&T’s complaint in one of its recent lawsuits [AT&T Mobility LLC v. Gonnello, 11-CV-5636 (S.D.N.Y.)] puts it this way: “Although styled as a request for arbitration on an individual basis, each Demand is actually a representative action.” [¶ 33]. In particular, each customer seeks “an injunction flatly prohibiting the merger or, alternatively, imposing global restrictions on the merger.” [¶ 34]. Thus, “the relief sought by each [customer] bears all of the characteristics of a representative action: it would affect a broad class . . . and even if just one of the [customers] prevails, the interest of the entire class would be affected.” [¶ 36].

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