Iberia Credit Bureau, Inc. v. Cingular Wireless

• Decision Date: 21 July 2004
• Docket Number: No. 03-30613.,03-30613.
• Citation: 379 F.3d 159
• Parties: IBERIA CREDIT BUREAU, INC., Etc.; et al., Plaintiffs, Iberia Credit Bureau, Inc., doing business as Information Services; Wardell X. Gerhardt; Constance White Louviere; Charles V. Landry; Sid Hebert, on behalf of Iberia Parish Sheriff's Department, Plaintiffs-Appellees, v. CINGULAR WIRELESS LLC, Etc.; et al., Defendants, Cingular Wireless LLC, formerly known as BellSouth Mobility, also known as Cingular/Bellsouth; Sprint Spectrum Company LP; Centennial Beauregard Cellular LLC, formerly known as Iberia Cellular Telephone Company LLC, doing business as Centennial Wireless, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

379 F.3d 159

IBERIA CREDIT BUREAU, INC., Etc.; et al., Plaintiffs, Iberia Credit Bureau, Inc., doing business as Information Services; Wardell X. Gerhardt; Constance White Louviere; Charles V. Landry; Sid Hebert, on behalf of Iberia Parish Sheriff's Department, Plaintiffs-Appellees, v. CINGULAR WIRELESS LLC, Etc.; et al., Defendants, Cingular Wireless LLC, formerly known as BellSouth Mobility, also known as Cingular/Bellsouth; Sprint Spectrum Company LP; Centennial Beauregard Cellular LLC, formerly known as Iberia Cellular Telephone Company LLC, doing business as Centennial Wireless, Defendants-Appellants.

No. 03-30613.

United States Court of Appeals, Fifth Circuit.

July 21, 2004.

Theodore M. Haik, Jr., Haik, Minvielle & Grubbs, New Iberia, LA, Joseph R. Joy, III, Lafayette, LA, Elizabeth Cary Dougherty, Gauthier, Downing, LaBarre, Beiser & Dean, Metairie, LA, Calvin Clifford Fayard, Jr., Denham Springs, LA, Kenneth Steven Wall, James Robert Davis, Jr. (argued), Law Office of J. Robert Davis, Houston, TX, for Iberia Credit Bureau, Gerhardt, Louviere, Landry and Hebert.

Gary J. Russo, Perret Doise, Lafayette, LA, Evan M. Tager (argued), Stephanie A. Martz, David Morris Gossett, Mayer, Brown, Rowe & Maw, Washington, DC, for Cingular Wireless.

John F. Olinde (argued), Corinne Ann Morrison, Douglas L. Grundmeyer, Charles Paul Blanchard, Chaffe, McCall, Phillips, Toler & Sarpy, New Orleans, LA, for Sprint Spectrum, LP.

Mark A. Balkin (argued), Hardy, Carey & Chautin, Metairie, LA, for Centennial Beauregard Cellular LLC.

Appeals from the United States District Court for the Western District of Louisiana.

Before KING, Chief Judge, and REAVLEY and EMILIO M. GARZA, Circuit Judges.

KING, Chief Judge:

The appellees in this action are customers of three cellular-telephone service providers, Cingular Wireless LLC, Sprint Spectrum LP, and Centennial Beauregard Cellular LLC. The customers alleged that the service providers engaged in deceptive trade practices and breached the customers' service agreements. The companies moved to compel arbitration of the dispute under the Federal Arbitration Act and written arbitration clauses in the customers' service agreements. The district court denied the motions to compel arbitration, and the companies brought this interlocutory appeal. We conclude that the district court correctly denied Centennial's motion but erred in denying Cingular's and Sprint's motions. We therefore affirm in part, reverse in part, and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

In September 2001, a group of cellular-telephone customers filed suit in Louisiana state court against their respective service providers — Cingular, Sprint, Centennial, and Telecorp Communications, Inc.¹ — and the providers' local agents. The suit, which alleged causes of action for breach of contract and violation of the Louisiana Unfair Trade Practices Act, La.Rev.Stat. Ann. § 51:1401 et seq. (West 2003), was predicated on certain allegedly deceptive billing procedures, most notably the providers' practice of rounding up calls to the next whole minute for billing purposes. The defendants removed the case to federal court on the basis of diversity of citizenship. The district court denied a motion to remand and dismissed the local agents on the ground that they had been fraudulently joined to destroy complete diversity. The case is a putative class action, but no class has yet been certified.

Some of the various plaintiffs' contracts with their respective service providers include arbitration provisions, but other contracts do not, depending on the plaintiff and the date of the contract. The plaintiffs' original complaint and the first two amended complaints stated that the plaintiffs were not pursuing claims related to contracts that contain arbitration clauses. A later version of the complaint dropped that limitation. When the plaintiffs began to pursue claims that involved contracts containing arbitration clauses, Cingular, Sprint, and Centennial filed motions to compel arbitration and to stay the judicial proceedings as regards the plaintiffs who were their respective customers. The state attorney general has also intervened in the case as a plaintiff. The defendants did not attempt to compel arbitration with regard to any contracts with the state, however, and the state is not involved in this appeal.

The arbitration clauses in the various contracts differ in some relevant respects, as set forth more fully below.

A. Centennial plaintiff

Plaintiff Sid Hebert, Sheriff of Iberia Parish, is suing as a representative of the Iberia Parish Sheriff's Department. Through one of the Department's deputies, Walter Dodge, who acts as its purchasing agent, the Department opened a multi-telephone account with Centennial in 1999. Extra phones were added to the account during the next couple of years. These agreements did not contain arbitration clauses.

On October 24, 2002, thirteen months after the original complaint in this case had been filed (but several months before the Sheriff's Department was added as a plaintiff in the case), the Department added still another phone to its Centennial account, with Dodge signing another standard-form service agreement. This latest form stated, above the signature line: "I acknowledge I have read and understand the terms and conditions on the back of this order form and agree to those terms." The final paragraph on the back of the form contains an arbitration clause requiring the customer (but perhaps not the company — a matter of dispute) to arbitrate all claims.² The clause provides that the arbitrator may not order consolidation or class arbitration. It further states that any arbitration would be confidential, and it includes a severability clause stating that if any portion of the arbitration clause is deemed invalid, the rest would remain in force. Dodge and the Sheriff state that they did not negotiate the terms and were not told of the arbitration clause, which had not been a part of the parties' previous agreements.

Another section of the Centennial Terms and Conditions states that Centennial can change the contract terms by sending written notice to the customer.

B. Cingular plaintiffs

Plaintiffs Iberia Credit Bureau, Inc., Constance Louviere, and Wardell Gerhardt entered into service agreements with Cingular. The agreements are standard forms consisting of a number of blank boxes for filling in various customer and service details, followed by six paragraphs of text. The third paragraph of each agreement explicitly incorporates by reference Cingular's Terms and Conditions. Each plaintiff signed the form. Immediately above the signature line was the following statement:

I ACKNOWLEDGE THAT I HAVE READ AND UNDERSTAND THIS AGREEMENT AND THE TERMS AND CONDITIONS, AND THE PLAN PROVISIONS AND CONDITIONS. I AGREE TO BE BOUND THEREBY.

The Terms and Conditions were (depending on which plaintiff is involved) either printed on the back of the form or presented in a separate pamphlet that accompanied the form. The two versions of the Terms and Conditions are substantially identical.

The section of the Terms and Conditions concerning arbitration provides that "instead of suing in court, CINGULAR and you agree to arbitrate any and all disputes and claims (including but not limited to claims based on or arising from an alleged tort) arising out of or relating to this Agreement." The Terms and Conditions further provide, among other things, that the parties "agree that no arbitrator has the authority to ... order consolidation or class arbitration" and that neither party "may disclose the existence, content, or results of any arbitration."³ The arbitration provision concludes by stating that "[n]otwithstanding the foregoing, either party may bring an action in small claims court."

Another section of the Terms and Conditions permits Cingular to change any terms, conditions, rates, or fees at any time. A customer who has signed a term contract, such as a one-year commitment, may cancel service in response to such a change without incurring a termination fee. Finally, the Terms and Conditions include a severability clause providing that the unenforceability of one provision of the agreement does not affect the remaining terms.

C. Sprint plaintiff

Plaintiff Charles Landry, the only plaintiff in this appeal who is suing Sprint, has two Sprint cellular accounts. The first one, opened in July 2001, does not contain an arbitration clause, but the second account, opened in August 2002, does. This second account was opened after the initial complaint in the lawsuit was filed. Sprint's request for arbitration concerns only claims arising from the second account.

Sprint includes its Terms and Conditions in the box with the handset that the customer purchases. The Terms and Conditions do not call for a signature, but they provide that the customer accepts them by activating his account. The version of the Terms and Conditions included with Landry's phone contained the following provision:

ARBITRATION OF DISPUTES. ANY CLAIM, CONTROVERSY OR DISPUTE, WHETHER SOUNDING IN CONTRACT, STATUTE, OR TORT, INCLUDING FRAUD, MISREPRESENTATION, OR ANY OTHER LEGAL THEORY, RELATED DIRECTLY OR INDIRECTLY TO THE [Sprint services], WHETHER BETWEEN THE COMPANY AND THE CUSTOMER OR BETWEEN THE COMPANY OR THE CUSTOMER, ON THE ONE HAND, AND EMPLOYEES, AGENTS OR AFFILIATED BUSINESSES OF THE OTHER PARTY, ON THE OTHER HAND, SHALL BE RESOLVED BY ARBITRATION AS PRESCRIBED IN THIS SECTION.⁴

This section of the Terms and Conditions further provides that no discovery will be permitted in the arbitration, except that the parties will exchange, before the hearing, the evidentiary materials that they plan to submit to the arbitrator.⁵

Other parts of the Sprint Terms and Conditions set forth additional provisions relevant to this appeal. Like Centennial and Cingular, Sprint reserves the right to change the parties'...