6th Cir. Interprets CAFA-FAA Interaction in Consumer Suit Against Verizon

On Wednesday, a panel of federal appellate judges sided with Verizon Wireless in a challenge brought by a customer over the validity of an arbitration clause in the customer agreement she signed. The non-precedential opinion affirmed the findings of the district court and an arbitration award, overriding the customer’s consent and federal statute conflict arguments.

The case concerns fees the plaintiff was charged and believed violated her contract with Verizon. She sought relief on behalf of a class, including a declaration that the arbitration clause in the customer agreement “was, as applied to state-law claims against Verizon for breach of contract under the Class Action Fairness Act of 2005 (CAFA), not voluntary or enforceable.”

The district court granted Verizon’s motion to compel arbitration. The parties proceeded through the para-judicial forum, and later, the district court granted Verizon’s request to confirm the arbitration award whilst rejecting the plaintiff’s request to vacate it.

In her appeal, the customer argued that the district court’s opinion compelling her to arbitration was incorrect on two bases. The Sixth Circuit first considered whether the clause was enforceable under federal law and concluded in the affirmative. “Nothing in the record, however, supports [the plaintiff’s] claim that her consent to the Customer Agreement was not knowing and voluntary,” the opinion said.

The panel acknowledged that Verizon “undoubtedly has greater economic power” than the plaintiff, but said that she fell short of showing the agreement was both procedurally and substantively unconscionable, in particular owing to the fact that she offered no evidence that Verizon was her only option for wireless coverage.

Next, the court turned to the plaintiff’s argument that CAFA overrides the Federal Arbitration Act (FAA) with respect to the arbitration of class action claims. The court noted that proving displacement of one federal statute by another was an “‘uphill climb,’” and ultimately reasoned that “the jurisdictional changes wrought through CAFA do not show an obvious conflict with the FAA that would make [the plaintiff’s] arbitration agreement with Verizon unenforceable.”

The plaintiff-appellant is represented by Lockridge Grindal & Nauen P.L.L.P., Karon LLC, and Law Offices of William R. Weinstein. Verizon is represented by its own counsel and McGuire Woods LLP.