Emilio v. Sprint Spectrum L.P.

68 F. Supp. 3d 509, 2014 U.S. Dist. LEXIS 177027, 2014 WL 7330433
CourtDistrict Court, S.D. New York
DecidedDecember 23, 2014
DocketNo. 11-CV-3041 (JPO)
StatusPublished
Cited by14 cases

This text of 68 F. Supp. 3d 509 (Emilio v. Sprint Spectrum L.P.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Emilio v. Sprint Spectrum L.P., 68 F. Supp. 3d 509, 2014 U.S. Dist. LEXIS 177027, 2014 WL 7330433 (S.D.N.Y. 2014).

Opinion

OPINION AND ORDER

J. PAUL OETKEN, District Judge:

Plaintiff Vincent Emilio (“Emilio”) initially filed this action as a petition pursu[511]*511ant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., to confirm a Partial Arbitration Award. The arbitrator’s award terminated arbitration proceedings and authorized Emilio to pursue his claims as a putative class action in court against Defendant Sprint Spectrum L.P., d/b/a Sprint PCS (“Sprint”). In February 2014, this Court granted Emilio’s motion to confirm the award, and Emilio filed a Class Action Complaint (the “complaint”). Sprint now moves to dismiss the complaint or to strike its class allegations. For the reasons that follow, Sprint’s motion is denied.

I. Background1

A. The Parties

Emilio is a New York resident and was a customer of Sprint wireless telephone .service during the relevant time period. (Dkt. No. 48 (“Compl”) ¶ 7.) Sprint is a Delaware limited partnership with its principal offices located in Kansas. Sprint is wholly owned by Sprint Corporation, a Delaware corporation with its principal executive offices located in Kansas. (Id. ¶ 8.)

B. Arbitration and Judicial Proceedings

The customer agreement between Emilio and Sprint contains an Arbitration Agreement, which provides for mandatory arbitration of disputes and states that class-wide resolution of claims is precluded. (See Dkt. No. 1 (“Petition”) Ex. A at 7-8). Under the terms of the agreement, “[t]he arbitrator’s decision and award is final and binding, and judgment on the award may be entered in any court with jurisdiction.” (Id. at 8.) The agreement also provides that the agreement is “governed by and must be construed under federal law and the laws of the State of Kansas, without regard to choice of law principles.” (Id.)

On January 4, 2005, Emilio filed a Demand for Class Arbitration, asserting that Sprint’s practice of charging customers a monthly fee to satisfy the New York State Excise Tax violated New York Tax Law § 186-e and New York General Business Law § 349 and constituted unjust enrichment. He argued that the tax was imposed solely upon Sprint and could not be passed on to customers, and estimated a class of more than two million New York Sprint customers.

In March 2005, Kathleen A. Roberts was appointed as the arbitrator in the JAMS forum. In February 2006, the parties submitted briefing regarding the enforceability of the Arbitration Agreement’s class action waiver. Emilio subsequently filed a First Amended Demand for Class Arbitration, adding a claim under Kansas’s Unfair Trade and Consumer Protection Act (“KCPA”), Kan. Stat. Ann. § 50-623 et seq. (Dkt. No. 7, Ex. 1 (“Amended Demand”).) The KCPA prohibits a supplier from engaging in any deceptive act or practice in connection with a “consumer transaction,” Kan. Stat. Ann. § 50-626(a), which is defined as “a sale, lease, assignment or other disposition for value of property or services within this state ... to a consumer,” id. § 50-624(c). The statute sets forth private remedies available to consumers, including class actions, and provides that “a consumer may not waive or agree to forego rights or benefits under this act.” Id. §§ 50 — 634(d); 50-625.

On October 25, 2006, Arbitrator Roberts issued a decision holding that the class action waiver was unenforceable in light of the KCPA’s anti-waiver provision. (Petition, Ex. B (“Oct.2006 decision”).) She. [512]*512determined that she had jurisdiction to resolve this issue because it was a “controversy or dispute” “arising out of or related to” the Arbitration Agreement, and because the agreement incorporated JAMS rules, which provided:

[Jjurisdietional and arbitrability disputes, including disputes over the existence, validity, interpretation or scope of the agreement under which Arbitration is sought ... shall be submitted to and ruled on by the Arbitrator. The Arbitrator has the authority to determine jurisdiction and arbitrability as a preliminary matter.

(Id. at 6 n. 1 (quoting JAMS Comprehensive Rule 11(c); JAMS Streamlined Rule 8(c) (ellipsis'in original)).) The arbitrator rejected Sprint’s argument that the KCPA did not apply to the dispute because the services provided to Emilio were not provided “within this state,” reasoning that:

Sprint’s operations are headquartered in Kansas, from which it unquestionably provides services to its customers throughout the United States. Moreover, it would be manifestly unfair for Sprint to require its customers to agree to the application of Kansas law, and at the same time deny application of its consumer protection statute. Having chosen to impose Kansas law upon its customers, Sprint cannot be permitted to make a self-serving determination of which laws of Kansas will apply to disputes under the Arbitration Agreement.

(Id. at 9 & n. 2.) The arbitrator also rejected Emilio’s argument that the class action waiver was unconscionable under Kansas state law. (Id. at 10-15.)

Following this decision, Sprint filed a motion for summary disposition premised on the claimed non-applicability of the KCPA and on a settlement release (“Ben-ney/Lundberg settlement”) arising out of a Kansas state court class action. On July 16, 2008, Arbitrator Roberts denied the motion because, inter alia, the settlement did not satisfy the constitutional requirement of adequacy of representation. (Dkt. No. 17, Ex. 5 (“July 2008 decision”).) On August 8, 2008, Sprint filed a motion in the Kansas state court that had approved the settlement seeking to enjoin Emilio from continuing to arbitrate or litigate his claims in any forum. On August 11, Emilio filed a petition in this Court to compel Sprint to continue arbitrating and to enjoin it from proceeding in Kansas state court. On November 6, 2008, Judge Jones granted Emilio’s petition. Emilio v. Sprint Spectrum L.P., No. 08 Civ. 7147(BSJ), 2008 WL 4865050 (S.D.N.Y. Nov. 6, 2008), modified in part, 2008 WL 4865182 (S.D.N.Y. Nov. 6, 2008), aff'd, 315 Fed.Appx. 322 (2d Cir.2009).

The parties subsequently returned to arbitration, engaging in discovery and briefing related to Emilio’s motion for class certification during the remainder of 2009. Decision on the issue was delayed pending settlement negotiations. On April 27, 2010, the United States Supreme Court issued its 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), holding that under the FAA a party cannot be compelled to submit to class arbitration absent a contractual basis for finding that it had agreed to do so. On October 19, 2010, Sprint filed a motion for reconsideration of the October 2006 decision in light of Stoltr-Nielsen.

On December 27, 2010, Arbitrator Roberts issued a decision holding' that Stolt-Nielsen precluded Sprint from being compelled to proceed in class arbitration.

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Bluebook (online)
68 F. Supp. 3d 509, 2014 U.S. Dist. LEXIS 177027, 2014 WL 7330433, Counsel Stack Legal Research, https://law.counselstack.com/opinion/emilio-v-sprint-spectrum-lp-nysd-2014.