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. C ellc o P ar tne r ship " (2010). 2010 D e cisio n s . P ape r 1292. http://d i git alc ommon s .l a

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_____________ K E IT H L IT M A N ; R O B E R T W A C H T E L , Indi vidual l yand on beh al f of al l other s s im ila rl ys itu a te d , A pp el l ants ,

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_______________ A r gued N ovember5, 2009 B e f o re : S C IR IC A , J O R D A N a n d C O W E N , C i r cui tJudges .

( Fi l ed: M ay21, 2010)

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ste in Gr e e n b e r g Tr a u r i g , LLP 200 Par k A venue Fl orham P ark, N J 07932 An d r e w G. M c Br i d e [ AR GUE D] E lb e rt L in W i l e yRe i n LLP 1 7 7 6 K S tr e e tNW W as hi ngt on, D C 20006 C ouns el f orAppel l ee A l an S. K apl i ns ky J er emyT . R os enbl um Ba l l a r d Sp a h rAnd r e ws & I n g e r s o l l , LLP 1 7 3 5 M a rk e t S tre e t - 5 1 F l. st Phi l adel phi a, PA 19103 C ouns el f orA m i cus Appel l ees

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_______________ J O R D A N , C i r cui tJudge . A ppel l ant s K ei th L i t m an and Rober tW acht el appea l fr om an or derof the U ni t ed St at es D i s tr i ctC our tforthe D i s tr i ctof N ew J er s eycompel l i ng arbi tr at i on and di s m i s s i ng thei rcas e. Forthe fol l ow i ng r eas ons , w e w i l l vaca t e the D i s tr i ctC our t ’ s or derand r emand forfur therpr ocee di ngs cons i s t entw i th thi s opi ni on.Speci fi cal l y , L i t m an and W acht el ar gue that , i n Sept emberof 2005, V er i zon i m pos ed 1 a bogus m onthl yadmi ni s tr at i ve cha r ge of f or tycent s on i t s cus t om er s and i ncr eas ed that c h a rg e to s e v e n ty ce n ts in M a rc h o f 2 0 0 7 . T h e a rb itratio n c lau se a lso p ro v id e s th a t th e a g re e m e n t to a rb itrate is in a p p lica b le in 2 th e e v e n t th a t th e c la s s -a rb itr a tio n p ro v is io n is f o u n d to b e u n e n f

o rc e a b le . 3 I . Backg r ound L itm a n a n d W a c h tel b ro u g h t th is p u tativ e c las s a c tio n a g a in st C e llco P a rtn e rsh ip d/b/ a V er i zon W i r el es s ( “V er i zon”) bas ed on V er i zon’ s al l eged unl aw ful i m pos i t i on of a d m in istra tiv e c h a rg e s o n c las s m e m b e rs’ c e ll p h o n e a c c o u n ts. T h e c o m p lain t as se rts 1 br eac h of contr act , unj us tenr i chment , and vi ol at i ons of the N ew J er s eyC ons um erFr aud A c t, N .J . S ta t. A n n . § 5 6 :8 -1 , et s eq . V er i zon moved t o compel arbi tr at i on pur s uantt o an arbi tr at i on cl aus e i n t he r el evantcus t om eragr eement s , w hi ch mandat es i ndi vi dual arbi trat i on of d i sputes . In ot her w ords, the arbi trat i on cl ause proh i bit s cl ass arbitrat i on s. 2 I n r es pons e t o t he mot i on, L i t m an and W acht el count er ed thatthe arbi tr at i on cl aus e i n thei rcus t om eragr eement s w as unenfor ceabl e bec aus e, pur s uantt o Muham m ad v. C ou nty Ba nk o

f R eho bo th B each , D el aw are , arbi tr at i on pr ovi s i ons i n contr act s of ad h esio n that p roh ibitu se o f a class a cti o n m ec h an ism fo r l o w -va lue c lai m s are uncons ci onabl e underN ew J er s eyl aw . 912 A . 2d 88, 100 ( N . J . 2006) ( “W e hol d . . . that the pr es ence of the cl as s - arbi tr at i on w ai veri n [pl ai nt i ff’ s ] cons um erarbi tr at i on agr eement r ender s thatagr eementuncons ci onabl e. ”) . V er i zon agr eed f orpurpos es of the mot i on t hat Muham m ad

a p p lies to th e p a rties ’ d isp u te, b u t ar g u e d th a t Muham m ad i s pr eempt ed by th e F e d e ra l A rb itr a tio n A c t ( “ F A A ” ).A m i ci , A m er i can Fi nanci al Ser vi ces A s s oci at i on, C hamberof C om m er ce of the 3 U ni t ed St at es of A m er i ca, and C ons um erB anker s A s s oci at i on, fi l ed a br i ef i n s uppor tof V e riz o n lik e w ise a ss e rtin g th a t Ho ma di s r egar ded G ay and ther efor e s houl d i t s el f be d is re g a rd e d . 4 T he D i s tr i ctC our t , r el y i ng on ourdeci s i on i n G ay v. C redi t i nform , 511 F. 3d 369 ( 3d C i r . 2007) , agr eed w i th V er i zon and di s m i s s ed the ca s e i n favorof arbi tr at i on. T he Co u r tf o u n d th e i n s t a n tma t t e rt o b e i n d i s t i n g u i s h a b l e f r o m G ay , w hi ch i tunder s t ood as concl udi ng thatthe FA A pr eempt ed Penns y l vani a ca s e l aw s t at i ng thatcl as s - arbi tr at i on w a iv e rs in c o n tra c ts o f

a d h e sio n a re u n c o n sc io n a b le. L itm a n a n d W a c h tel tim e ly a p p e a le d . A ft erthe openi ng and ans w er i ng br i efs w er e s ubm i t t ed t o us , anotherpanel of our C our ti s s ued i t s deci s i on i n Ho ma v. A m er i can Expre s s C o. , 5 5 8 F .3 d 2 2 5 (3 d C ir . 2 0 0 9 ). A s m or e ful l ydes cr i bed her ei n, the Ho ma opi ni on di s t i ngui s hed G ay and hel d thatthe F A A d o e s n o t p re e m p t Muham m ad . I d. at230. I n the w ake of Ho ma , L i t m an and W acht el m oved fors um m aryr ever s al of the D i s tr i ctC our t ’ s or dercompel l i ng arbi tr at i on a n d m o v e d to f

o re g o o ra l ar g u m e n t. V e riz o n o p p o se d b o th m o tio n s, u rg in g u s to di s r egar d Ho ma beca us e i ti r r econc i l abl yconfl i ct s w i th G ay. T her eaf t er , w e gr ant ed 3 V er i zon’ s m ot i on t o s t aythe appe al pendi ng ouren banc deci s i on i n P ul eo v. C has e Bank ,

— F . 3 d — , N o . 0 8 -38 3 7 , 2 0 1 0 W L 1 8 3 8 7 6 2 (3d C ir . M ay1 0 , 2 0 1 0 ) (en b an c).T he D i s tr i ctC our t ’ s j ur i s di ct i on w as bas ed on di ver s i tyof ci t i zens hi p pur s uantt o the 4 C la s s A c tio n F a ir n e s s A c t o f 2 0 0 5 . See 28 U . S. C . § 1332( d) . W e have j ur i s di ct i on over th is a p p e a l p u rsu a n t to 9 U .S .C . § 1 6 (a )(3 ). O u r re v iew o f th e D istric t C o u rt’s d e c isio n to c o m p e l a rb itr a tio n is p le n a ry. Tri ppe M f g. C o. v. Ni l es A udi o C or p. , 401 F. 3d 529, 531 (3d C ir . 2 0 0 5 ) ( ci t i ng B our i ezv. C ar negi e Mel l on U ni v. , 3 5 9 F . 3 d 2 9 2 , 2 9 4 (3d C ir . 2 0 0 4 )). 5 I I . D i s cus s i on 4 Pr el i m i nar i l y , w e not e, as w e di d i n Ho ma , tha t G ay ’ s di s cus s i on of the appl i cat i on o f th e F A A to P e n n s y lv a n ia la w a p p e a rs to b e d ic ta . Ho ma , 558 F. 3d at229. Ho ma w as admi t t edl yambi val enti n i t s tr eatm entof G ay ’s d is c u s s io n o f P e n n s y lv a n ia la w , s ee i d. , 558 F. 3d at230 ( “W hetherdi ct a ornot. . . . ”) , how ever , i n ourr ece nt l yfi l ed P ul eo opi ni on, w e aga i n r efe r r ed t o t hi s as pectof G ay a s d ic ta , P ul eo , 2 0 1 0 W L 1 8 3 8 7 6 2 , a t * 3 , n .2 (“ [ I]t is w o rth n o tin g o u r a g re e m e n t th a t G ay’s di s cus s i on of Penns y l vani a l aw w as i ndeed di ct a, s i nce ourhol di ng i n G ay w as that V i rgi nia l aw go verned the p art i es’ arbi tr at i on agr eement . ”) , w hi ch i tpl ai nl yi s , beca us e G ay hel d thatV i r gi ni a l aw , not P e n n s y lv a n ia la w , g o v e rn e d th e p a rt ie s ’ d is p u te . G ay , 511 F. 3d at390- 92. T hus , the di s cus s i on of Penns y l vani a ca s e l aw i n G ay w as “notes s ent i al t o the dec i s i on” i n that cas e, even i f i tm i ghthave be en “br i efe d, and ar gued bycouns el , and . . . pas s ed on byt he court . ” B L ACK ’ S L AW D I CTI ONARY ( 9th ed. 2009) . A s s uch, thatpor t i on of G ay i s not b in d in g o n s u b s e q u e n t p a n e ls o f th is C o u rt . S e e A m . C ivil L ib e rtie s U n io n o f N .J. ex re l. Landerv. Schundl er , 168 F. 3d 92, 98 n. 6 ( 3d C i r . 1999) ( “[W ] e have r epea t edl yhel d t hat d ic ta a re n o t b in d in g .” ).6

T hus , the pane l addr es s i ng Ho ma w as notbound bythatpor t i on of the G ay deci s i on. M or eover– and her e w e mayw anderi nt o di ct a our s el ves – w e ca nnotconcl ude th a t Ho ma and G ay a re ir re c o n c ila b le . A c c o rd in g to V e ri z o n , G ay r equi r es pr eempt i on of Muham m ad

beca us e Muham m ad

i s i n d i s t i n g u i s h a b l e f

r o m Thi bodeau v. C om cas tC or p. , 91 2 A . 2d 87 4 (Pa. Sup er. C t . 20 06 ), on e of the P enn sy l van i a cases G ay found t o be p re e m p te d . G ay , 5 1 1 F .3 d a t 3 9 5 (“ W e , h o w e v e r, re jec t L y tle and Thi bodeau forw e do n o t ag re e w ith th e m a s th e re is n o e sc a p e f ro m th e f a c t th a t th e yd e a l w ith a g re e m e n ts to a rb itr a te , ra th e r t h a n w ith c o n tr a c ts in g e n e ra l ... .” ). A s V e ri z o n s e e s it, Ho ma ’s concl us i on t o t he contr aryi s ther efor e i n confl i ctw i th G ay . T he di ct a i n G ay i nt erpr et ed P e n n sy lv a n ia c a se law to “ h o ld th a t an a g re e m e n t to a rb itrate m a yb e u n c o n sc io n a b le s i m pl ybeca us e i ti s an agr eementt o arbi tr at e, ” and the pr eempt i on det erm i nat i on that f o llo w e d w a s b a s e d o n th a t c o n s tru c tio n . G ay , 5 1 1 F .3 d a t 3 9 5 . B yc o n tra st, i n Ho ma , we r ead Muham m ad t o appl ygener al pr i nci pl es of contr acti nt erpr et at i on i n i t s i nval i dat i on of th e c la s s -a rb itr a tio n w a iv e r. Ho ma , 5 5 8 F .3 d a t 2 3 0 . Muham m ad di d nots aythat a rb itratio n itse lf

is u n c o n sc io n a b le, b u t in ste a d h e ld th a t “[ a ]s a m a tter o f g e n e ra lly appl i cabl e s t at e contr actl aw , i tw as uncons ci onabl e fordefe ndant s t o depr i ve [pl ai nt i ff] of the mechani s m of a c l as s - w i de ac t i on, w hetheri n arbi tr at i on ori n courtl i t i gat i on. ” Muham m ad , 912 A . 2d at100- 101. Si nce Muham m ad d id n o t evin ce h o sti li tytow ard arbi tr at i on cl aus es , w hi ch w as the conc ern i n G ay , it d id n o t c o n f lic t w ith th e F A A . See Ho ma , 5 5 8 F .3 d a t 2 3 0 ; s ee al s o P ul eo , 2010 W L 1838762, at*3, n. 2 ( “[T] he N ew J er s ey7

cas e l aw ati s s ue i n H

om a di d notevi nce hos t i l i tyt ow ar d arbi tr at i on cl aus es , w hi ch w as the conc ern aboutPenns y l vani a l aw expr es s ed i n G ay .” ). W e al s o expl ai ned i n Ho ma th a t G ay coul d notbe r ead a s a “bl anketpr ohi bi t i on on uncons ci onabi l i tychal l enges t o cl as s - arbi tr at i on pr ovi s i ons ” s i nce the FA A perm i t s the u s e o f g e n e ra lly a p p lic a b le c o n tr a c t d e f e n s e s to a tta c k a rb itr a tio n a g re e m e n ts . Ho ma , 558 F .3 d a t 2 3 0 ; s ee 9 U . S. C . § 2 ( contr actual arbi tr at i on pr ovi s i ons “s hal l be val i d, i rr evoca bl e, and enf

or cea bl e, s ave upon s uch gr ounds as exi s tatl aw ori n equi tyfort he re v o c a tio n o f

a n yc o n tra c t.”). V e riz o n m a yb e c o rre c t th a t Muham m ad bear s m any s i m i l ar i t i es t o Thi bodeau , butanyt ens i on betw een the di ct a i n G ay a n d th e h o ld in g in Ho ma is n o t b e y o n d re s o lu tio n , a s w e h a v e d is c u s s e d . See Int ’l B ros. of Elec. W

orkers, Lo c a l8 0 3 , AFL- CIO v. N. L. R. B. , 826 F. 2d 1283, 1293 n. 17 ( 3d C i r . 1987) ( “[A ] s a pane l o f th is C o u rt , it is o u r d u ty to h a rm o n iz e o u r d e c is io n s w h e re it is p o s s ib le to d o s o . C ons i der at i on of al l eged i ncons i s t enci es betw een publ i s hed opi ni ons and the det erm i nat i on w hethert o overrul e an opi ni on of thi s C our ti s r es erved fori n banc re v ie w .” ). M o re im p o rt a n tly, Ho ma i s pr i orpr ece dentthati s di r ect l yon poi ntand bi ndi ng on u s . See G ar ci a v. A t t ’

y G en. of

U. S. , 553 F. 3d 724, 727 ( 3d C i r . 2009) ( “W e ar e bound by pr ece dent i al opi ni ons of ourC our tunl es s theyhave be en r ever s ed byan en ba nc p ro c e e d in g o r h a v e b e e n a d v e rse lya f f e c ted b ya n o p in io n o f

th e S u p re m e C o u rt.”); s ee als o T hi r d C i r cui tI nt ernal O per at i ng Pr ocedur e 9. 1 ( “[T] he hol di ng of a pa nel i n aW e not e thatthe Supr eme C our t ’ s r ece ntrul i ng i n St ol t - Ni el s on S. A . v. A ni m al

Feeds 5 I nt er nat i onalC or

p. , — S. C t . — , 2010 W L 1655826 ( A pr . 27, 2010) , does notal t erour anal y s i s and conc l us i on. T he St ol t - Ni el s on C our taddr es s ed the s peci fi c ques t i on of “w hetheri m pos i ng cl as s arbi tr at i on on part i es w hos e arbi tr at i on cl aus es ar e ‘ s i l ent ” on thati s s ue i s cons i s t entw i th t he [FA A ] . ” I d. at*4. I tdi d notcons i derthe di s t i ncti s s ues of s t at e l aw pr eempt i on and uncons ci onabi l i ty . I n fac t , the en ba nc C our ti n P ul eo expr es s l yci t ed St ol t - Ni el s on w i thoutthen ques t i oni ng w hetheri tpr ecl uded an u n c o n s c io n a b ility d e te rm in a tio n . See Pul eo , 2010 W L 1838762, at*6 n. 5. 8 p re c e d e n tial o p in io n is b in d in g o n su b se q u e n t p a n e ls.” ). W e a re n o t in a p o sitio n to r eexa m i ne Ho ma , and, s i nce i tcontr ol s her e, w e w i l l vaca t e the D i s tr i ctC our t ’ s or der com pell i ng arbi trat i on and rem and for further proceedings. 5 I I I . C oncl usi on Ho ma c o n c lu d e d th a t th e F A A d o e s n o t p re e m p t Muham m ad a n d , th e re f

o re , Ho ma governs the out come of t hi s cas e. A ccor di ngl y , the D i s tr i ctC our t ’ s or dercompel l i ng a rb itratio n is v a c a ted a n d th e m a tter is re m a n d e d f o r f u rth e r p ro c e e d in g s c o n sis ten t w ith thi s opi ni on.