Another Class Action Waiver Upheld—Eleventh Circuit Applies Concepcion In Holding That FAA Preempts Florida Law To The Extent It Would Invalidate Class Action Waiver
The Eleventh Circuit in Pendergast v. Sprint, No. 09-10612 (11th Cir. Aug. 20, 2012), upheld Sprint’s class action waiver without resorting to an analysis of whether the waiver is unconscionable under Florida law or if it frustrates the remedial purposes of the Florida Deceptive and Unfair Trade Practices Act. This was so because, according to the Court, “to the extent Florida law would invalidate the class action waiver, it would still be preempted by the FAA” [Federal Arbitration Act].
The Court determined that the resolution of Pendergast’s appeal required only a “straightforward application” of the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), and the Eleventh Circuit’s prior decision in Cruz v. Cingular Wireless, LLC, 648 F.3d 1205 (11th Cir. 2011).
In addressing Pendergast’s argument of unconscionability because the waiver disallowed classwide procedures, the Court held 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 Court also rejected the argument that the defendant will not be forced into arbitration because of the non-severability provision, and thus the FAA should not preempt the application of state law here. According to the Court, “[a]s we held in Cruz in regard to a nearly identical non-severability provision, if a state rule invalidating class action waivers in arbitration agreements (thereby requiring class-wide arbitration instead of bilateral arbitration) serves as an obstacle to the FAA’s objective of enforcing arbitration agreements according to their terms, then a state rule invalidating a class action waiver and thereby forcing the parties out of arbitration entirely frustrates the FAA’s purpose even more.”
As to the argument that Pendergast and others will not be able to vindicate their rights without a class action, the Court recognized that Concepcion already rejected this argument, noting that “States cannot require a procedure that is inconsistent with the FAA, even if it is desirable for other reasons.”