A Simple Solution to an Infinite Problem: Curbing Arbitration Provisions That Exceed the Scope of the Federal Arbitration Act

Authors

Michael Russo

Document Type

Note

Abstract

(Excerpt)

In 2012, Diana Mey opened a new cell phone line with AT&T Mobility LLC ("Mobility"), the AT&T, Inc. ("AT&T") subsidiary responsible for AT&T's mobile services business in the United States. This required Mey to enter into the AT&T Wireless Customer Agreement, which contained an arbitration clause covering "all disputes and claims" "arising out of or relating to any aspect of the relationship[.]" Further, it applied as between each party's respective "subsidiaries, affiliates, agents, employees, predecessors in interest, successors, and assigns, as well as all authorized or unauthorized users or beneficiaries of services or Devices under this or prior Agreements between us." In case there was any doubt, the agreement was "intended to be broadly interpreted." This is what's known as an "infinite arbitration clause": a provision that "mandate[s] arbitration for all disputes between any related party in perpetuity."

In 2015, AT&T acquired DIRECTV, LLC ("DIRECTV"), making DIRECTV an "affiliate" of Mobility under AT&T's corporate umbrella. In 2017, Mey filed suit against DIRECTV, alleging that she had received numerous unauthorized "robocalls" from DIRECTV in violation of the Telephone Consumer Protection Act ("TCPA"). DIRECTV responded by invoking the arbitration clause in Mey's AT&T Wireless Customer Agreement that she had signed with Mobility (a "Mobility Contract") in 2012, and moved to compel arbitration. The district court denied the motion, and DIRECTV appealed. The Fourth Circuit reversed, holding that Mey had formed a valid agreement to arbitrate her TCPA claim with DIRECTV, a company of which she was never a customer, and which was not affiliated with AT&T when she signed the contract containing the arbitration clause ("container contract") in 2012.