In an effort to limit the number of potential class members in the T-Mobile data breach multi-district litigation, lawyers for T-Mobile USA, Inc. have taken the position that “a significant portion of this class is bound by arbitration agreements that would preclude participation in this class action”.
The MDL, currently pending before U.S. District Judge Brian Wimes of the Western District of Missouri, was formed in December, 2021 and is comprised of over 50 lawsuits brought against T-Mobile after it was targeted in a July, 2021 cyberattack that left the personal information of 50 million users of the wireless carrier at risk.
The lawsuits also allege there have been a number of similar attacks over the last five years, including an attack in December, 2021 that may have revealed personal information of a smaller number of users. Plaintiffs allege that T-Mobile failed to anticipate the possibility of cyberattacks and follow adequate security procedures that would have detected or even prevented the breach.
The arbitration issue was presented at the first hearing in the newly formed MDL held on January 25, 2022 and will likely be a focus in that litigation. Counsel for the plaintiffs acknowledged that some users may be subject to the arbitration provisions outlined in their financing agreements, but pointed out that many are not. In response, the company has argued that its arbitration agreement is broad and encompasses any and all claims or disputes.
It should be noted that arbitration clauses have become focal points in a number of different litigations, with companies adding them to their contracts in an effort to preclude customers’ ability to join a class action. After being sued by customers in a number of federal class actions in 2019, Intuit Inc. the software manufacturer of TurboTax, successfully moved to compel individual arbitration of the claims. Faced with the cost of thousands of individual arbitrations, Intuit then sought to force the claims into small claims court, a move that was denied on July 29, 2021 by a California appellate panel.
In July, 2021, Amazon advised its customers that it would no longer force them to resolve their complaints through arbitration and that any disputes with the company would have to be pursued in federal court. The company had been involved in about 75,000 arbitration claims involving their devices Echo and Alexa.
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