In Frank Gilbert v. I.C. System, Inc., the U.S. District Court for the Northern District of Illinois denied the defendant’s motion to compel arbitration in a FDCPA class action, holding that the corporate declaration offered by the defendant was insufficient to prove that the plaintiff actually saw and agreed to the account terms and conditions when he signed up for his cell phone contract. 2021 U.S. Dist. LEXIS 16279, 2021 WL 292852 (Case No. CV-04988, January 28, 2021).

Plaintiff Frank Gilbert incurred a debt on a Sprint consumer account. Defendant IC System (ICS), a collection agency, mailed the plaintiff a collection letter on behalf of Sprint. Gilbert filed suit against ICS, alleging that the collection letter violated the FDCPA because it misleadingly failed to inform him that the amount ICS sought to collect was increasing on a monthly basis due to interest or other charges. Gilbert claimed that he could, at some future date, have paid the amount set forth in the letter without realizing that the amount paid would not satisfy his current balance. Gilbert’s complaint seeks to certify a class of persons in Illinois who received a similar collection letter from ICS.

ICS filed a motion to compel arbitration, arguing that by activating his Sprint account, Gilbert agreed to Sprint’s terms and conditions (T&Cs), which provided: “[y]ou accept the agreement when you: [a]ctivate, use or attempt to use, the Services; or Pay for the services.” In the case of a dispute between the parties, it states, “[i]f we cannot resolve [a] dispute, you and Sprint agree that we will resolve through individual arbitration …” Id at 188. ICS did not produce a written contract, instead providing a website printout, which included the T&Cs together with a corporate declaration that stated that Gilbert “was provided with the Terms and Conditions when he began his Sprint account” and agreed to them “through his use and payment of the account services.” Id. at 195.

Observing that “a party may, by his acts and conduct, indicate his assent to its terms and become bound by its provisions even if he has not signed it,” Id at 193 (quoting Bauer v. Qwest Commc’ns Co. LLC, 743 F.3d 221, 227 (7th Cir 2014)), the court emphasized the Seventh Circuit’s standard for determining the existence of an agreement to arbitrate in the context of internet agreements:

“The 7th Circuit has instructed that assent is a ‘fact-intensive’ inquiry: we cannot presume that a person who clicks on a box that appears on a computer screen has notice of all of its contents not only of that page but of content that requires further action (scrolling, following a link.) … [A] person using the Internet may not realize that she is agreeing to a contract at all, whereas a reasonable person signing a physical contract will rarely be unaware of that fact.” Id. (quoting Carlton at the Lake, Inc., v. Barber, 928 N.E.2d 1266, 1270 (Ill. App. Ct. 2010)).

Addressing the evidence provided by ICS, the court held that the corporate declaration was insufficient to enable it to undertake the necessary fact-intensive inquiry. The declaration failed to provide any information as to how Gilbert registered for his account, how and when he received the T&Cs, or whether he was made aware of them (or even ever saw them). Concluding that ICS had not met its burden to show that the T&Cs constituted a binding agreement to arbitrate between Sprint and Gilbert, the court denied ICS’s motion to compel. The case emphasizes the importance of a factually developed and nonconclusory corporate declaration in supporting a motion to compel arbitration.