Wednesday, August 17, 2011
Last week, the Eleventh Circuit Court of Appeals decided Cruz v. Cingular Wireless, LLC, a case very similar to AT&T Mobility v. Concepcion, which we have previously discussed here and here. In light of the Supreme Court's decision in Concepcion, the Eleventh Circuit unanimously affirmed the District Court, which had granted the defendant's motion to compel arbitration.
In Concepcion, the Supreme Court held that California's state law rendering unenforceable provisions in arbitration agreements that preclude class actions are themselves pre-empted by the Federal Arbitration Act. Florida has a law similar to California's. The defendant in the Florida case is now called AT&T Mobiility (ATTM), since AT&T acquired Cingular. Consumers who use ATTM's services are subject to a Wireless Service Agreement which contains an arbitration provision and expressly prohibits class actions in connection with the agreement.
Plaintiffs nonetheless attempted to bring a class action suit to protest montly $2.99 charge for roadside assistance which plaintiffs claimed they never ordered, could not easily identify on their bill and could not get removed even if they expressly declined the service. Pre-Concepcion, it appears that Florida courts simply found the agreement's provision barring class actions to be enforceable as a matter of Florida law. Plaintiffs were alleging that ATTM's practices violated the Florida Deceptive and Unfair Trade Practices Act, but that Act is enforceable in arbitration, so the agreement does not undermine the Act. Plaintiffs objected that nobody is going to go to the expense of individual arbitration over a monthly charge of less than $3. But that objection was nullified because the Act allows for the recovery of all arbitration costs, including attorneys' fees, and because under the agreement, ATTM agreed to pay all arbitration costs, regardless of outcome, so long as the claim was not frivolous.
Post-Concepcion, Plaintiffs argued that the remedial goal of the Act would be undermined if class action status was not available because: 1) no attorney will represent an individual plaintiff with a small but complex claim; and 2) consumers would not even know that they had a claim with out the notice provisions made possible through the class action mechanism. The Eleventh Circuit was unmoved. These very policy arguments were considered and rejected in Concepcion. Additional empirical evidence presented in this case did nothing to undermine the applicability of the principle articulared in Concepcion to this very-nearly identical case.