On March 20, 2011, AT&T and Deutsche Telekom AG – the parent company of T-Mobile USA, Inc. – announced an agreement under which AT&T will acquire T-Mobile USA for approximately $39 billion. Beginning in July, the law firm Bursor & Fisher P.A. began an effort to thwart the merger by using AT&T’s own arbitration agreements against it – the same arbitration agreements that were at the center of the United States Supreme Court’s recent, and well publicized, decision AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), which held that class arbitration waivers are valid and enforceable and criticized the use of arbitration to provide relief to a class of claimants. AT&T Mobility recently filed suit to enjoin these arbitrations from proceeding, because they are allegedly beyond the scope of the wireless customers’ arbitration agreements.
The merger between AT&T and T-Mobile is currently being reviewed by the Department of Justice (DOJ), the Federal Communications Commission (FCC), certain state Attorneys General, and various other state regulators. Nevertheless, the Bursor law firm announced “a plan to use AT&T's own arbitration agreement to help stop the takeover of T-Mobile.” Bursor has declared that it is prepared to institute “thousands” of coordinated arbitrations under the consumer-arbitration provision in AT&T Mobility’s standard wireless agreement and that each arbitration would seek the same relief: “enjoin[ing] the merger.” Bursor has launched a web site designed to solicit AT&T Mobility’s customers to join in the arbitrations. In return, it is alleged that Bursor has promised that claimants might receive $10,000 through the arbitration.
According to AT&T Mobility’s complaint filed in a New York federal court, Bursor’s stated goal is to coerce “AT&T to settle, given the ‘daunting’ prospect of fighting more than 750 arbitrations, anyone of which could stop the deal”, quoting Terry Baynes of Reuters. The complaint quotes Scott Bursor of the Bursor firm as saying: “If we bring 100 cases and lose 99 of them we are going to win.”
AT&T Mobility’s lawsuit seeks a finding that the U.S. Supreme Court’s recent decision in AT&T Mobility LLC v. Concepcion – which confirmed that AT&T Mobility’s arbitration agreement is enforceable – precludes Bursor from maintaining class actions against AT&T Mobility in the name of its customers. According to AT&T Mobility, “the decision thus represents a clear threat to Bursor’s business model of extracting lucrative attorneys’ fee awards from businesses targeted by class actions.” The federal complaint alleges that the defendants (i.e., the claimants in the arbitrations) do not assert any individual claims nor do they seek any individualized relief that would affect only the particular customer initiating the arbitration. AT&T Mobility, cites for example, the customers’ failure to seek damages for any injuries that they believe the merger with T-Mobile would cause. Instead, AT&T complains, the customers’ arbitration demands seek only collective relief and otherwise bear all of the hallmarks of a class action. Thus, AT&T Mobility alleges that the defendants’ arbitration demands fall beyond the scope of arbitration available under AT&T Mobility’s arbitration agreements. AT&T Mobility’s lawsuit seeks a judgment in its favor declaring that their arbitration demands are outside the scope of their arbitration agreements and an injunction prohibiting them from proceeding.