sm_xm_logo.gifA pair of men from Alabama has filed a Class Action lawsuit against XM satellite Radio in response to the service outage suffered earlier this month.

The suit states that they as consumers, and on behalf of the class pre-pay for XM Satellite Radio service, and that XM failed to deliver service. In the suit, the pair from Alabama quotes various aspects of the consumer agreement of XM, but for some strange reason missed an entire section regarding disputes...


In order to expedite and control the cost of disputes, you agree to the following dispute resolution procedures:

a) Informal Resolution.
In the event of any dispute, claim or controversy arising out of or relating to the Services, this Customer Agreement or the breach, termination, enforcement, interpretation or validity thereof (hereinafter referred to as a "Claim"), we will first try to resolve it informally. Accordingly, neither of us may start a formal proceeding (except for Claims described in Section 11(d)) for at least 60 days after one of us notifies the other of a Claim in writing. To initiate a Claim, you must send notice to the address on the first page of this Customer Agreement. If XM initiates a Claim, we will send our notice to the billing address on file with us.

b) Formal Resolution.
If we cannot resolve a Claim informally, any Claim shall be resolved solely by binding arbitration, and the arbitrator shall also have the sole authority to decide, without limitation, any question regarding the existence, scope or validity of this arbitration provision. Notice of any Claim must be provided as set forth in Section 11(a). The arbitration will be conducted under the Commercial Arbitration Rules and the Supplementary Procedures for Consumer-Related Disputes of the American Arbitration Association (collectively, the "AAA Rules") that are in effect at the time the arbitration is initiated and under the rules set forth in this Customer Agreement. If there is a conflict between the AAA Rules and the rules set forth in this Customer Agreement, the rules set forth in this Customer Agreement will govern. ARBITRATION MEANS THAT YOU WAIVE YOUR RIGHT TO A JURY TRIAL. If you initiate an arbitration, you agree to pay a fee of $125 or, if less and you tell us in writing, the amount that you would pay to initiate a lawsuit against us in the appropriate court of your state. We agree to pay any additional fee or deposit required by the American Arbitration Association in excess of your filing fee. We also agree to pay the costs of the arbitration proceeding up to a maximum of one-half day (four hours) of hearings. Other fees, such as attorney's fees, expenses or travel to the arbitration and the costs of a proceeding that goes beyond one-half day will be in accordance with AAA Rules. The arbitration will be held at a location within 100 miles of your residence unless you and we both agree to another location. To start the arbitration, you or we must do the following things:

  1. Write a demand for arbitration. The demand must include a description of the Claim and the amount of damages sought to be recovered;
  2. Send two copies of the demand for arbitration plus the appropriate filing fee to: American Arbitration Association, 1776 Eye Street, N.W., Suite 850, Washington, D.C. 20006; and
  3. Send one copy of the demand for arbitration to XM SATELLITE RADIO INC. at the address on the first page of this Customer Agreement.

Notwithstanding the foregoing provisions of this subsection, you and we both retain the right to seek relief in an appropriate small claims court for disputes or claims that fall within the scope of its jurisdiction.

c) Binding Effect.
In the arbitration proceeding, the arbitrator must follow applicable law, and any award may be challenged if the arbitrator fails to do so. Otherwise, the arbitrator's decision is final and binding on all parties and may be enforced in any federal or state court that has jurisdiction. Upon judicial review of an arbitrator's decision, a court may sever any portion of this Section 11 that it finds to be unenforceable.

d) Exceptions.
Notwithstanding the foregoing:

  1. any dispute over the validity of either party's intellectual property rights or our licenses to operate our business;
  2. any dispute based on Section 11(c) above challenging or enforcing the arbitrator's award or decision; and
  3. any dispute involving a violation of the Communications Act of 1934, 47 U.S.C. §605, or the Electronic Communications Privacy Act, 18 U.S.C. §§2510-2521

may be decided only by a court of competent jurisdiction.

Nothing in this Customer Agreement, including, without limitation, this Section 11, shall affect our ability to terminate your Services for non-payment of amounts owed to us when due. Furthermore, nothing in this Customer Agreement, including, without limitation, this Section 11, will prevent us from bringing an action in a small claims court of competent jurisdiction in order to collect any unpaid amounts. If collection activities are required in order for us to collect money you owe us, you agree to pay the reasonable costs of such collection, including but not limited to costs of a collection agency, attorney's fees and court costs.


This agreement provides that all disputes between you and XM will be resolved by BINDING ARBITRATION.

You thus GIVE UP

YOUR RIGHT TO GO TO COURT to assert or defend your rights under this contract (EXCEPT for matters that may be taken to SMALL CLAIMS COURT).

*Your rights will be determined by a NEUTRAL ARBITRATOR and NOT a judge or jury.

*You are entitled to a FAIR HEARING, BUT the arbitration procedures are SIMPLER AND MORE LIMITED THAN RULES APPLICABLE IN COURT.

*Arbitrator decisions are as enforceable as any court order and are subject to VERY LIMITED REVIEW BY A COURT.

See Section 11 above.

Now, even with that being said, these guys seemed to miss that XM has indeed offered a credit to consumers for the outage period, and in fact has offered 2 days worth of service credit when the service was out for only 24 hours. Seems that XM is being generous does it not?

What we have here are two individuals who were so desparate and hungry for a pound of flesh that they rushed into the lengthy process of filing a Class Actiuon Lawsuit, without even making an attempt to resolve the issue by other means. It is sometimes scary to think of the levels people will stoop to.

Simply stated, these are not the brightest bulbs.