Earlier this month in Andermann v. Sprint Spectrum, L.P., a court addressed two hot topics in the litigation world: arbitration clauses and Telephone Consumer Protection Act (TCPA) class actions. The decision offers important potential strategies for businesses seeking to enforce arbitration clauses, particularly to avoid TCPA class actions, including when arbitration clauses can apply to TCPA claims and in what circumstances a business may rely on an arbitration clause in an affiliate's contract.

1. Arbitration Clauses Can Apply to a Former Customer's TCPA Claims Based on Phone Calls Made After the Contract Containing the Arbitration Clause Has Been Terminated

In Andermann, the plaintiffs' mobile phone contract was sold to Sprint. The contract sold to Sprint included an assignable arbitration clause that disallowed class action arbitration. Because the plaintiffs' cell phones did not work with Sprint's network, Sprint sent a letter to the plaintiffs informing them that their service would soon be terminated. After the plaintiffs decided to sign on with another mobile service provider (which terminated the contract with Sprint), Sprint Spectrum made six calls to the plaintiffs to remind them that their service was about to expire and that Sprint could offer a replacement plan or device. This prompted the plaintiffs to file a TCPA class action, contending that the unsolicited advertisements in Sprint Spectrum's calls violated the TCPA.

The district court denied Sprint's request to order arbitration of the TCPA claims, holding that the claims did not arise from and were not related to the contract because the calls were made after the plaintiffs terminated the contract. The appellate court reversed, holding that there was "an intimate relation" between the plaintiffs' TCPA claims and their contract, even though the calls that were the basis of the claim were made after the contract had been terminated. Specifically, the appellate court found that it was the assignment agreement in the contract that led to Sprint making the calls at issue. As a result, the appellate court held the arbitration clause applied to the TCPA claims. And, because the arbitration clause disallowed class action arbitration, the plaintiffs' claims would have to be arbitrated individually instead of as part of a class action.

2. A Business May Be Able to Rely on an Arbitration Clause in an Affiliate's Contract with the Plaintiff

The appellate court also considered the plaintiffs' argument that Sprint Spectrum could not rely on the contract's arbitration clause because the contract containing the arbitration clause was between the plaintiffs and Sprint Solutions, not Sprint Spectrum. The appellate court quickly dismissed this argument. It held that Sprint Spectrum could rely on the arbitration clause because Sprint Solutions had been 1.) their affiliate and 2.) designated to hold the plaintiffs' contracts on their behalf.

Takeaways

For businesses that are, or may be, faced with TCPA claims or other onerous claims brought by their customers, this decision offers two helpful avenues that may force a plaintiff to arbitrate his or her claims individually, as opposed to litigating them as a class action. First, a business may be able to rely on an arbitration agreement in a contract that has already been terminated. Secondly, a business may be able to rely on an arbitration agreement contained in a contract between one of its affiliates and a customer.