Opinion
107025/04.
Decided February 22, 2005.
Melvin H. Heiko, Esq. Heiko Law Offices, PC, New York, NY, Attorneys for Plaintiff.
David D. Klein, Esq, Wolf, Block, Schorr Solis-Cohen, LLP, Roseland, NJ, Attorneys for Defendants.
Defendants' motion to compel arbitration is granted and, accordingly, the pending action is stayed. Defendant's motion to dismiss the complaint and plaintiff's cross-motion for an order to maintain the action as a class action are denied.
Background
Plaintiff purchased cellular telephones and cellular telephone service from ATT wireless in January 2003. According to plaintiff, the telephones and the service were severely deficient in that the telephones did not function in the areas utilized by plaintiff. Plaintiff complained to ATT and received an additional 1000 minutes added to its plan, but it alleges that it was not informed of any additional or roaming charges. Consequently, plaintiff's monthly telephone bill increased dramatically from about $50 dollars to about $500.00. On May 6, 2004, plaintiff filed a summons and complaint against defendants asserting three causes of action, two for breach of contract and one for fraud.
Arbitration
Defendants moved to compel arbitration based on their standard service agreement ("Agreement") (annexed as Exhibit B), which they claim is included with every telephone and service purchased from ATT Wireless Service, Inc. Plaintiff does not dispute this fact. Paragraph 25 of the Agreement, entitled Binding Arbitration, states that:
The arbitration process established by this section is governed by the Federal Arbitration Act (the "FAA") ( 9 U.S.C. §§ 1- 6). The FAA, not state law, governs whether a claim related to this Agreement is subject to arbitration. This provision is intended to be interpreted broadly to encompass all disputes or claims, including those against any subsidiary, parent or affiliate companies, arising out of any aspect of our relationship (including but not limited to this Agreement, our Privacy Policy, Acceptable Use Policy or the service or any equipment used in connection with the Service). All such disputes or claims whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory, will be resolved by binding arbitration, except that (1) you may take claims to small claims court if they qualify for hearing by such a court, or (2) you or we may choose to pursue claims in court if the claims relate to the collection of any debts you owe to us.
In response, plaintiff argues that the agreement is not binding on him because he never signed it or agreed to submit to arbitration. Plaintiff's arguments have no merit inasmuch as two of the claims asserted by it are for breach of contract. Ranieri v. Bell Atlantic Mobile, 304 AD2d 353, 354 (1st Dept. 2003) ("plaintiff's claim that the nonsignatory defendants are not entitled to the benefit of the arbitration provision contained in the Agreements is inconsistent with his claim that they are liable to him under those Agreements for breaches of contract"); Johnson v. Chase Manhattan Bank USA, N.A., 2 Misc. 3rd 1003(A) (Sup.Ct. NY Co.), aff'd, 13 AD3d 322 (1st Dept. 2004) ("The foundation of plaintiff's opposition is his contention that he is not bound by the Cardmember Agreement, because he never agreed to it. However, among the claims asserted by plaintiff is one for breach of contract.") In any event, the Agreement clearly states that by using the cellular telephone and service, plaintiff agreed to be bound by the agreement. Id.; see also Hale v. First USA Bank, N.A., 2001 WL 687371 at *1 (SD NY 2001) (plaintiff does not dispute that she used her credit card and Account and thus accepted the Agreement).
Next, this court must decide whether to compel arbitration pursuant to the arbitration clause contained in the Agreement. As Justice Cahn recently stated in Johnson v. Chase Manhattan Bank USA, N.A., supra, "[t]he FAA mandates that agreements to arbitrate must be enforced on the same basis as other contracts ( see 9 USC § 2; Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213; Bell v. Cendant Corp., 293 F.3d 563 [2d Cir2002]). 'Because an agreement to arbitrate is a creature of contract, however, the ultimate question of whether the parties agreed to arbitrate is determined by state law' ( Bell v. Cendant Corp., supra, 293 F.3d at 566)." He went on to note that "[c]ourts have recognized a 'strong federal policy favoring arbitration as an alternative means of dispute resolution' ( Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 76 [2d Cir 1998]). As such, 'any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration' (Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25; see also League of American Theatres Producers, Inc. v. Cohen, 270 AD2d 43, 704 N.Y.S.2d 467 [1st Dept 2000]). The factors that must be considered in determining whether to compel arbitration, pursuant to the FAA, include whether the parties agreed to arbitrate, and the scope of the arbitration agreement ( see Norcom Electronics Corp. v. CIM USA, Inc., 104 F Supp 2d 198 [SD N.Y. 2000]). In addition, CPLR 7503(a) directs that "[w]here there is no substantial question whether a valid agreement was made or complied with . . . the court shall direct the parties to arbitrate." Id.
Here, applying these factors, it is clear that plaintiff's claims are subject to arbitration. As noted above, plaintiff agreed to be bound by the agreement by using the cellular telephone, and the valid arbitration clause encompassed both contract and fraud claims. Accordingly, defendant's motion to compel arbitration is granted and the instant matter is stayed pending arbitration.
Dismissal Pursuant to CPLR § 3211
Defendants also moved to dismiss the complaint against ATT Corp. pursuant to CPLR § 3211(a)(1)(7) based on a Separation Agreement between ATT Wireless and ATT Corp., dated June 21, 2001(annexed as Exhibit C). Pursuant to that agreement, ATT is no longer a subsidiary of ATT Corp. Defendants argues that inasmuch as plaintiff named ATT Corp. as a defendant by alleging that ATT Wireless was a subsidiary, the action against ATT Corp. must be dismissed. Although this position seems logical, "[o]nce a court determines that the parties agreed to arbitrate the subject matter in dispute, the 'role [of the court] has ended and [it] may not proceed to decide whether particular claims are tenable'" Spatz v. Ridge Lea Associates, LLC, 309 AD2d 1248 (4th Dept. 2003), quoting Matter of Praetorian Realty Corp., 40 NY2d 897, 898 (1976), and citing Matter of Silverman, 61 NY2d 299, 307 (1984); CPLR § 7501. Accordingly, this Court will not dismiss the action against ATT Corp. at this juncture.
Class Action Certification
By cross-motion, plaintiff seeks an order determining that the action be maintained as a class-action pursuant to Article 9 of the CPLR. Plaintiff's cross-motion is denied without prejudice. Whether the action should proceed as a class action is for the arbitrator to decide. Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 451 (2003). It should be noted, however, that although the Court in Green Tree Financial Corp. held that class action arbitrations are permissible under the FAA, if not prohibited by the applicable arbitration agreement, id.; see also Johnson v. Chase Manhattan Bank USA, N.A., supra, 2 Misc. 3rd 1003(A), paragraph 28 of the Agreement in this case, waives class-actions; see also Tsadilas v. Providian Nat. Bank, 13 AD3d 190 (1st Dept. 2004) (the arbitration provision is enforceable even though it waives plaintiff's right to bring a class action). Moreover, the fact that plaintiff is a law firm mitigates against any claims of unknowing waiver. Cf. Brower v. Gateway 2000, Inc., 246 AD2d 246, 252 (1st Dept. 1998) ("[t]hat a consumer does not read the agreement . . . does not invalidate the contract any more than such claim would undo a contract formed under other circumstances).
Conclusion
For the foregoing reasons, defendant's motion to compel arbitration and stay the action is granted. Defendant's motion to dismiss and plaintiff's motion to maintain the action as a class action are denied without prejudice. Accordingly, it is
ORDERED that the parties are directed to proceed to arbitration in compliance with the procedures set forth in the Arbitration Agreement, and to serve a copy of this Decision and Order upon the appropriate arbitral tribunal; and it is further
ORDERED that defendant's motion to dismiss is denied without prejudice; and it is further
ORDERED that plaintiff's motion to maintain the action as a class action is denied without prejudice; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.This constitutes the decision and order of the court.