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An arbitration agreement can apply retroactively to disputes, the California Court of Appeal held, but because a company’s 2004 arbitration agreement contained no retroactive language, it did not encompass a lawsuit filed against the company in 2003.
In Gregory v. Sprint Spectrum L.P., Super.Ct.No. GIC806155, 2006 WL 2497781 (Cal. App. 4 Dist. August 30, 2006), Gregory filed a putative class action against Sprint in 2003 for deceptive trade practices. Sprint filed a motion to compel arbitration.
The dispute over whether to compel arbitration lasted for over a year. In the meantime, Sprint had unilaterally executed several changes to the customer contract and arbitration agreement, which it was permitted to do.
During the hearing on the motion to compel arbitration, the judge required Sprint to state which agreement it was relying on to support its motion to compel. Sprint stated that it was relying on the June 2004 agreement, which went into effect after Gregory filed his lawsuit and after Sprint filed a motion to compel arbitration. When the trial court denied Sprint’s motion, reasoning that the 2004 agreement did not apply retroactively to Gregory’s dispute, Sprint appealed.
On appeal, the Court of Appeal agreed with the trial court. It reasoned that the June 2004 arbitration clause governed disputes arising out of or relating to “this agreement,” and that events prior to June 2004 did not arise under this agreement.
Had Sprint wanted the clause to apply retroactively, Sprint could have done so by stating its intent in the contract. In fact, the Court found that one of the previous agreements stated that it applied “regardless of the date of accrual of such claim,” but was later changed to “this agreement.” The Court found that disputes arising under “this agreement” can only mean that the arbitration clause applies to future disputes.
Sprint countered by arguing that mandatory arbitration agreements existed in some form or other with Gregory prior to and during the events alleged in his lawsuit. The Court agreed that previous agreements may have applied to Gregory’s claims, but stated that Sprint did not choose to enforce those previous agreements. Instead, Sprint elected to rely on the 2004 agreement. As such, the Court held that the trial court correctly decided that Gregory’s dispute did not arise under the 2004 agreement, since it happened before the agreement existed...
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