S. Commc'ns Servs., Inc. v. Thomas

• Decision Date: 12 July 2013
• Docket Number: No. 11–15587.,11–15587.
• Citation: 720 F.3d 1352
• Parties: SOUTHERN COMMUNICATIONS SERVICES, INC., d.b.a. SouthernLINC Wireless, Plaintiff–Appellant, v. Derek THOMAS, individually and on behalf of others similarly situated, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

720 F.3d 1352

SOUTHERN COMMUNICATIONS SERVICES, INC., d.b.a. SouthernLINC Wireless, Plaintiff–Appellant,

v.Derek THOMAS, individually and on behalf of others similarly situated, Defendant–Appellee.

No. 11–15587.

United States Court of Appeals, Eleventh Circuit.

July 12, 2013.

Robert P. Williams, II, John P. Hutchins, Puja R. Patel, Troutman Sanders, LLP, Atlanta, GA, for Plaintiff–Appellant.

Richard J. Burke, Paul M. Weiss, Complex Litigation Group LLC, Highland Park, IL, Wade H. Tomlinson, III, and Shaun O'Hara, Pope, McGlamry, Kilpatrick, Morrison & Norwood, P.C., Columbus, GA, for Defendant–Appellant.

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

Before TJOFLAT, CARNES and JORDAN, Circuit Judges.

TJOFLAT, Circuit Judge:

Southern Communications Services, Inc., (d/b/a SouthernLINC Wireless) (“SouthernLINC”) appeals the District Court's November 3, 2011, order denying its motion to vacate two arbitration awards, one construing the arbitration clause so as to allow for class litigation, the other certifying a class. We conclude that, under the standard set forth by the Supreme Court in Oxford Health Plans LLC v. Sutter, 569 U.S. ––––, 133 S.Ct. 2064, 186 L.Ed.2d 113 (2013), the arbitrator did not “exceed[ ] [his] powers” under § 10(a)(4) of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq. (2006), either in construing the arbitration clause as he did or in certifying a class.

In Part I, we lay out the facts and procedural history of the dispute between SouthernLINC and its former wireless customer, Derek Thomas. In Part II, we find that, in reaching the decisions he did, the arbitrator was “ ‘arguably construing ... the contract,’ ” Sutter, 133 S.Ct. at 2068 (quoting E. Associated Coal Corp. v. United Mine Workers of Am., Dist. 17, 531 U.S. 57, 60, 121 S.Ct. 462, 466, 148 L.Ed.2d 354 (2000)), and that we thus “may not correct his mistakes under § 10(a)(4),” id. at 2070. We briefly close in Part III.

I.

A.

SouthernLINC is a wireless provider in the southeastern United States headquartered in Atlanta, Georgia. A subsidiary of Southern Company, which owns a number of major electric utility companies in the same region, SouthernLINC was formed in the mid–1990s to run a wireless network that would serve its parent company's operations. The company uses excess capacity on the network to provide commercial mobile telephone services to customers.

During the relevant period, SouthernLINC required that each customer sign a standard contract, which included a set of Terms and Conditions. ¹ One provision therein, titled “Term/Termination,” set forth the charge that a customer would incur in the event he or she terminated a contract early:

If you terminate this Agreement or if we terminate this Agreement for cause prior to the end of the Initial Term, then you will pay an Early Termination Fee(s) (ETF) of $200.00 per handset or as otherwise set forth on the web site order page and any other charges owing under this Agreement within 10 days of the payment due date of your billing statement.

Record, no. 1–4, at 19–20. The contract also contained a provision on arbitration, which, in its entirety, reads:

The parties will make good faith attempts to resolve any disputes. If the parties cannot resolve the dispute within 60 days after the matter is submitted to them, then, unless otherwise agreed, the parties will submit the dispute to arbitration. The parties will request that arbitrator(s) hold a hearing within 60 days following their designation, and render a final and binding resolution within 30 days after the hearing. The parties will conduct the arbitration in Atlanta, Georgia pursuant to applicable Wireless Industry Arbitration Rules of the American Arbitration Association.

Id. at 22–23. The arbitration provision contained no reference to class arbitration.

Derek Thomas became a customer of SouthernLINC on June 7, 2005, when he contracted to begin his first line of service. He added a second line of service for his wife on October 23, 2006, and a final line for his son on September 10, 2007. Thomas agreed to SouthernLINC's terms and conditions with each added line.

After contracting to add his third line, on February 20, 2008, Thomas canceled his son's line of service. He was charged an ETF, but SouthernLINC promptly waived the charge when he protested the fee. Two days later, Thomas canceled his wife's line of service. Thomas paid his wife's cancellation fee.² One month later, on March 25, 2008, Thomas terminated his final line of service. SouthernLINC charged a $200 ETF. When Thomas did not pay the bill, he received a $250 bill from a collections agency. Thomas disputed the bill by returning it, unpaid, to the agency with a note. He heard nothing further from the agency and has not seen any impact of the unpaid bill on his credit report. Thomas has no intention to become a SouthernLINC subscriber in the future.

B.

On July 31, 2008, Thomas filed “on behalf of himself and a nationwide class of consumers” a demand for arbitration with the American Arbitration Association (“AAA”). Record, no. 1–4, at 2. Among other things, he argued that SouthernLINC's termination fees were unlawful penalties under Georgia law, seeO.C.G.A. § 13–6–7, and unjust, unreasonable, and unlawful charges under the Federal Communications Act, 47 U.S.C. § 201(b) (2006). He sought from the arbitrator a declaration that the fees he paid were unlawful; an injunction on behalf of the class (Thomas having no intention to become a SouthernLINC customer again) to prevent SouthernLINC from engaging in deceptive, unjust, and unreasonable practices; statutory, consequential, and incidental damages; disgorgement of all termination fees; additional appropriate declaratory relief; and interest.

On November 24, SouthernLINC counterclaimed for breach of contract, seeking compensatory, incidental, and consequential damages; interest; and attorneys' fees and costs. That same day, Thomas moved, pursuant to Rule 3 of the AAA's Supplementary Rules for Class Arbitrations, for a Clause Construction Award to allow class action treatment. On April 2, 2009, the appointed arbitrator issued a Partial Final Clause Construction Award. He found that the arbitration clause at hand permitted arbitration to proceed on behalf of a class because 1) under Georgia law, because the arbitration clause did not expressly bar class treatment, such treatment was permitted; 2) Georgia law, as set out by this circuit in Dale v. Comcast Corp., 498 F.3d 1216 (11th Cir.2007), “permit[s]—and even favor[s]—[class action] when individual class member[s'] claims are meager” so that they might vindicate their rights; and 3) class action presents an efficient mechanism for dispute resolution. Record, no. 1–2, at 6–8.

On November 20, 2009, Thomas moved for class certification. The arbitrator certified the class on June 24, 2010, in a Partial Final Class Determination Award that found that the proposed class fulfilled state and federal requirements for class certification:³ commonality, typicality, adequacy of class representative, predominance, and superiority.⁴ Immediately thereafter, on July 2, 2010, SouthernLINC moved for reconsideration of the Clause Construction Award based on the Supreme Court's April 2010 decision in Stolt–Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010). Upon reconsideration of his award, the arbitrator determined that, although his first and third grounds for finding class treatment permissible under the arbitration clause were “improper” under Stolt–Nielsen, his second ground “satisfied the rigorous requirements set forth in Stolt–Nielsen,” for, by relying on Eleventh Circuit interpretation of Georgia law to reach the conclusion that Georgia law favored class treatment where the amount in controversy was very small so that parties might “vindicate their rights,” he “based the Clause Award on a rule of law or rule of decision as Stolt–Nielsen requires.” Record, no. 7–4, at 6.

On September 17, 2010, SouthernLINC petitioned the District Court for the Northern District of Georgia⁵ under 9 U.S.C. § 10(a)(4) to vacate the Clause Construction and Class Determination Awards. In declining to do so, the court cited White Springs Agric. Chems., Inc. v. Glawson Invs. Corp. for the proposition that an arbitrator's “incorrect legal conclusion is not grounds for vacating or modifying [an] award,” 660 F.3d 1277, 1280 (11th Cir.2011), and Frazier v. CitiFinancial Corp., 604 F.3d 1313, 1324 (11th Cir.2010), for the proposition that a district court has no jurisdiction to vacate an award even in the event of an arbitrator's manifest disregard of the law. The court found “[t]he arbitrator in the present case engaged in the exact analysis Stolt–Nielsen requires.” Southern Commc'n Servs., Inc. v. Thomas, 829 F.Supp.2d 1324, 1339 (N.D.Ga.2011). He “identified generally applicable contract law principles to determine whether the parties implicitly authorized class arbitration .... [H]e identified legal principles governing the situation: state law governing contract formation and interpretation.” Id.

While the present case was before us, the Supreme Court in Sutter, 133 S.Ct. at 2068, set about to resolve a circuit split by answering the question of whether an arbitrator acts within his powers or exceeds his powers under the FAA by determining that parties affirmatively “agreed to authorize class arbitration,” Stolt–Nielsen, 130 S.Ct. at 1776, based solely on their use of broad contractual language precluding litigation and requiring arbitration of any dispute arising under their contract. Because the resolution of that question is dispositive of the present case, we stayed the case until the Supreme Court could reach its decision.

II.

A.

Congress enacted the Federal Arbitration Act, 9 U.S.C. § 10(a)(4), to supplant the judiciary's distaste for arbitration with a “national policy favoring [it] and...