Plaintiffs Didn't Opt Out of Arbitration, Says T-Mobile in Support of Motion to Compel

Two plaintiffs’ lawsuit against T-Mobile in a SIM swap fraud case “belongs in arbitration,” said the defendant's memorandum of law Friday (docket 1:23-cv-06159) in U.S. District Court for Eastern New York in Brooklyn in support of its motion to compel arbitration and stay the case, pending the outcome of that arbitration.

The two T-Mobile customers allege the carrier’s “gross negligence in hiring, training, and supervising its employees” enabled a SIM card swap that let criminals steal $130,000 from their savings. Feliks Roitman and Yekaterina Shkolnik allege an unidentified person unknown to them entered a T-Mobile location in Oakland, California, in November 2021 and initiated a SIM swap on Roitman’s account, while the family was at home in New York (see 2310030007). Roitman held the family’s account in his name, including lines for Shkolnik and their son.

T-Mobile’s terms and conditions provide for arbitration of “any and all claims or disputes in any way relating to or concerning” its T&Cs, services, privacy policies, or devices, said the memorandum. T-Mobile’s T&Cs give customers the right to opt out of arbitration procedures within 30 days from purchase or service activation, whichever is earlier, but the plaintiffs “did not opt out,” it said.

To the extent that the plaintiffs dispute the scope or enforceability of the arbitration provision, “that dispute must be decided by the arbitrator” because the terms incorporate the American Arbitration Association’s rules providing that the arbitrator will have the power to rule on his or her own jurisdiction, the memorandum said.

The arbitration agreement “plainly covers” the plaintiffs’ claims that T-Mobile failed to safeguard their personal information, which “Plaintiffs allege they provided to T-Mobile in exchange for T-Mobile’s provision of cellular services,” said the memorandum. The plaintiffs “relied on T-Mobile’s performance of these duties when they agreed to T-Mobile’s contract, and each and every time they provided personal information” while using the carrier’s network, it said.

Roitman signed service agreements with T-Mobile in 2020 for service on multiple devices, then changed his and Shkolnik’s lines to new numbers, the lines at issue in the litigation, said the memorandum. Roitman signed two more contracts in 2021. On Nov. 29, 2021, the plaintiffs allege an unknown criminal initiated a SIM swap on their phones, leading to the theft of cryptocurrency from Roitman’s Coinbase account and money from Shkolnik’s TD Bank account.

Their complaint asserts claims for negligence; breach of contract and fiduciary duty; violations of the Federal Communications Act; negligent infliction of emotional distress; aiding and abetting conversion; negligent hiring, retention, and supervision; violation of the Stored Communication and Computer Fraud and Abuse acts; violation of New York general business laws; and aiding and abetting fraud.

Under the Federal Arbitration Act, “written arbitration provisions in any contract involving interstate or international commerce ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract,’” said the memorandum, citing the 1993 2nd Circuit decision in Progressive Casualty Insurance Co. v. C.A. Reaseguradora Nacional De Venezuela.

T-Mobile's terms cover “any and all claims or disputes in any way related to or concerning the agreement, our privacy policy, our services, devices or products, including any billing disputes,” said the memorandum. The provision “is precisely the kind of broad arbitration clause that justifies a presumption of arbitrability,” it said, citing Oldroyd v. Elmira Savings Bank.