Southern Communs. Servs. v. Thomas, No. 11-15587 (11th Cir. July 12, 2013) [click for opinion]
Plaintiff was a U.S. wireless service provider and Defendant was one of Plaintiff's customers. The terms and conditions of Plaintiff's wireless policy included an early termination fee and an arbitration clause that did not explicitly prohibit class arbitration. Defendant cancelled his wireless service before his contract expired and was charged an early termination fee. Defendant refused to pay the fee and filed a nationwide class consumers' demand for arbitration, arguing that the early termination fees were unlawful penalties, unjust and unreasonable.
Defendant moved for an award to allow class action treatment. The arbitrator allowed Defendant to proceed on behalf of the class and certified the class because the parties’ arbitration clause did not expressly bar class treatment and state law favored class actions. This appeal followed the arbitrator's and district court's denial of Plaintiff's motion to reconsider the clause construction and class certification awards.
On appeal, the court noted that the purpose of the Federal Arbitration Act (the "FAA"), 9 U.S.C. §§ 1 et seq., was to create a national policy that places arbitration agreements on par with other contracts. The court reasoned that, in order to vacate, modify or correct an award under § 10(a)(4) of the FAA on the ground that the arbitrator exceed his or her authority, the court must ask "whether the arbitrator (even arguably) interpreted the parties' contract, not whether he got its meaning right or wrong."
The court affirmed the district court's decision to uphold the arbitrator's award, reasoning that Plaintiff failed to satisfy the highly deferential standard to vacate, modify or correct an award under § 10(a)(4) of the FAA. The court noted that the arbitrator "arguably interpreted" the parties' contract given that he considered the contract's language and the parties' intent by examining the arbitration rules incorporated into the arbitration clause and considered the meaning of the words in the arbitration clause and state law on the issue. The court made it clear that it was not its job to opine on how well the arbitrator interpreted the contract, because the parties bargained for the arbitrator's construction of the contract.