T-Mobile says it can’t be sued by users because of forced-arbitration clause
T-Mobile US is trying to force customers into arbitration in order to avoid a class-action lawsuit that accuses the phone carrier of violating federal law by selling its customers’ real-time location data to third parties.
T-Mobile yesterday filed a motion to compel arbitration in US District Court in Maryland, saying that customers agreed to terms and conditions that require disputes to be handled in arbitration instead of courts. The two plaintiffs named in the lawsuit did not opt out of the arbitration agreement, T-Mobile wrote.
“As T-Mobile customers, each Plaintiff accepted T-Mobile’s Terms and Conditions (‘T&Cs’),” T-Mobile wrote in a memorandum of law. “In so doing, they agreed to arbitrate on an individual basis any dispute related to T-Mobile’s services and to waive their right to participate in a class action unless they timely opted out of the arbitration procedure outlined in the T&Cs. Neither Plaintiff elected to opt out. Accordingly, Plaintiffs have brought their grievances to the wrong forum and their claims should be dismissed in favor of arbitration.”
T-Mobile’s terms and conditions say, “Thanks for choosing T-Mobile. Please read these Terms & Conditions (‘T&Cs’), which contain important information about your relationship with T-Mobile, including mandatory arbitration of disputes between us, instead of class actions or jury trials. You will become bound by these provisions once you accept these T&Cs.”
There is a way to opt out of arbitration—which customers can find out if they actually read the terms and conditions. “You may opt out of these arbitration procedures by calling 1-866-323-4405 or online at www.T-Mobiledisputeresolution.com,” the conditions say. To opt out of arbitration, T-Mobile customers must take this action within 30 days of activating a new phone line. “If more than 30 days has passed since you activated your line of service, you are not eligible to opt out of arbitration, and any opt out you submit will not be valid,” T-Mobile’s arbitration opt-out website says.
Even if T-Mobile’s motion to compel arbitration is successful, other customers who previously opted out of T-Mobile arbitration could file a similar lawsuit. However, that would result in a much smaller pool of customers who could seek damages. Few people are even aware that they can opt out of arbitration agreements, so T-Mobile’s motion to compel arbitration could prevent the vast majority of customers from being represented in a class action.
The class-action complaint, which we wrote about in May, seeks financial damages and certification of a class consisting of every person who was a T-Mobile customer in the US between May 3, 2015 and March 9, 2019. That’s at least 50 million people, the class-action complaint says. The lead plaintiffs are T-Mobile customers Shawnay Ray and Kantice Joyner of Maryland.
Plaintiffs will fight T-Mobile motion
When contacted by Ars today, plaintiffs’ attorney Cory Zajdel said that “T-Mobile’s motion to compel arbitration proves that T-Mobile does not want any fact-finding to take place in a public forum on the issue of whether it sold users’ exact location without consent.”
Zajdel said plaintiffs will oppose T-Mobile’s motion, but he wouldn’t tell us exactly how they’ll argue that the mandatory-arbitration clause shouldn’t apply to them. “We intend to pursue this case to its conclusion in any forum to find out what information was sold and who had access to the information,” Zajdel said.
Zajdel’s firm is also representing mobile customers in nearly identical lawsuits against AT&T, Verizon, and Sprint. As of this morning, AT&T, Verizon, and Sprint had not filed motions to compel arbitration in the cases.
Carriers stopped data sales… eventually
In June 2018, all four major carriers promised to stop selling their mobile customers’ location information to third-party data brokers after a security problem leaked the real-time location of US cell phone users. But AT&T and T-Mobile recently acknowledged that they didn’t stop sales to location-data aggregators until March 2019.
Verizon said it largely stopped its location aggregator program in November 2018, with the exception of four roadside assistance companies. Verizon terminated its sales agreements with those roadside assistance companies in March 2019. Sprint said it would stop its location-data sales by the end of May 2019.
The lawsuit against T-Mobile said the carrier violated Section 222 of the US Communications Act, which says that phone companies may not use or disclose location information “without the express prior authorization of the customer.” The lawsuit also accuses T-Mobile of failing to follow its own privacy policy and “profit[ing] from the sale and unauthorized dissemination of Plaintiff and Class Members’ [private data].”
Mandatory-arbitration clauses are still common despite complaints from Democratic lawmakers and regulators that they deprive customers of the right to sue and help ISPs avoid serious punishment for actions that harm consumers.
Mandatory-arbitration clauses are not bullet-proof. In March 2018, a US District Court judge ruled that AT&T couldn’t use its arbitration clause to avoid a lawsuit over the company’s throttling of unlimited mobile data plans. But the ruling was specific to California, with the judge pointing out that the state Supreme Court “held that an arbitration agreement that waives the right to seek the statutory remedy of public injunctive relief in any forum is contrary to California public policy and therefore unenforceable.”
