Pendergast v. Sprint Solutions, Inc., et al.

Case Updates

The U.S. Court of Appeals for the Eleventh Circuit held that to the extent that Florida law would invalidate the class action waiver, it would be preempted by the Federal Arbitration Act. The plaintiff in this case argued that the arbitration agreement is unconscionable under Florida state law because it prohibts classwide resolution of claims. The Eleventh Circuit explained that if Florida law were to invalidate the class action on that basis, then for the same reasons the U.S. Supreme Court enunciated in AT&T Mobility v. Concepcion, that state law would impose procedures fundamentally incompatible with the arbitration the parties agreed upon, would thus stand as an obstacle to the accomplishment of the FAA’s objectives, and would be preempted. The Eleventh Circuit also rejected the plaintiff's argument that, unlike the plaintiffs in Concepcion, the plaintiff in this action would not be able to vindicate his rights without a class action. According to the Eleventh Circuit, this argument merely substantiated the public policy arguments that the U.S. Supreme Court expressly rejected in Concepcion.

NCLC urged the Florida Supreme Court to clarify whether class action waivers are unconscionable under Florida law, and whether the party resisting arbitration has the burden of proving that an agreement is unconscionable. In this case, the plaintiff-cell phone customer alleged that the defendant-cell phone company improperly charged him $20 in roaming fees, and sought to certify a class in spite of a class action waiver term in the plaintiff's arbitration agreement.

The Eleventh Circuit certified to the Florida Supreme Court questions regarding the availability of the unconscionability defense under Florida law. In its brief, NCLC argued that the Federal Arbitration Act preempts the plaintiffs' effort to twist the unconscionability defense into an anti-arbitration device. NCLC warned that distorting the unconscionability defense to preclude class action waivers would undermine the viability of arbitration agreements to the detriment of consumers and businesses alike.

After argument to the Florida Supreme Court but before the court issued a decision, the U.S. Supreme Court issued its decision in AT&T Mobility v. Concepcion, which held that a California legal rule that invalidated class action waivers as 'unconscionable' was preempted by the Federal Arbitration Act. In light of Concepcion, the Florida Supreme Court granted the defendant's motion to decline jurisdiction over the certified questions, and the case returned to the Eleventh Circuit.