BETH BLOOM, District Judge.
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:
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 Spirit Airlines' 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.
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 any contract." 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 a substantive 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 on whether the availability of class arbitration is an arbitrability question for a court or a procedural question for an arbitrator.
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 determinations to the arbitrator.
In finding that the Agreement does establish the parties' clear and unmistakable delegation to the arbitrator the question of whether the Agreement allows for class arbitration, this Court finds most persuasive the approach taken by the Fifth Circuit in Reed v. Florida Metropolitan University, Inc., 681 F.3d 630 (5th Cir. 2012), abrogated in part on other grounds, Sutter, 133 S.Ct. 2064. In Reed, the Fifth Circuit addressed whether the district court erred in allowing an arbitrator to determine whether the parties had agreed to class arbitration pursuant to their arbitration agreement, which explicitly adopted the AAA's "Commercial Rules." 681 F.3d at 634. The Fifth Circuit began its analysis by observing that the AAA's Commercial Rules "do not contain class arbitration procedures[.]" Id. Rather, the collective AAA Rules—which explicitly govern the Agreement in this case—include "various" rules governing specific actions (e.g., the AAA Commercial Rules) and "separate Supplementary Rules for Class Arbitration" (the "Supplementary Rules"), which were enacted after the Supreme Court's decision in Bazzle. Reed, 681 F.3d at 634. "By their plain terms, these Supplementary Rules apply `to any dispute arising out of an agreement that provides for arbitration pursuant to any of the rules of the . . . AAA[] where a party submits a dispute to arbitration on behalf of or against a class or purported class, and shall supplement any other applicable AAA rules.'" Id. at 634-35 (quoting AAA Supp. R. 1(a)) (emphasis added). Observing that "[c]ommentators and AAA arbitral tribunals have consistently concluded that consent to any of the AAA's substantive rules also constitutes consent to the Supplementary Rules[,]" the Fifth Circuit concluded "that the parties' agreement to the AAA's Commercial Rules also constitutes consent to the Supplementary Rules."
The parties' consent to the Supplementary Rules proved dispositive for the Fifth Circuit, as "the substance" of the Supplementary Rules—in particular, Supplementary Rule 3—provides that "the arbitrator shall determine as a threshold matter . . . whether the applicable arbitration clause permits the arbitration to proceed on behalf of or against a class . . . ." Id. (quoting AAA Suppl. R. 3) (emphasis in original). Finding that the parties' consent to the Supplementary Rules "therefore[] constitute[d] a clear agreement to allow the arbitrator to decide whether the party's [sic] agreement provide[d] for class arbitration[,]" the Fifth Circuit held that the district court correctly referred the class arbitration issue to the arbitrator. Id. at 635-36.
Here, like the parties in Reed, Spirit Airlines and Defendants have consented to the Supplementary Rules of the AAA by way of the Agreement's explicit adoption of "the rules of the American Arbitration Association." ECF No. [1-2] at ¶ 9.5. Supplementary Rule 3 speaks directly to the issue at hand by providing that "the arbitrator shall determine as a threshold matter. . . whether the applicable arbitration clause permits the arbitration to proceed on behalf of or against a class . . . ." AAA Suppl. R. 3. Of course, there is one notable difference between the agreement in Reed and the Agreement in this case. Unlike the Reed agreement's express provision that the AAA Commercial Rules would govern, the Agreement here provides that the AAA Rules will govern, but does not reference any subset of the AAA Rules.
In the Court's view, however, the omission of a specific subset of the AAA Rules is immaterial in this context. The AAA Commercial Rules, as a prime example, do not themselves incorporate or even reference the Supplementary Rules. See generally Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, 809 F.3d 746, 763 (3d Cir. 2016) (finding that the Supplementary Rules were not incorporated into the parties' agreements in part because even if the AAA Commercial Rules were incorporated therein—as was argued by the defendant—"[t]he Commercial Rules do not even refer to the Supplementary Rules"). As the Fifth Circuit recognized in Reed, the incorporation of the Supplementary Rules works in the opposite direction. That is, the Supplementary Rules, through its own unequivocal language, apply to all AAA Rules (including the subsets); neither the AAA Rules generally nor the subsets need specifically incorporate the Supplementary Rules because the incorporation exists by default. That default incorporation, as mentioned, is achieved by Supplemental Rule 1(a), which provides that the Supplementary Rules apply to "any dispute arising out of an agreement that provides for arbitration pursuant to any of the rules of the [AAA]." AAA Suppl. R. 1(a) (emphasis added); see also Reed, 681 F.3d at 635 (collecting cases and recognizing that, in addition to the AAA Commercial Rules, the AAA Wireless Industry Arbitration Rules and the AAA National Rules also incorporate the Supplementary Rules).
A final point bears mention. One of the main authorities Spirit Airlines relies on is the Third Circuit's decision in Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, 809 F.3d 746 (3d Cir. 2016), in which the arbitration agreement at issue used language nearly identical to that used in the Agreement in this case. Specifically, the Third Circuit examined an arbitration provision in oil and gas leases that provided as follows: "In the event of a disagreement between Lessor and Lessee concerning this Lease, performance thereunder, or damages caused by Lessee's operations, the resolution of all such disputes shall be determined by arbitration in accordance with the rules of the [AAA]." Id. at 748. Particularly relevant here, in holding that the leases did not clearly and unmistakably delegate the question of class arbitrability to the arbitrators, the Third Circuit emphasized, inter alia, that the leases did not explicitly reference the AAA Commercial Rules—which the defendant asserted were incorporated into the leases— nor did the AAA Commercial Rules in turn explicitly reference the Supplementary Rules. Id. at 762-63. The Third Circuit characterized the defendant's ultimate reliance on the Supplementary Rules as implicating "`a daisy-chain of cross-references'—going from the Leases themselves to `the rules of the American Arbitration Association' to the Commercial Rules and, at last, to the Supplementary Rules.'" Id. at 762. The Third Circuit described what it viewed as a flaw in that reliance as follows:
Id. at 763; see also Reed Elsevier, Inc. ex rel. LexisNexis Div. v. Crockett, 734 F.3d 594, 599 (6th Cir. 2013) (concluding that the agreement, despite its incorporation of the AAA Commercial Rules, was "silent or ambiguous as to whether an arbitrator should determine the question of classwide arbitrability; and that is not enough to wrest that decision from the courts").
As already discussed, this Court views an arbitration agreement's reference to the AAA Rules much differently than above. Aside from that, the final point to be made is that the Third Circuit in Chesapeake appeared to group the Eleventh Circuit's treatment of the AAA Rules with that of the Fifth Circuit—particularly in the Reed decision—and in doing so drew a distinction with its own treatment of the AAA Rules. See 809 F.3d at 765 n.7 (citing S. Commc'ns, 720 F.3d at 1358 n. 6, and Reed, 681 F.3d at 635 n.5). The Third Circuit reiterated that the proper inquiry of whether the leases at issue clearly and unmistakably delegated the question of class arbitrability to the arbitrators was "not merely whether the parties have somehow `consented' to the Supplementary Rules." Id. at 765. Then, in a footnote, the Third Circuit observed that the Eleventh Circuit in Southern Communications had, like the Fifth Circuit in Reed, "refrained from deciding whether the availability of class arbitration is a question of arbitrability because the appellant `gave the question of whether the contract allowed for class arbitration to the arbitrator through its choice of rules and by failing to dispute th[e] [a]rbitrator's jurisdiction to decide the threshold issue.'" Id. at 765 n.7 (quoting S. Commc'ns, 720 F.3d at 1358 n. 6) (emphasis added) (internal quotation marks omitted) (alteration in original). The Third Circuit appeared to view the Eleventh Circuit's treatment of the appellant's "choice of rules" as problematic, stating in relevant part that "[l]Like the Fifth Circuit, the Eleventh Circuit did not reference the `onerous' burden that applies in the current context"—i.e., whether the agreement clearly and unmistakably delegated the specific question of class arbitrability to the arbitrator. Id. at 754, 765 n.7.
The "choice of rules" that the Third Circuit was referring to was the AAA Wireless Industry Arbitration Rules. Id. Importantly, like the AAA Commercial Rules, the AAA Wireless Industry Arbitration Rules do not explicitly reference the Supplementary Rules.
The Court finds highly persuasive the Fifth Circuit's view in Reed that inclusion of any of the AAA Rules in an arbitration agreement necessarily incorporates the Supplementary Rules, which in turn specifically delegate the class arbitrability issue to the arbitrator. See AAA Suppl. R. 1(a); AAA Suppl. R. 3. Furthermore, as alluded to by the Third Circuit in Chesapeake, the Court believes that the Eleventh Circuit, if squarely confronted with the issue, would follow suit with the Fifth Circuit's Reed decision—to the extent that it has not already done so. Accordingly, the Court finds that the parties Agreement, through its adoption of the AAA Rules, clearly and unmistakably delegated to the arbitrator the question of whether the Agreement allows for class arbitration. And because "the parties have contracted around the default rule" that the Court rule on the class arbitrability issue, "it is[] [] unnecessary for [the Court] to reach" the secondary issue of whether Defendants may, pursuant to the Agreement, pursue their claims against Spirit Airlines through class arbitration. Terminix, 432 F.3d at 1333. Indeed, it would be improper for the Court to do so.
Based on the foregoing, it is
