Monday, January 4, 2010

Eleventh Circuit Certifies Unconscionability & Class Action Waiver Case To Florida Supreme Court

In a published opinion released today, the Eleventh Circuit certified the following questions to the Florida Supreme Court:
(1) Must Florida courts evaluate both procedural and substantive unconscionability simultaneously in a balancing or sliding scale approach, or may courts consider either procedural or substantive unconscionability independently and conclude their analysis if either one is lacking?
(2) Is the class action waiver provision in Plaintiff’s contract with Sprint procedurally unconscionable under Florida law?
(3) Is the class action waiver provision in Plaintiff’s contract with Sprint substantively unconscionable under Florida law?
(4) Is the class action waiver provision in Plaintiff’s contract with Sprint void under Florida law for any other reason?
The decision Pendergast v. Sprint Nextel Corporation (09-10612) described the action below as follows:
Plaintiff James Pendergast appeals the district court’s order granting the motion to compel arbitration filed by Defendants-Appellees Sprint Solutions, Inc. and Sprint Spectrum, L.P. (collectively, “Sprint”). Plaintiff is a former Sprint wireless customer and sued Sprint, on behalf of himself and a similarly-situated class, for allegedly charging improper roaming fees for calls placed within Sprint’s coverage areas. The district court found the arbitration clause and class action waiver contained in the Terms and Conditions of Plaintiff’s contract with Sprint were valid and enforceable and barred this class action.
With regard to the basis for certification, the court stated:
Our review of Florida law confirms the district court’s interpretation of Florida law as requiring a showing of both procedural and substantive unconscionability. Precedent from the Florida Third District Court of Appeal consistently requires a showing of both procedural and substantive unconscionability. Hialeah Auto., LLC v. Basulto, __ So.2d __, No. 3D07-855, 2009 WL 187584, at *2 (Fla. 3d Dist. Ct. App. Jan. 28, 2009) (“Our court has said that, to invalidate a contract for unconscionability ‘under Florida law, a court must find that the contract is both procedurally and substantively unconscionable.’”) (quoting Murphy v. Courtesy Ford, L.L.C., 944 So.2d 1131, 1134 (Fla. 3d Dist. Ct. App. 2006)); see also Golden v. Mobil Oil Corp., 882 F.2d 490, 493 (11th Cir. 1989) (stating in a commercial lease setting that Florida courts require a plaintiff to show both procedural and substantive unconscionability). Decisions from other Florida appellate districts also consistently require a showing of both procedural and substantive unconscionability. E.g., Bland v. Health Care & Retirement Corp. of Am., 927 So.2d 252, 256 (Fla. 2d Dist. Ct. App. 2006); Fonte v. AT&T Wireless Servs., Inc., 903 So.2d 1019, 1025 (Fla. 4th Dist. Ct. App. 2005); Powertel, Inc. v. Bexley, 743 So.2d 570, 574 (Fla. 1st Dist. Ct. App. 1999).
Nonetheless, there is some tension in Florida law regarding the analytical framework courts should use in evaluating both procedural and substantive unconscionability. Must courts evaluate both prongs simultaneously in a balancing exercise, or may courts stop the analysis after finding either procedural or substantive unconscionability to be independently lacking?
Some Florida courts appear to reject the procedural-plus-substantive unconscionability requirement as a rule of law or use a balancing or sliding scale approach. Steinhardt v. Rudolph, 422 So.2d 884, 889 (Fla. 3d Dist. Ct. App. 1982) (stating that although most courts take a “balancing approach” requiring “a certain quantum of procedural plus a certain quantum of substantive unconscionability,” the “procedural-substantive analysis is . . . only a general approach to the unconscionability question and is not a rule of law”) (quotation omitted and emphasis added); Fonte, 903 So.2d at 1025 (“‘The prevailing view is that procedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. But they need not be present in the same degree . . ..’”); Romano v. Manor Care, Inc., 861 So.2d 59, 62 (Fla. 4th Dist. Ct. App. 2003) (stating “[e]ssentially a sliding scale is invoked” and “the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa”).
Other Florida courts do not use, and some in fact never mention, a balancing or sliding scale approach and assess procedural and substantive unconscionability independently, concluding that if one part of the unconscionability test is not established, the other part need not be examined at all. Bland, 927 So.2d at 257 (“This court, however, eschews the ‘sliding scale’ approach. Rather, we assess procedural unconscionability and substantive unconscionability independently.”); Nat’l Fin. Servs., L.L.C. v. Mahan, 19 So.3d 1134, 1136-37 (Fla. 3d Dist. Ct. App. 2009) (“Because the arbitration provisions in this case suffered from no procedural malady, we do not reach the question of substantive unconscionability.”); Belcher v. Kier, 558 So.2d 1039, 1045 (Fla. 2d Dist. Ct. App. 1990) (stating “the court must view unconscionability in a two-pronged approach, i.e., procedural unconscionability and substantive unconscionability” and “because the appellees were unable to carry their burden as to both prongs, the ruling in their favor cannot stand.”); see also Hialeah, __ So.2d __, 2009 WL 187584, at *5 n.4 (“Speaking for himself, the writer of the opinion suggests that in an appropriate future case, this court should reconsider Murphy v. Courtesy Ford, L.L.C., 944 So.2d 1131 (Fla. 3d Dist. Ct. App. 2006) . . . . Although the requirement for both procedural and substantive unconscionability has been repeated in a number of arbitration cases in recent years, I respectfully suggest that holding is (a) illogical, and (b) inconsistent with this court’s decision in Steinhardt v. Rudolph, 422 So.2d 884 (Fla. 3d Dist. Ct. App. 1982).”) (Cope, J.).

1 comments:

Albert said...

See also Segal et al v. Amazon.com, Inc.
link:
http://docs.justia.com/cases/federal/district-courts/florida/flsdce/1:2010cv20718/353407/29/0.pdf

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