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PostPosted: Tue Oct 10, 2006 4:47 am 
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New decision from the Illinois Supreme Court in the case of Kinkel v. Cingular Wireless. The Court held that the class action ban included in an older version of Cingular's contract was unconscionable.

Here are some high points:

o The case involves an older version of Cingular's contract, where it required the consumer to pay $150 to bring the claim, had a secrecy provision, and some other wrinkles. Cingular wanted the court to look at it's newer contract, b/c it argues that the cases striking class action bans only involve contracts that had some "other" bad provision that augmented the class action ban provision. The Court refused to look at the newer contract, b/c after-the-fact re-writes to avoid unconscionability should not be allowed, and because hte plaintiff had cancelled her relationship with Cingular before the re-write of the contract.

o The Court rejected Cingular's argument that the Federal Arbitration Act preempts Illinois law, because the plaintiff was not arguing against class action bans solely when they're in arbitration clauses, but was instead arguing that class action bans are unconscionable whether they're in an arbitration clause or in a setting where parties could go to court. The court noted that there is no caselaw about how individual arbitration, rather than class arbitration, is favored, and noted that after Bazzle, there can be class actions in arbitration.

o The Court held that under Illinois law, either procedural or substantive unconscionability or a cominbation of the two is enough to render a clause unenforceable. Yet, they make it harder to get a contract held to be procedurally unconscionable than it is in many other states.

o The Court noted that it's a contract of adhesion, but said that was just one factor, b/c nearly all modern contracts are contracts of adhesion. As to other procedural unconscionability factors, the court noted that the costs were not clearly explained in the contract itself (b/c you have to go to the AAA's website to figure out what they are), and that the clause was in fine print on the bottom of a page filled margin to margin with fine print.

o The court noted that without the class action device, typical consumers would never know that they had a legal claim at all, and that they could not vindicate those claims without a lawyer. This is great language, and very helpful to many cases.

o The court repeatedly ducks the question of the legality of class action bans in arbitration clauses where the business pays all the costs and there are no other bad provisions. It repeatedly stresses that it's not deciding those cases, and draws upon the language in many of the good cases pointing to other consumer-unfriendly provisions.

o There is really nice language about how the "strict confidentiality clause" was unconscionable, citing Ting.

o The court rejects Cingular's argument that the clause was not unconscionable b/c consumers could go to small claims court, finding that no better than arbitration.

o The court rejects Cingular's argument that the class action ban was not unconscionable b/c the state Attorney General might take consumer cases, noting that the AG has scarce resources and that "there is no guarantee" that the AG would find this case to be a high priority.

o The court went on to severe the class action ban from the rest of the arbitration clause, and thus ordered Cingular into arbitration with the class action ban stricken. This was only possible under the language of Cingular's "old" clause; it's more recent clauses provide that if the ban on class actions is not enforceable, then the entire arbitration clause falls.

o In a recurring theme with pretty much every pro-consumer or pro-employee case to be cited on this issue, the court cites to one of Jean Sternlight's articles with approval.

http://www.state.il.us/court/Opinions/S ... 100925.htm


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