Hall v. Sprint Spectrum L.P.
315 Ill. Dec. 446, 376 Ill. App. 3d 822, 876 N.E.2d 1036 (2007)
Rule of Law:
An express choice-of-law provision in an adhesion contract, designating the law of a state with a substantial relationship to the parties or transaction, will be enforced to govern contractual and related statutory claims of a multi-state class action, provided its application does not violate a fundamental public policy of a state with a materially greater interest.
Facts:
- Sprint Spectrum L.P. and SprintCom, Inc. (collectively Sprint) provide wireless communication services to millions of customers throughout the United States and are headquartered in Overland Park, Kansas.
- In June 2003, Jessica Hall, an Illinois resident, entered into a one-year cell phone service contract with Sprint at a Radio Shack store in Granite City, Illinois, which included a $150 early termination fee (ETF) if she canceled service before the year ended.
- In October 2003, Sprint discontinued Hall's service for nonpayment.
- Hall attempted to cancel her contract, but Sprint refused unless she paid the remaining balance on her account plus the early termination fee.
- In December 2003, Hall paid, under protest, $415.61 for one of her two cell phone numbers, including the early termination fee, at a Sprint PCS store in Fairview Heights, Illinois.
- Sprint refused to cancel Hall's second cell phone number account and stop the accrual of charges unless she paid the early termination fee for that number; Hall never paid this ETF, and Sprint eventually wrote off the account.
- All of Sprint's contracts contained an express choice-of-law provision stating: “This Agreement is governed by and must be construed under federal law and the laws of the State of Kansas, without regard to choice[-]of[-] law principles.”
Procedural Posture:
- Jessica Hall filed a class action complaint in the Circuit Court of Madison County, Illinois, against Sprint.
- Hall filed a motion for class certification.
- The Circuit Court, acting as the trial court, granted Hall's motion for class certification, certifying a 48-state class.
- Hall filed a first amended class action complaint.
- Sprint filed a motion to reconsider the class certification, which the Circuit Court denied.
- The Circuit Court entered a formal written order certifying the 48-state class.
- Sprint, as appellant, filed a petition for leave to appeal to the Illinois Appellate Court, Fifth District, under Illinois Supreme Court Rule 306(a)(8).
- The Illinois Appellate Court, Fifth District, denied Sprint's petition for leave to appeal.
- Sprint, as appellant, filed a petition for leave to appeal to the Illinois Supreme Court.
- The Illinois Supreme Court denied Sprint's petition but issued a supervisory order, directing the Illinois Appellate Court, Fifth District, to grant Sprint's petition for leave to appeal in light of Avery v. State Farm Mutual Automobile Insurance Co.
- The Illinois Appellate Court, Fifth District, granted Sprint's petition for leave to appeal.
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Issue:
Does an Illinois trial court abuse its discretion by certifying a 48-state class action where the contracts contain a Kansas choice-of-law provision, thereby applying Kansas law, including its consumer protection act, to nationwide class members' claims concerning early termination fees, despite arguments of extraterritorial application and due process concerns?
Opinions:
Majority - Justice Stewart
No, an Illinois trial court does not abuse its discretion by certifying a 48-state class action based on a Kansas choice-of-law provision in the contracts. The trial court properly predicated class certification on the application of Kansas law, including the Kansas Consumer Protection Act (KCPA), as mandated by the express choice-of-law provision in Sprint's contracts. Illinois generally follows the Restatement (Second) of Conflict of Laws §187(2), which permits parties to choose the governing law unless the chosen state lacks a substantial relationship to the parties/transaction or its application would violate a fundamental policy of a state with a materially greater interest. Here, Kansas has a substantial relationship to Sprint, and no fundamental public policy of Illinois would be violated by applying Kansas law. The fact that the KCPA might not otherwise apply extraterritorially is irrelevant because the parties expressly agreed to its application. Hall’s claims, including statutory fraud, are fundamentally related to the contract's validity (i.e., whether the early termination fee is an unlawful penalty), making them subject to the choice-of-law provision. This application does not violate due process rights of non-Kansas class members under Phillips Petroleum Co. v. Shutts because the express choice-of-law provision created a reasonable expectation that Kansas law would govern. The court affirmed that the class met all four prerequisites for certification under Illinois Code of Civil Procedure §2-801: numerosity (undisputed), commonality (whether the ETF is an illegal penalty applies to all class members), adequacy of representation (Hall's interests align with the class, and members can opt out), and appropriateness (a class action is efficient and promotes justice for consumer claims).
Analysis:
This case significantly clarifies the enforceability of express choice-of-law provisions in standard form contracts within the context of multi-state class actions. It affirms that such provisions can allow for the application of a single state's laws, including consumer protection statutes, to a national class, even if those statutes might not otherwise have extraterritorial reach. The decision streamlines the complex conflict-of-laws analysis often present in class actions by emphasizing party autonomy in contract design and reinforcing the principles of predictability and judicial economy for nationwide litigation involving uniform contract terms.
