Cruz v. Cingular Wireless Llc

• Decision Date: 11 August 2011
• Docket Number: No. 08–16080.,08–16080.
• Citation: 23 Fla. L. Weekly Fed. C 209,648 F.3d 1205
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: Lourdes CRUZ, Paul Flaherty, Jr., and Curtis Smith, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants,v.CINGULAR WIRELESS, LLC, a foreign corporation now known as AT&T Mobility, LLC, Defendant–Appellee.

648 F.3d 1205

23 Fla. L. Weekly Fed. C 209

Lourdes CRUZ, Paul Flaherty, Jr., and Curtis Smith, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants,

v.CINGULAR WIRELESS, LLC, a foreign corporation now known as AT&T Mobility, LLC, Defendant–Appellee.

No. 08–16080.

United States Court of Appeals, Eleventh Circuit.

Aug. 11, 2011.

OPINION TEXT STARTS HEREWest CodenotesValidity Called into DoubtWest's F.S.A. § 501.204(1) Frank Paul Bland, Jr., Amy Radon, Public Justice, P.C., Washington, DC, Scott Wm. Weinstein, Morgan & Morgan, P.A., Fort Myers, FL, Leslie A. Bailey, Public Justice, P.C., Oakland, CA, for Appellants.Evan M. Tager, Archis Ashok Parasharami, Mayer Brown, LLP, Washington, DC, Jack Wilson, Bradley, Arant, Boult, Cummings, LLP, Jackson, MS, John J. Shahady, Adorno & Yoss, LLP, Ft. Lauderdale, FL, for Appellee.Deborah M. Zuckerman, AARP Found. Lit., Washington, DC, David L. Balser, McKenna, Long & Aldridge, LLP, Atlanta, GA, for Amici Curiae.Appeal from the United States District Court for the Middle District of Florida.Before MARCUS, FAY and ANDERSON, Circuit Judges.MARCUS, Circuit Judge:

The Plaintiffs in this case are customers of Defendant AT&T Mobility, LLC (“ATTM”),¹ a cellular phone company. Each signed a contract with ATTM, agreeing that any disputes between themselves and ATTM would be resolved through binding arbitration on an individual, rather than classwide, basis. In spite of this contractual “class action waiver,” the Plaintiffs sought to pursue their consumer fraud claims against ATTM in federal court as representatives of a putative class of similarly situated ATTM customers. When ATTM moved to dismiss the complaint and compel arbitration in accordance with the terms of the contracts, the Plaintiffs argued that the contractual class action waiver was unenforceable, because it effectively immunized ATTM from liability for its wrongdoing, in violation of Florida public policy.

The district court granted ATTM's motion to dismiss the complaint and compel arbitration, holding that Florida public policy did not create a blanket prohibition on class action waivers, and that under the particular facts of the case, the arbitration provision was enforceable in full, where the arbitral forum preserved all statutory remedies, the provision did not limit the consumers' right to recoup attorney's fees, ATTM agreed to pay all costs of arbitration, and no confidentiality agreement prevented the Plaintiffs from notifying other ATTM customers of their potential claims. This timely appeal ensued.

After this Court heard oral argument in this case,² the Supreme Court rendered a decision in AT&T Mobility LLC v. Concepcion, 563 U.S. ––––, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), holding that a state law which “classif[ied] most collective-arbitration waivers in consumer contracts as unconscionable,” and thus unenforceable, was preempted by the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq.Concepcion, 131 S.Ct. at 1746, 1753. We subsequently requested supplemental briefing from the parties regarding the effect of Concepcion on this case. After careful consideration, we now hold that, in light of Concepcion, the class action waiver in the Plaintiffs' arbitration agreements is enforceable under the FAA. Insofar as Florida law would invalidate these agreements as contrary to public policy (a question we need not decide), such a state law would “stand[ ] as an obstacle to the accomplishment and execution” of the FAA, id. at 1753 (quotation omitted), and thus be preempted. Accordingly, we affirm the district court's order dismissing the Plaintiffs' claims and compelling arbitration.

I.

Consumers wishing to obtain cellular telephone service from ATTM must agree to a Wireless Service Agreement (“WSA”),³ which sets forth or incorporates by reference certain standardized “Terms of Service.” [Dkt. 37, ¶ 6.] The Terms of Service contain a mandatory arbitration agreement, providing that the customer (“you”) and ATTM “agree to arbitrate all disputes and claims between us.” [Dkt. 37–15, at 2.] The arbitration agreement further includes a restriction on class actions, as follows:

YOU AND [ATTM] AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. Further, unless both you and [ATTM] agree otherwise, the arbitrator may not consolidate more than one person's claims, and may not otherwise preside over any form of a representative or class proceeding.[Dkt. 37–15, at 6.]⁴ A so-called blow-up clause provides that if the class action waiver “is found to be unenforceable, then the entirety of this arbitration provision shall be null and void.” [ Id.]

Notwithstanding the mandatory arbitration provision in their WSAs, the Plaintiffs filed an Amended Class Action Complaint against ATTM in the United States District Court for the Middle District of Florida. [Compl., Dkt. 5.] The Plaintiffs alleged that ATTM violated the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”),⁵ Fla. Stat. § 501.201, et seq., by charging them $2.99 a month for a “Roadside Assistance Plan” (“RAP”) that they never ordered. [Compl. ¶¶ 1, 32–33.] The RAP purports to provide customers with towing services, dead-battery jump starts, flat-tire assistance, fuel delivery, lockout assistance, and key replacement services. [Compl. ¶ 4.] Although ATTM calls the RAP “optional,” the Plaintiffs allege that ATTM automatically enrolled customers for the service without the customers' knowledge or consent. [Compl. ¶¶ 4–5.] They further allege that the monthly charges were “hidden” in their cellular telephone bills without notice or warning, and that even once the Plaintiffs noticed the charges and requested their removal, ATTM refused to remove past charges and allowed additional charges to accrue during a waiting period before the Plaintiffs' cancellation became effective. [Compl. ¶¶ 25, 27.] The complaint requested monetary and injunctive relief, and also sought certification of a proposed class consisting of “[a]ll persons and entities who (1) enrolled in a[n ATTM] account in the state of Florida; and (2) were subjected to a monthly charge for the Roadside Assistance Plan without ever requesting or enrolling in said plan.” [Compl. ¶ 16.]

ATTM moved to dismiss the complaint and compel arbitration pursuant to the arbitration agreement that the Plaintiffs had signed. [Dkt. 31.] The Plaintiffs countered that the arbitration provision was unenforceable, on the ground that the class action waiver embedded in the provision hindered the remedial purposes of FDUTPA by effectively immunizing ATTM from liability for unlawful business practices, in violation of public policy.

The district court granted ATTM's motion to dismiss the complaint and compel arbitration, holding that ATTM's class action waiver did not violate Florida public policy. See Cruz v. Cingular Wireless, LLC, No. 2:07–cv–714–FtM–29DNF, 2008 WL 4279690, at *4 (M.D.Fla. Sept. 15, 2008). The district court observed that in general, under Florida law, “an arbitration agreement is unenforceable for public policy reasons if it defeats the remedial purpose of the statute upon which the action is based, or deprives the plaintiff of the ability to obtain meaningful relief.” Id. at *2 (citing Alterra Healthcare Corp. v. Estate of Linton, 953 So.2d 574, 578 (Fla.Dist.Ct.App.2007); Powertel, Inc. v. Bexley, 743 So.2d 570, 576 (Fla.Dist.Ct.App.1999)). The court then discerned that although FDUTPA claims are susceptible to class action litigation, FDUTPA does not confer a blanket, non-waivable right to class representation. Id. at *3 (citing Fonte v. AT&T Wireless Servs., Inc., 903 So.2d 1019, 1024–25 (Fla.Dist.Ct.App.2005)). The court noted that Florida intermediate appellate courts⁶ have invalidated as against public policy arbitration agreements that purport to limit the substantive remedies available under FDUTPA, or the consumer's ability to recover full attorney's fees. Id. at *2–3 (citing S.D.S. Autos, Inc. v. Chrzanowski, 976 So.2d 600 (Fla.Dist.Ct.App.2007); Holt v. O'Brien Imps. of Fort Myers, Inc., 862 So.2d 87, 89 (Fla.Dist.Ct.App.2003); Powertel, 743 So.2d 570). By contrast, a Florida intermediate appellate court enforced an arbitration agreement containing a class action waiver where the agreement provided that the consumer retained all substantive rights and remedies granted under FDUTPA, and did not eliminate the consumer's right to recover full attorney's fees.⁷See id. (citing Fonte, 903 So.2d 1019).⁸

With this framework in mind, the district court examined the arbitration agreement at issue between ATTM and the Plaintiffs, and concluded it was valid and enforceable under Florida law, because (1) “there is no question that the arbitration agreement provides all the same remedies available to plaintiffs under FDUTPA, as it states in relevant part that ‘[a]rbitrators can award the same damages and relief that a court can award,’ ” id. at *3 (quoting arbitration agreement [Dkt. 37–5, at 20] ); (2) the agreement allows a consumer who prevails in arbitration to recover attorney's fees and costs from ATTM without limitation, and even allows an award of double attorney's fees in certain instances, id.; (3) there was no confidentiality rule preventing the Plaintiffs from disseminating information about their claims to other potential claimants, id. at *4; and (4) ATTM agreed to bear all costs of arbitration regardless of which party prevailed, id.⁹ In light of these features, the district court concluded that the arbitration agreement did not defeat the remedial purposes of FDUTPA, and was therefore valid and enforceable under Florida law. Arguing that the district court failed to appreciate the functionally exculpatory effect of the class action waiver, the Plaintiffs appealed the district court's order to this Court.

II.

We review de novo an order...