Wigginton v. Dell, Inc.

SUPREME COURT CASES

Laws-info.com » Cases » Illinois » 5th District Appellate » 2008 » Wigginton v. Dell, Inc.

State: Illinois

Court: 5th District Appellate

Docket No: 5-07-0076 Rel

Case Date: 06/02/2008

Preview:Rule 23 order filed April 25, 2008; Motion to publish granted June 2, 2008.

NO. 5-07-0076
IN THE

APPELLATE COURT OF ILLINOIS FIFTH DISTRICT ________________________________________________________________________ STEPHEN R. WIGGINTON and WEILMUENSTER ) Appeal from the & WIGGINTON, P.C., Individually and on Behalf of ) Circuit Court of Others Similarly Situated, ) St. Clair County. ) Plaintiffs-Appellees, ) ) v. ) No. 03-L-455 ) DELL, INC., f/k/a Dell Computer Corporation, ) Honorable ) Lloyd A. Cueto, Defendant-Appellant. ) Judge, presiding. ________________________________________________________________________ JUSTICE CHAPMAN delivered the opinion of the court: The plaintiff, Stephen R. Wigginton, filed a class action, alleging that the defendant, Dell, Inc. (Dell), refused to honor rebates that it offered its customers to induce them to purchase computer equipment from Dell. The defendant filed a motion to compel arbitration. The court found that a prohibition on class arbitration contained in the defendant's arbitration clause was unenforceable, and it entered an order striking that prohibition and compelling arbitration. The defendant appeals, arguing that the arbitration clause in the parties'

agreement is not severable and is enforceable in its entirety. We affirm. On December 17, 2002, the plaintiff purchased $4,535.67 in computer equipment for his law firm. He was offered a $500 rebate on the equipment, which could be redeemed after the purchase. According to the plaintiff, he made several attempts to obtain the forms necessary to claim the rebates, both by calling Dell and by attempting to download the forms from Dell's Web site. He alleges that he was not able to obtain the forms for several months. When he submitted the rebate forms, the claim was rejected on the basis that the eligibility

1

period had expired. According to the plaintiff, he was never told that there was a limitation on the period of eligibility to claim the rebate. On July 22, 2003, the plaintiff filed his original complaint in this matter. On

September 22, the defendant filed its first motion to dismiss or, in the alternative, to compel arbitration and stay litigation pending arbitration. The defendant pointed to its terms and conditions of sale, which contain a provision that all disputes or claims against Dell are subject to binding arbitration, to be administered by the National Arbitration Forum. The arbitration clause further provides that "arbitration will be limited solely to the dispute or controversy between Customer and Dell." The terms and conditions also include a choice-oflaw provision making disputes subject to Texas law. On March 31, 2004, with the defendant's motion still pending, the plaintiff filed a first amended complaint, adding his law firm as a plaintiff. On May 7, 2004, the defendant filed a new motion to dismiss the amended complaint or, in the alternative, to compel arbitration and stay litigation pending arbitration. On December 19, 2006, the court held a hearing in the matter. Prior to that time, both parties had submitted briefs in support of their positions. Although the plaintiff initially argued that the arbitration clause was unconscionable in its entirety, before the hearing he conceded that the dispute was subject to arbitration, but he argued that the prohibition on class arbitration was unconscionable. On January 11, 2007, the trial court entered an order striking the class arbitration prohibition and compelling arbitration. The court found that the class prohibition was unconscionable. On February 9, 2007, the defendant filed this

interlocutory appeal pursuant to Supreme Court Rule 307(a) (188 Ill. 2d R. 307(a)). As the defendant correctly contends, this court has applied Texas law to the same provision as the one at issue here and found it to be enforceable, in Hubbert v. Dell Corp., 359 Ill. App. 3d 976, 835 N.E.2d 113 (2005). We emphasize that, while the provision

2

involved here is identical to the provision involved in Hubbert, the circumstances surrounding the formation of the contract in the instant case differ greatly from those in Hubbert . This distinction is significant for reasons we will explain in detail later. Moreover, in deciding to apply Texas law in Hubbert , we explained that we will only apply the law of another state pursuant to a choice-of-law provision if (1) there is some relationship between that state and the controversy at issue and (2) applying the other state's law does not violate the public policy of this state. Hubbert , 359 Ill. App. 3d at 982, 835 N.E.2d at 120 (citing Potomac Leasing Co. v. Chuck's Pub, Inc., 156 Ill. App. 3d 755, 758-59, 509 N.E.2d 751, 753-54 (1987)). In Hubbert , we found no public policy reason not to apply Texas law. Hubbert , 359 Ill. App. 3d at 982, 835 N.E.2d at 120. This conclusion has been undermined by subsequent decisions of the Illinois Supreme Court. In Kinkel v. Cingular Wireless, LLC, 223 Ill. 2d 1, 857 N.E.2d 250 (2006), the supreme court found a class arbitration prohibition similar to the one here at issue to be unconscionable. This holding presents a conflict between Illinois law and Texas law that did not exist when we decided Hubbert . See Hubbert , 359 Ill. App. 3d at 982, 835 N.E.2d at 120 (noting that the result would be similar under the law of either state). For reasons we will explain, we find that it would violate the public policy of this state to enforce the provision at issue, even assuming it would be enforceable under Texas law. First, however, we turn to the impact of the differing circumstances surrounding the contract formation here and in Hubbert . Under Texas law, as under Illinois law, there are two components to unconscionability

Download Wigginton v. Dell, Inc..pdf