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Keywords

lawsuitarbitrationappealmotionclass actionarbitration clause

contractplaintiffarbitrationclass action

Related Cases

Kinkel v. Cingular Wireless LLC, 223 Ill.2d 1, 857 N.E.2d 250, 306 Ill.Dec. 157

Facts

Donna M. Kinkel entered into a two-year service agreement with Cingular Wireless in July 2001, which included an early-termination fee of $150 if she canceled her service before the term ended. After canceling her service in April 2002, Kinkel filed a lawsuit against Cingular, claiming the fee was an illegal penalty and that the arbitration clause in the service agreement was unconscionable. Cingular sought to compel arbitration based on the agreement's terms, but the Circuit Court denied the motion, leading to an interlocutory appeal.

Cingular charged her an early-termination fee of $150, which she paid under protest.

Issue

Whether the arbitration clause in the service agreement is enforceable, particularly in light of the unconscionability of the class action waiver contained within it.

Whether the prohibition of class arbitration is unconscionable.

Rule

The enforceability of arbitration clauses, including class action waivers, must be determined on a case-by-case basis, considering the totality of the circumstances, and state law principles regarding unconscionability apply unless expressly preempted by federal law.

Enforceability of a class action waiver, whether or not the contract provides for mandatory arbitration, must be determined on a case-by-case basis, considering the totality of the circumstances.

Analysis

The court analyzed the arbitration clause and found that while there was some procedural unconscionability, it was not sufficient to render the class action waiver unenforceable. The court determined that the class action waiver was substantively unconscionable, but it could be severed from the arbitration clause, allowing the remainder of the arbitration agreement to be enforced.

Although there was a degree of procedural unconscionability in service agreement, it was not sufficient, in itself, to render class action waiver unenforceable; class action waiver was substantively unconscionable.

Conclusion

The Supreme Court affirmed the Appellate Court's judgment, holding that the arbitration clause applied to Kinkel's claim and that the class action waiver was severable and enforceable.

Judgment of Appellate Court affirmed.

Who won?

Cingular Wireless prevailed in the case as the court upheld the enforceability of the arbitration clause, allowing the individual claims to proceed to arbitration despite the unconscionability of the class action waiver.

Cingular's argument that this new provision should be applied to plaintiff's claim was rejected.

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