Kevin Janda entered into a cell phone service agreement with T-Mobile USA. Janda and Singh asserted that T-Mobile charged a "Universal Service Fund Fee" and/or a "Regulatory Cost Recovery Fee," which was not required by law and was not included in the advertised cost.
Also, T-Mobile supposedly billed minutes in billing periods other than when the call was made, and improperly charged for roaming, long distance, and nights and weekends that were supposed to be free. The service agreement said, in small, bold font, that the signatory agreed to all terms and conditions and that all disputes were subject to mandatory arbitration with more information to be found on the back of the agreement.
The agreement required a waiver of all class action rights. The contract included this provision: "an arbitrator may not award relief in excess of or inconsistent with the provisions of the Agreement . . . or award lost profits, punitive, incidental or consequential damages or any other damages other than the prevailing party's direct damages," as well as this provision: "[e]ach party agrees to pay the fees and costs of its own counsel . . . at the arbitration," which seems to limit the plaintiff to attorney fees that amount to less than what he is allowed to recover.
Singh and Janda argued that the contract was unconscionable, and they should not be required to arbitrate. The U.S. District Court found that the contract was unconscionable. What reasoning did the court use to come to that decision?
Janda v. T-Mobile, 2006 U.S. Dist. LEXIS 15748 (N.D. Cal., Mar. 17, 2006).