Southern Communications Services, Inc. v. Thomas

829 F. Supp. 2d 1324, 2011 U.S. Dist. LEXIS 131344, 2011 WL 5386428
CourtDistrict Court, N.D. Georgia
DecidedNovember 3, 2011
DocketCivil Action No. 1:10-CV-2975-AT
StatusPublished
Cited by8 cases

This text of 829 F. Supp. 2d 1324 (Southern Communications Services, Inc. v. Thomas) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southern Communications Services, Inc. v. Thomas, 829 F. Supp. 2d 1324, 2011 U.S. Dist. LEXIS 131344, 2011 WL 5386428 (N.D. Ga. 2011).

Opinion

ORDER

AMY TOTENBERG, District Judge.

This case is before the Court on Plaintiff Southern Communications Services, Inc., D/B/A SouthernLINC Wireless’ (“SouthernLINC”) Motion to Vacate [Doc. 1] two arbitration awards: a Clause Construction Award and a Class Determination Award. By issuing these two awards, the arbitrator answered two questions the parties submitted to him in turn: 1) whether their arbitration agreement authorizes class arbitration and 2) what class, if any, he should certify. The arbitrator determined first that the arbitration clause in the parties’ agreement permits class arbitration and second that the class — including Defendant Derek Thomas, individually and on [1327]*1327behalf of others similarly situated (the “Customers”) — meets the applicable class certification criteria. SouthernLINC now argues that the arbitrator exceeded his authority in making these determinations and moves for the Court to vacate both awards. For the following reasons, the arbitrator did not in fact exceed his authority, and the Court has no jurisdiction to vacate his awards. Accordingly, SouthernLINC’s Motion is DENIED.

I. Background

Defendant Thomas contracted with Plaintiff SouthernLINC for cellular phone service in June 2005. (Demand [1-4] ¶ 32). As a condition of obtaining service from SouthernLINC, Thomas and other Customers were required to agree to a standard form contract (the “Agreement”) including non-negotiable “Terms and Conditions” drafted by SouthernLINC. Id. at ¶ 16, Ex. A. This Agreement states that it is governed by Georgia law. Id. at Ex. A ¶ 18. The Agreement includes a clause requiring a Customer to pay a $200 early termination fee (“ETF”) if he or she terminates the contract early. Id. at Ex. A ¶ 6. The Agreement also includes a clause requiring any disputes to be resolved through binding arbitration (the “Arbitration Clause”). Id. at ¶ 6, Ex. A ¶ 17. The Arbitration Clause specifies that the parties “will conduct the arbitration ... pursuant to applicable Wireless Industry Arbitration rules of the American Arbitration Association” (the “WIA Rules” of the “AAA”). Id. at ¶ 6, Ex. A ¶ 17.

In February 2008, Thomas cancelled his phone service before the end of the contract term and refused to pay the ETF, and SouthernLINC refused to waive this fee and threatened collection action. Id. at ¶ 33-34. On July 31, 2008, pursuant to the Arbitration Clause, Thomas filed a demand with the AAA on behalf of himself and the other Customers challenging the ETFs .as illegal penalties. (Demand [1-4]).

As a threshold matter, the arbitrator’s first duty was to determine whether the Arbitration Clause permitted class arbitration. He derived his authority to make this determination from the AAA’s Supplementary Rules for Class Arbitrations (“Supplementary Rules”), which were incorporated by reference into the WIA Rules, which were specified by the Arbitration Clause. (Clause Const. Award [1-2] at 2). AAA Supplementary Rule 3 makes a “Clause Construction Award” the first step in any AAA class action proceeding and provides that “the arbitrator shall determine as a threshold matter, in a reasoned, partial final award on the construction of the arbitration clause, whether the applicable arbitration clause permits the arbitration to proceed on behalf of or against a class.” Id. ■

The parties disputed whether the Arbitration Clause authorized this action to proceed on behalf of a class and submitted briefs for the arbitrator’s consideration: the Customers filed a Motion; SouthernLINC filed a Brief in Opposition; the Customers filed a Reply; and both parties filed supplemental briefs following the arbitrator’s request. Id. at 1. Discovery and briefings continued for over six months. The parties did not dispute the arbitrator’s jurisdiction to decide this issue. Id. at 2.

The crux of this dispute was whether the parties intended to permit class proceedings. The parties argued their opposing positions regarding their intent in their briefs to the arbitrator and submitted to his authority to render a decision on this issue. The Customers argued that “there is no evidence of any mutual intent to prohibit class arbitration.” (Claimant’s Reply Supp. Mot. Prelim. Clause Const. Award [1-10] at 2). Conversely, SouthernLINC argued that “the parties’ [sic] in[1328]*1328tended to preclude class arbitrations.” (Resp. Br. Opp. Claimant’s Mot. Prelim. Clause Const. Award [1-11] at 3). The parties took “opposite positions on whether the arbitration clauses’ [sic] silence on class arbitration does or does not create an ambiguity.” (Clause Const. Award [1-2] at 5).

On April 2, 2009, the arbitrator issued a Clause Construction Award after finding that the Arbitration Clause permitted class arbitration. Id. at 4. He concluded that “class arbitration is permitted by the arbitration clause under Georgia authority on class arbitrations, United States Supreme Court precedent on arbitration, and Georgia rules of contract construction.” Id. at 4. The arbitrator recognized that “prior unconfirmed clause construction awards have little precedential value for purposes of this Clause Construction Award.” Id. Instead, he based his decision “solely upon [his] analysis of the facts and law applicable to the parties’ Agreement here.” Id.

The arbitrator began his analysis of the Agreement by recognizing that Georgia law applies and that “a fundamental principle of contract construction is that a contract is to be construed against the drafter,” Id. at 5, citing Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 62-63, 115 S.Ct. 1212, 131 L.Ed.2d 76 (1995) (“[A] court should construe ambiguous language against the interest of the party that drafted it .... [The drafter of] an ambiguous document ... cannot ... claim the benefit of the doubt. The reason for this rule is to protect the party who did not choose the language from an unintended or unfair result.”); see also Dept. of Community Health v. Pruitt Corp., 295 Ga.App. 629, 673 S.E.2d 36, 39 (2009) (“Another rule of construction requires us to construe ambiguous contract provisions against the drafter....”). The arbitrator reasoned that to reject the Customers’ argument that they intended to authorize class arbitration would “effectively impute an intent to the non-drafters to give up unknown rights that were not expressly disclosed or discussed in the contract.” (Clause Const. Award [1-2] at 5). Following this contract construction analysis under Georgia law, he concluded that there was no intent to bar arbitration and that “Georgia contract law ... permits class arbitration.”1 Id. at 5-6.

The arbitrator further reasoned that to reject the Customers’ argument that they intended to authorize class arbitrations would effectively deny them the ability to vindicate their rights under Georgia law, citing Dale v. Comcast Corp., 498 F.3d 1216 (11th Cir.2007). In Dale, customers brought a class action against Comcast Corporation to recover for its alleged failure to pass through cost savings resulting from decreased franchise fees to its cus[1329]*1329tomers, as required by federal law.

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829 F. Supp. 2d 1324, 2011 U.S. Dist. LEXIS 131344, 2011 WL 5386428, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southern-communications-services-inc-v-thomas-gand-2011.