Increasingly, courts are recognizing that arbitration clauses can encompass TCPA claims if the provisions are appropriately written, potentially saving companies significant time and resources just by ensuring consumer contracts include binding arbitration clauses.
Limiting exposure to an increasing number of TCPA claims, and in particular, class actions, may be possible with broad mandatory arbitration provisions in commercial contracts with customers. Three recent cases in California signal a new trend that arbitration is a viable way to resolve TCPA claims and potentially exclude class action litigation.
In O’Brien v. Gen. Elec. Capital Corp., Case No. 3:12-cv-01909 (S.D. Cal. 2013), plaintiff opened a credit card with defendant and subsequently defaulted on her payments. Plaintiff alleged that defendant made more 50 collection calls with an automatic telephone dialing system (“ATDS”) to her cell phone without prior express consent in violation of the TCPA, 47 U.S.C. § 227(b). Plaintiff sought to certify a class of persons who received calls to their cell phones from defendant without prior express consent.
While the court did not dismiss class allegations, it granted defendant’s motion to stay and compel contractual arbitration because plaintiff failed to opt-out of the arbitration clause when she opened the credit card account. The clause stated that all claims relating in any way to plaintiff’s account would be resolved by binding arbitration and plaintiff could not litigate or participate in a class action.
Although defendant avoided costly litigation with plaintiff, there is always the possibility that others that opened credit card accounts will come forward and litigate their TCPA claims and represent a class. However, it is likely those persons would be subject to the same arbitration clauses in their respective credit card agreements, unless they initially opted-out.
In an almost identical case, a court upheld the enforcement of a mandatory arbitration clause between a plaintiff who borrowed money for a student loan, but failed to make the required payments. Smith v. Citibank, Case No. 8:13-cv-00748 (C.D. Cal. 2013). Plaintiff filed a class action and alleged that defendant violated the TCPA by placing ATDS and prerecorded calls to his cell phone without prior express consent and continued to do so after he told them to stop calling. 47 U.S.C. § 227(b).
The court relied on strong public policy favoring arbitration and found the agreement’s language which included “any and all aspects of [plaintiff’s] Account, including without limitation the origination, establishment, terms, treatment, operation, handling, billing, servicing, limitations on or termination or acceleration of [plaintiff’s] Account” was broad enough to encompass the TCPA claims made by plaintiff. Once again, a broad arbitration clause saved defendant from litigation.
Finally, in Brown v. DirecTV, LLC, et al., Case No. 2:12-cv-08382 (C.D. Cal. 2013), defendant hired a third party to make collection calls to plaintiff after he failed to make his satellite television payments. Plaintiff alleged the calls violated the TCPA, 47 U.S.C. § 227(b), and sought to certify a class of persons who received prerecorded or ATDS calls to their cell phones from defendant without prior express consent. While plaintiff argued the TCPA claims did not “arise under or relate to” the terms and conditions of service that plaintiff accepted when he originally signed up for the service, the court held the collection calls for missed payments related to the contract, and the TCPA claims had to be resolved by binding arbitration.
Broad, mandatory arbitration provisions in consumer contracts are important to limit exposure to the increasing number of TCPA claims, and in particular, class actions. Courts are now recognizing that arbitration clauses can encompass TCPA claims if the provisions are appropriately written. This can potentially save companies significant time and resources just by ensuring consumer contracts include binding arbitration clauses.