Cappuccitti v. Directv Inc.

• Decision Date: 15 October 2010
• Docket Number: No. 09-14107.,09-14107.
• Citation: 623 F.3d 1118
• Parties: Renato CAPPUCCITTI, on behalf of himself and all others similarly situated, Plaintiff-Appellee, v. DIRECTV, INC., a California Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

623 F.3d 1118

Renato CAPPUCCITTI, on behalf of himself and all others similarly situated, Plaintiff-Appellee,

v.DIRECTV, INC., a California Corporation, Defendant-Appellant.

No. 09-14107.

United States Court of Appeals,Eleventh Circuit.

Oct. 15, 2010.

COPYRIGHT MATERIAL OMITTED.

Matthew Dexter Richardson, Alston & Bird, LLP, Atlanta, GA, Melissa D. Ingalls, Robyn E. Bladow, Kirkland & Ellis, LLP, Los Angeles, CA, for Defendant-Appellant.

William M. Sweetnam, Sweetnam, LLC, Northbrook, IL, Deanna D. Dailey, Sprenger & Lang, PLLC, Minneapolis, MN, Carlos A. Gonzalez, Vaughan & Evans, LLC, Cartersville, GA, Charles, Stein, Siegel, Waters & Kraus, LLP, Dallas, TX, Kristen E. Law, Elizabeth Joan Cabraser, Lieff, Cabraser, Heimann Bernstein, San Francisco, CA, for Plaintiff-Appellee.

Archis Ashok Parasharami, Mayer Brown, LLP, Washington, DC, for Amici Curiae Chamber of Commerce of USA & CTIA, the Wireless Ass'n.

John H. Beisner, Skadden, Arps, Slate, Meagher & Flom, LLP, Washington, DC, for Washington Legal Found., Amicus Curaie.

Caryn L. Bellus, Kubicki Draper, Miami, FL, Thomas A. Burns, Hill, Ward & Henderson, P.A., Tampa, FL, for Florida Defense Lawyers Ass'n, Amicus Curiae.

Appeal from the United States District Court for the Northern District of Georgia.

ON PETITION FOR REHEARING

Before TJOFLAT, WILSON and EBEL, ^* Circuit Judges.

PER CURIAM:

On July 19, 2010, we issued an opinion in this case. Cappuccitti v. DirecTV, Inc., 611 F.3d 1252 (11th Cir.2010). We based our decision on our interpretation of the jurisdictional requirements of the Class Action Fairness Act of 2005 (“CAFA”), Pub.L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.), which we have elsewhere called a “statutory labyrinth.” Lowery v. Ala. Power Co., 483 F.3d 1184, 1199 (11th Cir.2007). Subsequent reflection has led us to conclude that our interpretation was incorrect. Specifically, CAFA's text does not require at least one plaintiff in a class action to meet the amount in controversy requirement of 28 U.S.C. § 1332(a). Accordingly, we construe both parties' petitions for rehearing en banc to include petitions for panel rehearing, ¹ vacate our earlier opinion, and replace it with this one.

I.

DirecTV, Inc. (“DirecTV”), a California corporation, is the largest direct-to-home satellite television provider in the United States, beaming a wide variety of programs to millions of subscribers throughout the country. In June 2004, Renato Cappuccitti, a Georgia resident, entered into an agreement (the “Customer Agreement”) to receive DirecTV's service and thereby became a DirecTV subscriber. ² In March 2008, Cappuccitti cancelled his subscription. In response, in April 2008, DirecTV charged him a $420 “early cancellation fee” in accordance with the terms of the Customer Agreement.

On March 6, 2009, Cappuccitti, on behalf of himself and a putative class of DirecTV subscribers in Georgia, brought this action against DirecTV in the United States District Court for the Northern District of Georgia. Although Cappuccitti had not paid the cancellation fee, his complaint sought recovery of the fee in Count I, a claim for “Money Had and Received,” and in Count II, a claim for “Unjust Enrichment.” In Count III, Cappuccitti sought a declaratory judgment invalidating the cancellation fee on the ground that it is unlawful and therefore unenforceable under Georgia law. ³ On May 11, 2009, DirecTV filed a motion to compel arbitration under the arbitration clause of the Customer Agreement or, alternatively, to dismiss Counts I and II, under Rule 12(b)(6) of the Federal Rules of Civil Procedure, on the ground that Cappuccitti had not paid the cancellation fee. ⁴ On July 17, 2009, the district court issued an order denying the motion to compel arbitration and granting the motion to dismiss Counts I and II. Count III remained undisturbed. DirecTV now appeals the part of the order denying arbitration. We have jurisdiction under 9 U.S.C. § 16(a)(1)(B).

II.

In subpart A., we address the question of whether CAFA afforded the district court subject matter jurisdiction to entertain this class action. Concluding that the court did possess jurisdiction, we address, in subpart B., the question of whether the district court erred in denying DirecTV's motion to compel arbitration.

A.

Under 28 U.S.C. § 1332(d)(2)(A):

The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which-(A) any member of a class of plaintiffs is a citizen of a State different from any defendant....

A “class action” includes “any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action.” Id. § 1332(d)(1)(B).

Additionally, the putative class must contain at least 100 members for a district court to exercise subject matter jurisdiction under CAFA. Id. § 1332(d)(5). To determine whether the amount in controversy requirement is met “[i]n any class action, the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs.” Id. § 1332(d)(6).

There is no requirement in a class action brought originally or on removal under CAFA that any individual plaintiff's claim must exceed $75,000. See, e.g., 14AA Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3704 (Supp.2010) (“CAFA ... extends federal subject matter jurisdiction to class actions when there is minimal diversity and the total amount in controversy exceeds $5,000,000, exclusive of interest and costs, and provides for aggregation even if no individual class member asserts a claim that exceeds $75,000.”). ⁵ Eleventh Circuit precedent does not contradict this proposition. ⁶

Applying these requirements to the controversy at hand, it becomes clear that the district court had subject matter jurisdiction as an original matter. Cappuccitti brought the action on behalf of himself and all persons similarly situated pursuant to Rule 23. The putative class exceeded 100 persons, ⁷ and the amount of controversy-in the aggregate-exceeded $5,000,000, exclusive of interest and costs. ⁸ As the plaintiff class was comprised entirely of Georgia residents, there was sufficient diversity, since DirecTV is a California corporation. These factors alone were sufficient to allow the district court to exercise subject matter jurisdiction, and the further requirements and exceptions to jurisdiction under CAFA neither apply nor warrant discussion here.

In sum, Cappuccitti properly requested that the district court certify his proposed class pursuant to Rule 23(c) in order to obtain declaratory and injunctive relief under Rule 23(b)(2) and damages under Rule 23(b)(3).

B.

Contractual disputes between Cappuccitti and DirecTV are subject to binding arbitration ⁹ in accordance with Section 9 of the Customer Agreement. Section 9 states:

You may, in arbitration, seek any and all remedies otherwise available to you pursuant to your state's law .... Unless we agree to pay your fee for you, you only need to pay an arbitration initiation fee equal to [the] filing fee [you would be charged by the state court], not to exceed $125 .... We also agree to pay the costs of the arbitration proceeding. Other fees, such as attorney's fees and expenses of travel to the arbitration will be paid in accordance with JAMS Rules. ¹⁰ The arbitration will be held at a location in your hometown area unless you and we both agree to another location or telephonic arbitration.

The JAMS Rules in effect at the time the contract was made and when Cappuccitti cancelled his service provide that the arbitrator can award attorney's fees and expenses if allowed by applicable state law, here Georgia law. JAMS Streamlined Arbitration Rules & Procedures 18-19 (2007), available at http:// www. jamsadr. com/ files/ Uploads/ Documents/ JAMS- streamlined_ arbitration_ rules- 2007. pdf.

Section 9 also states: “Neither you nor we shall be entitled to join or consolidate claims in arbitration by or against other individuals or entities, or arbitrate any claim as a representative member of a class or in a private attorney general capacity.” ¹¹ Section 9 therefore requires that Cappuccitti, proceeding individually, arbitrate his claim that the early cancellation fee is invalid.

Under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., arbitration agreements generally are considered valid and enforceable. ¹² They may be held unenforceable, however, if, under the controlling state law of contracts, requiring arbitration of a dispute would be unconscionable. ¹³ See Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 686-87, 116 S.Ct. 1652, 1656, 134 L.Ed.2d 902 (1996). Cappuccitti contends that requiring him individually to arbitrate the validity of the early cancellation fee would be unconscionable under Georgia law.

The Georgia law of contracts deems an arbitration clause unenforceable if, “in the light of the general commercial background and the commercial needs of the particular trade or case, the clause[ ] involved [is] so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract.” NEC Techs., Inc. v. Nelson, 267 Ga. 390, 478 S.E.2d 769, 771 (1996) (internal citations omitted) (emphasis added). ¹⁴

Georgia's unconscionability doctrine contemplates both procedural unconscionability, which “addresses the process of making the contract,” and substantive unconscionability, which “looks to the contractual terms themselves.” Id. (internal citations omitted). When considering procedural unconscionability, the Georgia courts examine “the age, education, intelligence, business acumen...