Fonte v. AT&T Wireless Services, Inc.

• Decision Date: 15 June 2005
• Docket Number: No. 4D04-219.,4D04-219.
• Citation: 903 So.2d 1019
• Parties: Betzaida FONTE, Appellant, v. AT&T WIRELESS SERVICES, INC., Appellee.
• Court: Florida District Court of Appeals

903 So.2d 1019

Betzaida FONTE, Appellant, v. AT&T WIRELESS SERVICES, INC., Appellee.

No. 4D04-219.

District Court of Appeal of Florida, Fourth District.

June 15, 2005.

George A. Hanson, Amy E. Bauman of Stueve Helder Siegel LLP, Kansas City, MO, and Carl F. Schoeppl of Schoeppl & Burke, P.A., Boca Raton, for appellant.

David P. Ackerman and Ryon M. McCabe of Ackerman, Link & Sartory, P.A., West Palm Beach, for appellee.

POLEN, J.

Appellant, Betzaida Fonte, has appealed a non-final order staying a purported class action case and compelling arbitration. This court has jurisdiction. Fla. R.App. P. 9.130(a)(3)(C)(iv). We reverse in part and affirm in part as follows.

Fonte's proposed class action complaint against AT&T Wireless alleged, among other things, breach of contract and a violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) by unilaterally changing customer rate plans. On January 28, 2002, Fonte entered Alpha Cellular, which sold wireless service for AT&T, Nextel, T-Mobile and MetroPCS. Fonte, who regards herself as an informed consumer, chose AT&T as her service provider because she preferred its rate plan. It is undisputed that Fonte was not under any pressure to enter into a contract with AT&T. Fonte eventually signed a two-year Personal Service Agreement.

The Personal Service Agreement provided in relevant part:

This Agreement hereby incorporates by reference the Terms and Conditions and other information set forth in the AT&T Wireless Welcome Guide ... the Rate Plan Brochure and/or feature or promotional materials (collectively, "Sales Information") that you were provided ... By signing below you acknowledge that you have received and reviewed the Terms and Conditions and Sales Information and that you agree to be bound by such Terms and Conditions and the Sales Information for the term of your Agreement.

In accordance with the Personal Service Agreement, Fonte received a telephone package, which clearly indicated that it contained the AT&T Wireless Welcome Guide, in which the challenged Terms and Conditions were located. Although Fonte testified that she did not receive an AT&T Wireless Welcome Guide, AT&T presented evidence that every phone comes with one. Fonte's salesman, however, did not discuss the Terms and Conditions contained in the AT&T Wireless Welcome Guide, nor was it is his practice to do so with customers. The AT&T Wireless Welcome Guide contains information a customer needs to know about the phone, as well as the Terms and Conditions of service. The third page of the AT&T Wireless Welcome Guide has a bold heading captioned "Terms and Conditions" and states that by using AT&T's services a customer consents to the Terms and Conditions which can be found in full on page 32. AT&T's monthly invoices also referenced these Terms and Conditions. The Terms and Conditions section of the AT&T Wireless Welcome Guide provides in relevant part:

5. RESOLUTION OF DISPUTES

PLEASE READ THIS SECTION CAREFULLY. IT AFFECTS RIGHTS THAT YOU MAY OTHERWISE HAVE. IT PROVIDES FOR RESOLUTION OF MOST DISPUTES THROUGH ARBITRATION INSTEAD OF COURT TRIALS AND CLASS ACTIONS. ARBITRATION IS FINAL AND BINDING AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT. ...

a. Binding Arbitration. This provision is intended to be interpreted broadly to encompass all disputes or claims arising out of our relationship. Any dispute or claim made by you against us ... arising out of or relating to this Agreement... (whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory) will be resolved by binding arbitration except that (1) you may take claims to small claims court... or (2) you or we may choose to pursue claims in court if the claims relate solely to the collection of any debts you owe to us. However, even for those claims that may be taken to court, you and we both waive any claims for punitive damages and any right to pursue claims on a class or representative basis.

b. Arbitration Procedures. ... An arbitrator may not award relief in excess of or contrary to what this Agreement provides, order consolidation or arbitration on a class wide or representative basis, or award punitive damages or any other damages aside from the prevailing party's actual damages, except that the arbitrator may award on an individual basis damages required by statute and may order injunctive or declaratory relief pursuant to an applicable consumer protection statute....

c. Costs of Arbitration. All administrative fees and expenses of an arbitration will be divided equally between you and us, except that for claims of less than $1,000, you will be obligated to pay $25 and we will pay all other administrative costs and fees. In all arbitrations, each party will bear the expense of its own counsel, experts, witnesses and preparation and presentation of evidence at the arbitration.

d. Waiver of Punitive Damage Claims and Class Actions. By this Agreement, both you and we are waiving certain rights to litigate disputes in court. If for any reason this arbitration clause is deemed inapplicable or invalid, you and we both waive, to the fullest extent allowed by law, any claims to recover punitive or exemplary damages and any right to pursue any claims on a class or consolidated basis or in a representative capacity.

* * *

If any of this Agreement is found invalid, the balance of the Agreement remains enforceable.

In June of 2002, AT&T instituted two relatively small rate changes: (1) directory assistance calls were increased from $.99 to $1.25 and (2) busy or unconnected calls lasting longer than 30 seconds would now be billed. AT&T sent out a notice to all subscribers notifying them of these changes and informing them that "If you do not want to accept the changes ..., you can cancel your service without incurring an early cancellation fee by notifying us within the next 20 days." On August 25, 2002, Fonte called AT&T and told it that she had heard from a friend that she could cancel her contract without penalty but was not sure why. AT&T informed her of the two rate changes, and also told her that her 20-day window to cancel the contract without a penalty had expired. Fonte wished to cancel her contract and requested that this penalty be waived, but AT&T refused. Two days later, Fonte again requested that this penalty be waived, but AT&T again refused such request. Fonte ultimately canceled her contract without a waiver of the penalty, thus paying the $175 early termination penalty.

On September 26, 2002, Fonte filed a class action lawsuit against AT&T, alleging breach of contract, fraud, and a violation of FDUTPA. On November 25, 2003, the trial court held an evidentiary hearing on AT&T's motion to compel arbitration. The trial court ultimately granted AT&T's motion and adopted in large part AT&T's proposed order, finding that the challenged contractual provisions are not procedurally or substantively unconscionable.

Fonte argues that the trial court erred by granting AT&T's motion to compel arbitration based upon the arbitration clause in the AT&T Wireless Welcome Guide. She asserts that the arbitration clause is unenforceable.

The trial court's decision was based in part on factual findings. Accordingly, it presents a mixed question of law and fact. The standard of review applicable to the trial court's factual findings is whether they are supported by competent, substantial evidence. However, the standard of review applicable to the trial court's construction of the arbitration provision, and to its application of the law to the facts found, is de novo.

Gainesville Health Care Ctr., Inc. v. Weston, 857 So.2d 278, 283 (Fla. 1st DCA 2003) (citations omitted).

There are two frameworks which courts have used when confronted with this issue: (1) whether the arbitration clause is void as a matter of law because it defeats the remedial purpose of the applicable statute, or (2) whether the arbitration clause is unconscionable.¹ As these frameworks are distinct from one another, for purposes of this opinion we have analyzed both. Blankfeld v. Richmond Health Care, Inc., 902 So.2d 296 (Fla. 4th DCA 2005)(en banc).

IS AT&T'S CONTRACT VOID AS A MATTER OF LAW?

"A remedial statute is designed to correct an existing law, redress an existing grievance, or introduce regulations conducive to the public good. It is also defined as [a] statute giving a party a mode of remedy for a wrong, where he had none, or a different one, before." Adams v. Wright, 403 So.2d 391, 394 (Fla.1981) (citation omitted). FDUTPA is a remedial statute designed to protect consumers. See Beacon Prop. Mgmt., Inc. v. PNR, Inc., 890 So.2d 274, 279 (Fla. 4th DCA 2004). One of those remedial purposes is to provide for the possibility of an attorney's fee award. § 501.2105, Fla. Stat.

The Florida Deceptive Trade Practices Act depends for enforcement on its "enforcing authority" and the injured consumers. If, because of the small sums involved, consumers cannot recover in full their attorney fees, they will quickly determine it is too costly and too great a hassle to file suit, and individual enforcement of this act will fail.... The obvious purpose of the "little FTC Act" is to make consumers whole for losses caused by fraudulent consumer practices.... These aims are not served if attorney fees are not included in the protection.

LaFerney v. Scott Smith Oldsmobile, Inc., 410 So.2d 534, 536 (Fla. 5th DCA 1982). Accordingly, the arbitration clause's bar on an award of attorney's fees defeats a remedial purpose of FDUTPA.

However, the Agreement has a severability clause, stating: "If any of this Agreement is found invalid, the balance of the Agreement remains enforceable." As a general rule, contractual provisions are severable, where the illegal portion of the contract does not go to its essence, and, with the illegal portion eliminated, there remain valid legal obligations. Gold, Vann & White, P.A. v. Friedenstab, 831...