Gatton v. T-Mobile USA, Inc.

T-Mobile USA, Inc. (T-Mobile) (defendant) provides cellular phone service. Its subscribers (plaintiffs), of which Gatton is one, are all required to sign a service agreement. The service agreement provides that subscribers are bound by T-Mobile’s Terms and Conditions (Terms). It also provides that all disputes are required to be arbitrated as provided in the Terms. The introductory paragraph in the Terms provides, in all capital letters, that subscribers agree to be bound by the agreement. It also provides that if a subscriber does not wish to be bound, he should not use T-Mobile’s service or the phone. The shipping box for the phone was sealed with sticker reminding the subscriber to read the Terms and that he agreed to be bound by them, including the arbitration agreement, if he used the service. A “Welcome Guide” included in the phone shipping box also provided the Terms. The arbitration clause in the Terms provided that arbitration was mandatory and class arbitration was not permitted. Gatton and other subscribers brought suit on behalf of themselves and others similarly situated challenging certain provisions of the Terms. T-Mobile moved to compel arbitration based upon the arbitration clause in the contract. The trial court denied the motion, holding that the arbitration clause was unconscionable because it denied class arbitration. T-Mobile appealed to the Court of Appeals of California.