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Shroyer v. New Cingular Wireless Services, Inc.
United States Court of Appeals for the Ninth Circuit
498 F.3d 976 (9th Cir. 2007)
Kenneth Shroyer (plaintiff) subscribed to two cellular-service contracts with AT&T Wireless Services, Inc. (AT&T). After AT&T merged with Cingular Wireless Services, Inc. (Cingular) (defendant) in 2004, the quality of Shroyer’s cellular service deteriorated. Cingular advised Shroyer that his service could only improve if he signed a contract extension with Cingular. In 2005, Shroyer signed a form contract to switch his cellular phone accounts to Cingular. The form contract incorporated by reference Cingular’s "Terms and Conditions Booklet." The booklet included a clause requiring that all disputes arising out of the agreement be resolved by arbitration and prohibiting subscribers from bringing class arbitrations against Cingular. The clause also included a non-severability provision, which stated that if the class arbitration waiver was found unenforceable, the entire arbitration clause would be unenforceable. In 2006, Shroyer sued Cingular in a class action lawsuit before the California Superior Court, alleging that Cingular, for the purpose of increasing profits, misrepresented that cellular service could only be improved if customers entered extension contracts with Cingular. Cingular removed the case to the United States District Court for the Central District of California and moved to compel arbitration, pursuant to the Federal Arbitration Act (FAA). The district court granted the motion and dismissed the action. Shroyer appealed, arguing that the arbitration clause was procedurally and substantively unconscionable.
Rule of Law
Holding and Reasoning (Reinhardt, C.J.)
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