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Mitchell v. Wireless

March 31, 2006


The opinion of the court was delivered by: Honorable David H. Coar


Before this court is Defendant Verizon Wireless' ("Defendant's") motion to compel arbitration and stay judicial proceedings. For the reasons discussed below, Defendant's motion is GRANTED.


On January 28, 2005, Plaintiff Ed Mitchell ("Plaintiff") filed a complaint against Trans Union, LLC and Verizon Wireless alleging violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. According to Plaintiff, the two companies have been reporting inaccurate information about his credit history and Verizon Wireless account to third parties. On May, 18, 2005, this Court granted Plaintiff's motion to voluntarily dismiss the case against Trans Union, LLC.

The remaining defendant, Verizon Wireless, now seeks to compel arbitration and stay these judicial proceedings in accordance with an arbitration clause in its Service Agreement with Plaintiff. Plaintiff opposes Defendant's motion on the ground that the Service Agreement violates the FCRA, public policy, and the prohibition against unconscionable contracts.


The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq., which governs this action establishes a "federal policy favoring arbitration." Shearson/American Exp., Inc. v. McMahon, 482 U.S. 220, 226 (1987). To that end, the statute requires state and federal courts to rigorously enforce agreements to arbitrate, see Jain v. Mere, 51 F.3d 686, 688 (7th Cir. 1995), and provides that such agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. A court may issue an order compelling arbitration only "upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue." 9 U.S.C. § 4. Under this provision of the statute, the validity of an agreement cannot be at issue either. Matterhorn, Inc. v. NCR Corp., 763 F.2d 866, 867 (7th Cir. 1985).

A court may compel arbitration pursuant to the FAA if the following three elements are shown: (1) a written agreement to arbitrate, (2) a dispute within the scope of the arbitration agreement, and (3) a refusal to arbitrate. Zurich American Insurance Co. v. Watts Industries, Inc., 417 F.3d 682, 687 (7th Cir. 2005). Accord Sharif v. Wellness International Network, Ltd., 376 F.3d 720, 726 (7th Cir. 2004) ("[I]f the parties have an arbitration agreement and the asserted claims are within its scope, the motion to compel cannot be denied."); Graphic Communications Union, Chicago Paper Handlers' & Electrotypers' Local No. 2 v. Chicago Tribune Co., 794 F.2d 1222, 1226 (7th Cir. 1986) ("The question of whether the parties contracted to arbitrate a particular dispute is generally one for judicial determination."). The first element requires a court to decide whether there is an effective written agreement. See In re VMS Ltd. Partnership Securities Litigation, 26 F.3d 50, 51 (7th Cir. 1994).

Once a court determines that a dispute is arbitrable, it must grant any motion by the parties to stay legal proceedings. See 9 U.S.C. § 3.


A. Is there a Valid Written Agreement to Arbitrate?

Plaintiff does not dispute that a written agreement to arbitrate exists. He consented to arbitration by signing the Service Agreement with the arbitration clause*fn1 (hereinafter "the arbitration agreement") and a Verizon Receipt stating that "I AGREE TO THE CURRENT VERIZON WIRELESS CELLULAR SERVICE AGREEMENT . . . . I UNDERSTAND THAT I AM AGREEING TO . . . SETTLEMENT OF DISPUTES BY ARBITRATION INSTEAD OF JURY TRIALS AND OTHER IMPORTANT TERMS IN THE CSA." Def.'s Mem. in Support, Ex. B at 2. Plaintiff does dispute the validity of the written agreement. He argues that the entire Service Agreement is unconscionable because Defendant was the stronger, more experienced party; Defendant provided Plaintiff with a pre-printed contract containing a bevy of exclusions and terms that would befuddle the average consumer; and Defendant included a one-sided clause forcing Plaintiff to renounce his rights to a trial jury and risk having his claim heard by a prejudiced panel of attorneys and judges.

It is Plaintiff's burden to prove unconscionability, see Zobrist v. Verizon Wireless, 354 Ill. App. 3d 1139, 1149 (Ill. App. Ct. 2004), and courts have rejected each of Plaintiff's protests. In Illinois,*fn2 "[a] contract is unconscionable when it is improvident, oppressive, or totally one-sided, but mere disparity of bargaining power is not sufficient grounds to vitiate contractual obligations." Streams Sports Club, Ltd. v. Richmond, 99 Ill.2d 182, 191 (Ill. 1983). Thus, in a case involving a different arbitration clause with Verizon Wireless, the Illinois Appellate Court held that the lone "fact that Verizon is a large corporate entity utilizing a standardized contract" with a "take-it-or-leave-it provision . . . does not require a court to reach the conclusion that the provision is unconscionable." Zobrist, 354 Ill. App. 3d at 1148. Rather, "fraud or other similar wrongdoing in the procurement of the agreement must be established in order to invalidate the clause as unconscionable." Id. (citing Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361, 367 (7th Cir. 1999). Finding no evidence that Verizon fraudulently procured the plaintiff's consent to arbitration, the court in Zobrist--as will the Court here--upheld the provision against a procedural unconscionability challenge.*fn3 A court considering a Verizon Wireless arbitration clause identical to the one here reached the same result in New Jersey, where the law on unconscionability corresponds to the law in Illinois. See Ohai v. Verizon Communications, Inc., No. 05-729, 2005 U.S. Dist. LEXIS 25703, *14 (D.N.J. Oct. 28, 2005). The Ohai court declined to find procedural unconscionability when, among other things, the meaning of Verizon's arbitration clause is not concealed and the clause is written in plain, unambiguous language that is not reduced to small print or hidden footnotes. See id.

As to substantive unconscionability, Plaintiff complains that the arbitration agreement forces him to waive his right to a jury trial for an arbitrator who is likely to favor major corporations or, if the arbitration requirement does not apply, a judge who will conduct a bench trial. This unconscionability argument fails for lack of support. See, e.g., Hawkins v. Aid Association for Lutherans, 338 F.3d 801, 806 (7th Cir. 2003) (requiring appellants to cite authority before prevailing on the argument that losing access to court destroys or diminishes their benefits under the contract); Tezky v. Woodfield Chevrolet, No. 00 C 5718, 2001 U.S. Dist. LEXIS 24672 (N.D. Ill. Mar. 14, 2001) (holding that "mere preference for a jury does not mean that resolution of [the] dispute by a panel of arbitrators would entail prejudice."). The paucity of support in Plaintiff's brief overall helps to explain why "the doomed 'unconscionability' argument . . ...

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