Spirit Airlines, Inc. v. Maizes

SPIRIT AIRLINES, INC., Plaintiff, v. STEVEN MAIZES, et al., Defendants.

Case No. 17-cv-61086-BLOOM/Valle

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

September 18, 2017

ORDER

THIS CAUSE is before the Court upon Plaintiff Spirit Airlines, Inc.'s ("Plaintiff" or "Spirit Airlines") Motion for Preliminary Injunction to Stay Class Arbitration Proceedings, ECF No. [8] ("Motion for Preliminary Injunction"), and Defendants Steven Maizes, Vincent Anzalone, Lee Traylor, and Howard Madenberg's (collectively, "Defendants") Motion to Dismiss Complaint, ECF No. [25] ("Motion to Dismiss"). The Court had the benefit of oral argument on the Motions at a hearing held on August 11, 2017. The Court has considered the oral arguments made at that hearing, has reviewed the Motions, all opposing and supporting submissions, the record and the applicable law, and is otherwise fully advised. For the reasons set forth below, Spirit Airlines' Motion for Preliminary Injunction is denied and Defendants' Motion to Dismiss is granted.

I. BACKGROUND

On April 12, 2017, Defendants filed an arbitration claim against Spirit Airlines with the American Arbitration Association ("AAA") in Broward County, Florida, purporting to represent a class of consumers who paid a fee to join Spirit Airlines' "$9 Fare Club." ECF No. [1] at ¶ 11. The $9 Fare Club is a discount program allowing Spirit Airlines passengers to pay a fee for access to reduced air fares and other discounted items. See ECF No. [8] at 4. In the arbitration action, which is currently pending, Defendants—each of whom enrolled in the $9 Fare Club—allege misrepresentations in the "$9 Fare Club Terms and Conditions" (the "Agreement") that is posted on Spirit Airlines' website. See ECF No. [1] at ¶¶ 12-13. Of import here, the Agreement contains an arbitration clause, which states as follows:

This Agreement and the terms of membership shall be governed and construed in accordance with the laws of the State of Florida without giving effect to the choice of law provisions thereof. Any dispute arising between Members and Spirit will be resolved by submission to arbitration in Broward County, State of Florida in accordance with the rules of the American Arbitration Association then in effect. Notwithstanding the foregoing, nothing in this Agreement is intended or shall be construed to negate or otherwise affect the consumer protection laws of the state in which Members reside.

ECF No. [1-2] at ¶ 9.5 (emphasis added). Defendants relied on the Agreement's arbitration clause in filing their putative class arbitration claim with the AAA. See ECF No. [1-1] at ¶ 11.

On May 30, 2017, Spirit Airlines initiated this action by filing a Complaint against Defendants seeking injunctive and declaratory relief—namely, a stay of the arbitration action and a declaration that (i) the Agreement's arbitration clause does not authorize class action arbitration claims against Spirit Airlines, and (ii) the arbitration action is preempted by federal law. ECF No. [1] at ¶ 1. Shortly thereafter, on June 16, 2017, Spirit Airlines filed its Motion for Preliminary Injunction, urging the Court to enter an order enjoining Defendants from: "(i) petitioning an arbitrator to rule on whether their claims are subject to class arbitration, or (ii) proceeding with their putative class arbitration, until [the] Court decides whether claims arising from the $9 Fare Club Agreement are subject to class arbitration." ECF No. [8] at 3. On July 17, 2017, Defendants filed their Motion to Dismiss, arguing that the Court should dismiss SpiritAirlines' Complaint for lack of subject matter jurisdiction pursuant to the Federal Arbitration Act, 9 U.S.C. § 1, et seq. ("FAA"), and Federal Rule of Civil Procedure 12(b)(1).

In essence, the parties are at odds on two issues. First, as a threshold matter, whether the arbitrator or the Court decides if arbitration may proceed on a class basis. And second, whether the parties agreed to class arbitration by way of the Agreement's arbitration clause. With respect to the threshold issue, Spirit Airlines argues that the Court, not the arbitrator, should decide whether the parties agreed to arbitrate on a class basis. See ECF No. [8] at 5-15; ECF No. [39]. As to the second issue, Spirit Airlines argues that the Agreement's arbitration clause covers bilateral claims only—i.e., Spirit Airlines "did not agree to class arbitration . . . ." ECF No. [8] at 1. Defendants respond that, through the Agreement's incorporation of the AAA Rules, the parties agreed to allow the arbitrator ("not a judge") to decide all issues of arbitrability, including whether the parties agreed to submit to class arbitration. ECF No. [25] at 3-4. Defendants also argue that the Agreement explicitly provides for arbitration over class or collective claims in that the Agreement's arbitration clause is made applicable to any dispute arising between "Members and Spirit," rather than, for example, any dispute "arising between any 'Member' and Spirit, or between 'You' and Spirit." Id. at 2-3. As such, regarding the threshold inquiry, the Court must first address who the ultimate decision maker is, which requires an examination of the Agreement to determine whether the parties agreed to submit the class arbitrability issue to the arbitrator. If such an agreement was reached, this federal court action can proceed no further.

II. DISCUSSION

The FAA, which applies to contracts that evidence transactions involving interstate commerce, provides that contractual arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of anycontract." 9 U.S.C. § 2. The FAA's "primary" purpose is to ensure that "private agreements to arbitrate are enforced according to their terms." Volt Info. Scis., Inc. v. Bd. of Trs. of the Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989). With respect to class arbitration, "a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so." Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 684 (2010).

As the Fifth Circuit has explained, "[p]reliminary issues in arbitration cases include gateway disputes, which typically require judicial determination, and procedural questions, which are to be reviewed by the arbitrator." Robinson v. J & K Administrative Management Services, Inc., 817 F.3d 193, 195 (5th Cir. 2016) (citing Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 451-53 (2003) (plurality opinion)). "The arbitrability of disputes—in other words, the determination of whether the agreement applies to the parties' claims—is generally a gateway issue to be determined by the courts." Id. (citing AT & T Technologies, Inc. v. Comm'ns Workers of Am., 475 U.S. 643, 649 (1986)). "'[W]hether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy' are two examples of questions of arbitrability." Fed. Nat'l Mortg. Ass'n v. Prowant, 209 F. Supp. 3d 1295, 1309 (N.D. Ga. 2016) (quoting Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452 (2003)) (emphasis added) (alteration in original). "And if there is doubt about [whether the arbitrator should decide a certain issue,] we should resolve that doubt 'in favor of arbitration.'" Bazzle, 539 U.S. at 452 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985)).

By way of background, in Bazzle, the Supreme Court addressed whether the underlying question before it—namely, whether the governing contracts forbade class arbitration—was asubstantive gateway issue for a judge to decide or a procedural issue for the arbitrator to decide. A plurality of the Court found that it was procedural, characterizing the "relevant question [as] what kind of arbitration proceeding the parties agreed to[,]" and reasoning that the question "concerns contract interpretation and arbitration procedures." Bazzle, 539 U.S. at 452-53 (citations omitted) (emphasis in original). The Bazzle plurality went on to explain: "Arbitrators are well situated to answer that question. Given these considerations, along with the arbitration contracts' sweeping language concerning the scope of the questions committed to arbitration, this matter of contract interpretation should be for the arbitrator, not the courts, to decide." Id. at 453.

Importantly, however, the Supreme Court has since explained that the Bazzle plurality decision did not definitively decide the issue. See, e.g., Oxford Health Plans LLC v. Sutter, — U.S. —, 133 S. Ct. 2064, 2068 n. 2 (2013) ("Stolt-Nielsen made clear that this Court has not yet decided whether the availability of class arbitration is a question of arbitrability. . . . But this case gives us no opportunity to do so . . . .") (internal citation omitted). Likewise, the Eleventh Circuit has yet to decide the issue directly. See S. Commc'ns Servs., Inc. v. Thomas, 720 F.3d 1352, 1358 n. 6 (11th Cir. 2013). But see Prowant, 209 F. Supp. 3d at 1310 ("However, that is not to say Bazzle is worthless. Au contraire. It may have been a plurality decision, but it's the best we've got. Neither the Eleventh Circuit nor the Supreme Court has expressly rejected the proposition that class availability could be a [] procedural issue, and the plurality in Bazzle found it is. Of course, if class availability is a procedural issue, it was, as a matter of law, for the arbitrator to decide in this case."). As such, this Court is without any binding authority onwhether the availability of class arbitration is an arbitrability question for a court or a procedural question for an arbitrator.¹

In any event, the arbitrator may make arbitrability determinations—such as whether the parties have agreed to submit a particular dispute to arbitration—when the parties "clearly and unmistakably" delegate such...