ALLTEL CORPORATION AND ALLTEL COMMUNICATION, INC. v. Sumner

• Decision Date: 10 February 2005
• Citation: 360 Ark. 573,203 S.W.3d 77
• Parties: ALLTEL CORPORATION AND ALLTEL COMMUNICATIONS, INC., Appellants, v. Paul SUMNER and Charles Miller, individually and on behalf of all persons similarly situated, Appellees
• Court: Arkansas Supreme Court

203 S.W.3d 77

360 Ark. 573

ALLTEL CORPORATION AND ALLTEL COMMUNICATIONS, INC., Appellants, v. Paul SUMNER and Charles Miller, individually and on behalf of all persons similarly situated, Appellees

04-279

Supreme Court of Arkansas

Opinion Delivered February 10, 2005

ANNABELLE CLINTON IMBER, Associate Justice

The appellees, Paul Sumner and Charles Miller, individually and on behalf of all others similarly situated, filed a class-action complaint against the appellants, Alltel Corporation and Alltel Communications, Inc., (collectively hereinafter "Alltel"). In their complaint, Sumner and Miller assert one count of deceptive trade practices in violation of the Arkansas Deceptive Trade Practices Act. Ark. Code Ann. §§ 4-88-101, et. seq. (Repl. 1999). Specifically, they claim that

[b]eginning sometime in the year 2000, Alltel falsely advertised and offered unlimited monthly wireless telephone services, subject to fixed roaming charges to [Sumner and Miller] and the Class Members for $49.95 for various terms and durations. Indeed, some of the ads even said the $49.95 rate would last for the life of the customer.

As a result of the advertising campaign, Sumner and Miller subscribed to Alltel's wireless telephone service in accordance with the terms set forth in the advertised rate plan. The class-action complaint further states that within months after signing up thousands of customers, including Sumner and Miller, Alltel sent letters to them announcing an increase in the monthly rate from $49.95 to $59.95, as well as an increase in the roaming rate, with the increases to be effective July 16, 2001. Alltel responded to the complaint by filing a motion to dismiss or stay pending resolution of the arbitration issue in another case¹, or, in the alternative, to compel arbitration. In its motion, Alltel stated Sumner and Miller signed a service contract that included an arbitration clause.² According to Alltel, the arbitration clause states:

Any dispute arising out of this Agreement or relating to the Services and Equipment must be settled by arbitration administered by the American Arbitration Association. Each party will bear the cost of preparing and prosecuting its case. We will reimburse you for any filing or hearing fees to the extent they exceed what your court costs would have been if your claim had been resolved in a state court having jurisdiction. The arbitrator has no power or authority to alter or modify these Terms and Conditions, including the foregoing Limitation of Liability section. All claims must be arbitrated individually, and there will be no consolidation or class treatment of any claims. This provision is subject to the United States Arbitration Act.

Sumner and Miller filed a brief opposing Alltel's motion to dismiss or stay, and the circuit court denied Alltel's motion without a hearing.

Shortly thereafter, Alltel filed a motion for reconsideration, a hearing and amendment to order. The circuit court vacated its earlier order and held a hearing. At that point, Alltel submitted the affidavit of John Chapman, Director of Retail Sales for Alltel, which states in relevant part:

3. Based on my knowledge of Alltel's practices and procedures, the Agreement for Communications Services Terms and Conditions, which is attached hereto as Exhibit "A," would have been given to the Plaintiffs prior to the initiation of service.

4. No Alltel wireless customer would receive service until such time as an Agreement for Communications Services Terms and Conditions, or its predecessor, would have been in place.³

Ultimately, the court entered an order denying Alltel's motion, which order is the subject of this appeal by Alltel.

In its order, the circuit court denied Alltel's motion to dismiss or stay, or, in the alternative, to compel arbitration and stated, "[Alltel] offered insufficient proof that the arbitration clause was communicated to the Plaintiffs or that the Plaintiffs should be bound by Defendants' asserted common clause. The affidavit of John Chapman, alone, is insufficient to prove that the Plaintiffs were given a contract which provided for the requirement of arbitration. . . ." An order denying a motion to compel arbitration is an immediately appealable order. Ark. R. App. P.-Civ. 2(a)(12); The Money Place, LLC v. Barnes, 349 Ark. 411, 78 S.W.3d 714 (2002); E-Z Cash Advance, Inc. v. Harris, 347 Ark. 132, 60 S.W.3d 436 (2001); Showmethemoney Check Cashers, Inc. v. Williams, 342 Ark. 112, 27 S.W.3d 361 (2000). We review a circuit court's order denying a motion to compel arbitration de novo on the record. Id.

The same rules of construction and interpretation apply to arbitration agreements as apply to agreements in general. Cash in a Flash Check Advance of Arkansas, LLC, v. Spencer, 348 Ark. 459, 74 S.W.3d 600 (2002)

. Thus, the essential elements for an enforceable arbitration agreement are (1) competent parties, (2) subject matter, (3) legal consideration, (4) mutual agreement, and (5) mutual obligation. Id. Furthermore, the construction and legal effect of a written contract to arbitrate are to be determined by the court as a matter of law. E-Z Cash Advance, Inc. v. Harris, 347 Ark. 132, 60 S.W.3d 436 (2001).

A threshold inquiry is whether an agreement to arbitrate exists; that is, whether there has been mutual agreement, with notice as to the terms and subsequent assent. We keep in mind two legal principles when deciding whether a valid contract was entered into: (1) a court cannot make a contract for the parties but can only construe and enforce the contract that they have made; and if there is no meeting of the minds, there is no contract; and (2) it is well settled that in order to make a contract there must be a meeting of the minds as to all terms, using objective indicators. Williamson v. Sanofi Winthrop Pharm., Inc., 347 Ark. 89, 60 S.W.3d 428 (2001). Both parties must manifest assent to the particular terms of the contract. Van Camp v. Van Camp, 333 Ark. 320, 969 S.W.2d 184 (1998). In this case, Alltel argues that "assent was indicated by the continued use and benefit of ALLTEL services." In support of this proposition, they cite Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir. 1997). In Hill, the plaintiff ordered a computer over the telephone. The terms and conditions, which contained an arbitration clause, were included in the box with the computer. The court determined that the arbitration clause was enforceable because the buyer, after being given notice of the terms, kept the computer. Similarly in Stiles v. Home Cable Concepts, 994 F.Supp. 1410 (M.D. Ala. 1998), the court enforced the amended terms of an agreement where the amended terms were mailed to the plaintiff, and he acknowledged receipt of the notice.

The above cases are distinguishable from the case at hand because, in each case, it was shown that the party had received the agreement. For a party to assent to a contract, the terms of the contract must be effectively communicated. Crain Indus., Inc. v. Cass, 305 Ark. 566, 810 S.W.2d 910 (1991). Here, the only evidence introduced by Alltel that Sumner and Miller had received notice was the Chapman affidavit stating that Altell's practice and procedure is to provide copies of the terms and conditions prior to the initiation of service. We must decide if this affidavit is sufficient evidence to establish that Sumner and Miller, in fact,...