Sprint Faces Arbitration on Smartphone Fees
(CN) - An arbitrator will handle claims that Sprint tacks on a "premium data add-on" fee after selling customers a supposedly "unlimited data" plan, a federal judge ruled.
Consumers began suing Sprint Solutions and Sprint Spectrum shortly after the Overland Park, Kan.-based company began selling two 4G smartphones in 2010. Taiwan-based HTC makes the Evo, while the Epic is manufactured by South Korea's Samsung.
The customers claimed that they bought supposedly "unlimited data" plans but incurred a $10 monthly "premium data add-on" fee to use the new devices.
Several federal complaints against Sprint were ultimately consolidated in New Jersey, but U.S. District Judge Susan Wigenton last year ordered discovery into whether the claims should be subject to arbitration.
Sprint then moved to compel bilateral arbitration and dismiss or stay all actions under the Federal Arbitration Act (FAA) and Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
Judge Wigenton granted the motion Wednesday, tossing aside the claim by Cameron Comstock and the other plaintiffs that "Sprint's failure to specify arbitral rules in advance imposes additional layers of cost and delay on the arbitration process."
"Plaintiffs' argument is misleading because it presumes that court action will be required to choose an arbitrator if they proceeded with individual arbitration against Sprint," the unpublished opinion states. "The pertinent portion of the arbitration agreement states: 'Unless we each agree otherwise, the arbitration will be conducted by a single neutral arbitrator and will take place in the county of the last billing address of the device. We will agree on the arbitrator, and if we cannot agree, then the arbitrator will be appointed by the court as provided by the FAA.' Plaintiffs' reference to the three instances in which court action was required to choose an arbitrator does not establish the filing fee in federal court as a projected cost. Instead, it shows that there is a possibility that court action and thereby a filing fee may be required in selecting an arbitrator. Notably, Sprint has provided documents showing that it has the practice and policy of paying for arbitral costs when customers seek individual arbitration. Therefore, plaintiffs' first assertion of projected costs pertaining to the logistics of the arbitral process is insufficient." (Emphasis in original).
The plaintiffs also failed to show that the arbitral costs will exceed the best possible recovery, based on seven arbitrations between AT&T and its subscribers.
Sprint Corp. reported $35.3 billion in revenue in 2012.