Antitrust Law Daily Wrap Up, PRIVACY—7th Cir.: Sprint’s call for arbitration should have been allowed in TCPA suit, (May 12, 2015)

By Greg Hammond, J.D.

Sprint Spectrum L.P. should have been granted the opportunity to arbitrate claims it violated the Telephone Consumer Protection Act (TCPA) after plaintiffs’ service contract was sold to Sprint. Finding that the case falls under the “established business relationship” exception to the TCPA, the U.S. Court of Appeals in Chicago reversed an order by the federal district court in Chicago that denied arbitration (Andermann v. Sprint Spectrum L.P., May 11, 2015, Posner, R.).

Ronald and Anna Andermann obtained mobile phone services from U.S. Cellular in 2000, but the service contract was later assigned to Sprint without notice to the Andermanns. Sprint subsequently contacted the Andermanns, informing them that their mobile service would be terminated because their cellphones were no longer compatible with Sprint’s network. Sprint called the Andermanns on six occasions to remind them that their service was about to expire and added that Sprint had “a great set of offers and devices available to fit [their] needs.” The Andermanns did not answer the calls, but later brought suit, claiming that the unsolicited advertisements contained in the calls violated the TCPA. The district court denied Sprint’s request to arbitrate the claims, finding that Sprint’s contract with the Andermanns terminated prior to the phone calls and that the dispute over the legality of the calls could not have arisen from or related to the service contract.

The appellate court reversed and remanded the lower court’s decision, finding that Sprint is entitled to arbitrate its claims, even if the claims are unlikely to prevail. Specifically, the court found that the case falls within the exception in the TCPA for telephone solicitations made to “any person with whom the caller has an established business relationship.” It reasoned that by stepping into U.S. Cellular’s shoes, Sprint created a business relationship that would have been disrupted had Sprint told the Andermanns only that their services were going to be cut off, without adding an offer to substitute an equivalent service. “So truncated a communication would gratuitously have deprived the Andermanns of what might have been an attractive opportunity for them,” the court stated.

The case number is 14-3478.

Attorneys: F. Paul Bland, Jr. (Public Justice, PC) for Ronald Andermann. Fred R. Puglisi (Sheppard, Mullin, Richter & Hampton LLP) for Sprint Spectrum L.P.

Companies: Sprint Spectrum L.P.

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