## Facts

- Wireless customers subscribed to service under Cingular’s standard-form subscriber agreement.
- The agreement required mandatory arbitration and barred class litigation and class arbitration, permitting only individual proceedings.
- Customers alleged Cingular systematically overcharged consumers by adding roaming, long-distance, and other hidden charges, typically about $1 to $40 per month per customer.
- Plaintiffs asserted that pursuing individual claims was not economically feasible given the small damages, time required, and technical complexity of proving billing errors.
- Plaintiffs supported the infeasibility of individual pursuit with expert declarations indicating that few consumers would file individual arbitrations for such claims.
- The claims included alleged violations of Washington’s Consumer Protection Act (CPA), ch. 19.86 RCW, brought as a putative class action.

## Issues

1. Whether a class-action waiver in a mandatory consumer arbitration clause is unconscionable or void as against Washington public policy when it effectively prevents prosecution of widespread small-value CPA claims.
2. Whether enforcing the waiver would functionally exculpate the company from liability and frustrate the CPA’s remedial and deterrent objectives.
3. Whether invalidating the class-action waiver applies neutral contract doctrines (public policy and unconscionability) rather than a rule that disfavors arbitration.

## Decision

- The Washington Supreme Court reversed the trial court order compelling individual arbitration.
- The court held the class-action waiver unenforceable because it violated Washington public policy embodied in the CPA.
- The court concluded the waiver operated as an exculpatory provision in practice by making effective relief for small, widely distributed injuries unrealistic.
- The case was remanded for further proceedings without enforcing the class-action waiver.

## Legal Principles

- Contract terms that violate public policy are void and unenforceable under Washington law.
- The CPA relies heavily on private enforcement to deter and remedy unfair or deceptive practices; contract terms that materially impair such enforcement may violate public policy.
- A provision in an adhesion contract that, in practical effect, immunizes the drafter from liability for alleged misconduct can be substantively unconscionable and treated as exculpatory.
- Arbitration agreements remain subject to generally applicable contract defenses, including unconscionability and public policy, so long as the doctrine does not single out arbitration for disfavored treatment.
- In evaluating enforceability, courts may consider the real-world effect of a class-action waiver, including whether individual proceedings are a realistic mechanism for vindicating small-value consumer claims.

## Conclusion

The court held that enforcing Cingular’s arbitration class-action waiver would, as a practical matter, prevent meaningful pursuit of small but widespread consumer claims and thereby undermine the CPA’s private-enforcement design; because the waiver functioned as exculpation in an adhesion contract, it was unenforceable and the order compelling individual arbitration was reversed.


Scott v. Cingular Wireless, 160 Wash. 2d 843, 161 P.3d 1000 (Wash. 2007)