CHARLESTON –- West Virginia's Supreme Court of Appeals interrupted a class action against AT&T Mobility so Brooke Circuit Judge Ronald Wilson can think twice about his jurisdiction.
On Oct. 28, all five Justices directed Wilson to review AT&T's motion for enforcement of an arbitration clause in a contract former customer Charlene Shorts signed.
Wilson declared the clause unconscionable because it prohibited class actions, but the Justices found he failed to engage in meaningful analysis.
"In reviewing the motion, the trial court is required to make specific findings on the issue of unconscionability," they wrote in an unsigned opinion.
Shorts seeks to represent all West Virginians who signed contracts with Cingular or AT&T since 2002. She set up an account with AT&T in 2003, and failed to make timely payments.
AT&T terminated the contract, added an early termination fee of $150, and sold the debt to Palisades Collection.
Palisades filed a complaint against Shorts in Brooke County magistrate court in 2006, seeking to recover more than $1,000 in debt and interest.
Shorts denied owing anything and asserted a counterclaim under the state Consumer Credit and Protection Law.
Palisades removed the case to circuit court, where Shorts added AT&T as defendant and proposed a class action seeking damages, debt cancellation and attorney's fees.
AT&T removed the case to Federal Court pursuant to the Class Action Fairness Act, which steers most new class actions to federal courts.
District Judge Irene Keeley remanded it to Brooke County, and appeals judges of the U.S. Fourth Circuit in Richmond affirmed the decision.
AT&T sought review at the U.S. Supreme Court, and the Court denied it.
AT&T then asked Wilson to compel arbitration, not under the contract Shorts and AT&T signed but under one she and Cingular signed in 2005.
Last December, Wilson declared prohibition of class actions unconscionable under Dunlap v. Berger, a Supreme Court decision from 2002.
The Justices found he misinterpreted the decision.
"Standing alone, the lack of class action relief does not render an arbitration agreement unenforceable on grounds of unconscionability under this Court's decision in Dunlap," they wrote.
They wrote that according to Dunlap, every dispute must be examined on the basis of language in a particular contract in conjunction with specific facts.
They told Wilson to examine relative positions and bargaining power of the parties. They told him to specify unfair terms in the contract.
They told him to inquire whether the contract prevents a claimant from vindicating rights and whether costs of arbitration are burdensome.
They apparently answered the last question for him. "Ms. Shorts bears no costs with regard to an arbitration proceeding," they wrote.
They wrote that the contract provides a minimum recovery of $10,000 for a customer whose arbitration award exceeds the company's last settlement offer.
Jeffrey Wakefield, of Flaherty, Sensabaugh and Bonasso in Charleston, represented AT&T, along with Archis Parasharami and Evan Tager of Washington, D.C.
Robert Bailey, William Wilmoth, and Michael McCarthy, all of Steptoe and Johnson in Charleston, represented Palisades Collections.
Christopher Regan, James Bordas Jr., and Jason Causey, all of Bordas and Bordas in Wheeling, represented Shorts, along with Thomas McIntire of Wheeling.
Chanler Langham, Jonathan Bridges, and William Merrill, all of Susman Godfrey in Dallas, Texas, also represented Shorts.
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