Court Opinion

ID: 618650
Source: CourtListenerOpinion
Date Created: 2011-12-09 20:02:17+00
Date Added: 2024-06-11T17:50:45.601778
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                               No. 09-2174

AMERIX CORPORATION; 3C INCORPORATED; CAREONE SERVICES,
INCORPORATED, f/k/a Freedompoint Corporation; FREEDOMPOINT
FINANCIAL CORPORATION; ASCEND ONE CORPORATION; BERNALDO
DANCEL,

                 Plaintiffs – Appellants,

           and

GENUS CREDIT MANAGEMENT CORPORATION, now known as National
Credit    Counseling   Services,    Incorporated; INCHARGE
INSTITUTE OF AMERICA, INCORPORATED,

                 Plaintiffs,

           v.

LAVERNE JONES; STACEY NESS; KERRY NESS,

                 Defendants – Appellees.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.     J. Frederick Motz, District Judge.
(1:09-cv-01498-JFM)

Argued:   September 22, 2011             Decided:   December 9, 2011

Before TRAXLER, Chief Judge,          KEENAN,   Circuit   Judge,   and
HAMILTON, Senior Circuit Judge.

Affirmed by unpublished per curiam opinion.
ARGUED: Lawrence S. Greenwald, GORDON, FEINBLATT, ROTHMAN,
HOFFBERGER & HOLLANDER, Baltimore, Maryland, for Appellants.
Joseph Seth Tusa, TUSA, PC, Lake Success, New York, for
Appellees.   ON BRIEF: Catherine A. Bledsoe, Brian L. Moffet,
GORDON, FEINBLATT, ROTHMAN, HOFFBERGER & HOLLANDER, Baltimore,
Maryland, for Appellants Amerix Corporation, 3C Incorporated,
CareOne    Services,    Incorporated,   FreedomPoint    Financial
Corporation, Ascend One Corporation, and Bernaldo Dancel; Dwight
W. Stone, II, Dennis M. Robinson, Jr., WHITEFORD TAYLOR AND
PRESTON, LLP, Baltimore, Maryland, for Appellants Genus Credit
Management Corporation and InCharge Institute of America,
Incorporated. G. Oliver Koppell, John F. Duane, Daniel Schreck,
G. OLIVER KOPPELL & ASSOCIATES, New York, New York; Paul C.
Whalen, WHALEN & TUSA, PC, New York, New York; Jack Sando, LAW
OFFICE OF JACK C. SANDO, Bethesda, Maryland, for Appellees.

Unpublished opinions are not binding precedent in this circuit.

                              - 2 -
PER CURIAM:

     This    is   an   appeal   under       the       Federal    Arbitration         Act,      9

U.S.C. §§ 1–16, from the district court’s order confirming an

arbitration award in which the arbitrator certified, inter alia,

a nationwide class arbitration of claims alleging unfair and

deceptive     acts     and   practices          in    violation        of    the    Maryland

Consumer    Protection        Act,        Md.        Code     Ann.,     Commercial            Law

§§ 13-301, 408 (West 2011).           For reasons that follow, we affirm.

                                           I.

     We begin by setting forth the facts and procedural history

relevant to the issues on appeal.                     Laverne Jones, Stacey Ness,

and Kerry Ness each enrolled in a debt management program with

Genus   Credit     Management      Corporation              (Genus),    pursuant         to    a

document    styled     “EasyPay      Client          Agreement[],”          which   in    turn

incorporated      by   reference      a    document          styled     “Terms      of    Debt

Management-EasyPay.”         Jones v. Genus Credit Mgmt. Corp. (Genus

I), 353 F. Supp. 2d 598, 600 (D. Md. Jan. 31, 2005) (internal

quotation marks omitted).            We will refer to this latter document

as “the EasyPay Contract” and to the two documents together as

“the Debt Management Plan.”               Genus drafted the Debt Management

Plan.

     The    EasyPay     Contract     contained          the    following       arbitration

clause (the Arbitration Clause):

                                          - 3 -
      Any dispute between us that cannot be amicably
      resolved, and all claims or controversies arising out
      of this Agreement, shall be settled solely and
      exclusively by binding arbitration in the City of
      Columbia, Maryland, administered by, and under the
      Commercial Arbitration Rules then prevailing of, the
      American Arbitration Association (it being expressly
      acknowledged that you will not participate in any
      class action lawsuit in connection with any such
      dispute,   claim,   or   controversy,  either   as   a
      representative plaintiff or as a member of a putative
      class), and judgment upon the award rendered by the
      arbitrator(s) may be entered and enforced in any court
      of competent jurisdiction.

(J.A. 69).            The EasyPay Contract also contained the following

choice-of-law provision (the Choice-of-Law Provision):

      The forms and schedules in this packet contain the
      complete agreement between you and [Genus] regarding
      the   [Debt   Management  Program].     All  questions
      concerning   the   construction,  validity,  and   the
      interpretation of this Agreement will be governed by
      the laws of the State of Maryland without reference to
      any conflict of laws rules.

Id.

      Of relevance on appeal, Laverne Jones, Stacey Ness, and

Kerry     Ness    (collectively          the   Underlying     Plaintiffs)      jointly

filed a class action complaint in the United States District

Court     for    the     District       of   Maryland   against   Genus;      InCharge

Institute        of    America,     Incorporated;        Amerix   Corporation;        3C

Incorporated;           CareOne     Services,        Incorporated 1;    Freedompoint

Financial       Corporation;        Ascend     One    Corporation;     and    Bernaldo

Dancel     (collectively          the    Underlying     Defendants).         The   First
      1
          Formerly known as Freedompoint Corporation.

                                             - 4 -
Amended Complaint alleged various causes of action under federal

and    state        law,    including      violation        of     the       Credit      Repair

Organizations Act, 15 U.S.C. §§ 1679 to 1679j, and unfair and

deceptive       acts       and    practices     in    violation         of      the    Maryland

Consumer Protection Act, Md. Code Ann., Commercial Law §§ 13-

301, 408 (West 2011). 2

       The     Underlying          Defendants      moved     to    dismiss        the     First

Amended      Complaint       on     the   ground     that    the    Arbitration          Clause

required the Underlying Plaintiffs to arbitrate all of their

claims alleged in such complaint.                    Alternatively, the Underlying

Defendants contended that if the district court permitted the

action to proceed at all, the class action allegations should be

stricken because the Arbitration Clause also contained a waiver

by    the    Underlying          Plaintiffs     of   their    respective              rights   to

participate in any class action lawsuit.                            The district court

agreed       with    the     Underlying       Defendants      that        the    Arbitration

Clause      required       the     Underlying    Plaintiffs        to     arbitrate       their

claims alleged in the First Amended Complaint.                            Genus I, 353 F.

Supp. 2d at 603.                 The district court alternatively held that,

assuming arguendo the Underlying Plaintiffs are not required to

submit       their     claims        to    arbitration,           their      class       action

       2
        None of the Underlying Plaintiffs were residents                                       of
Maryland during the time relevant to their allegations                                         of
wrongdoing on the part of the Underlying Defendants.

                                            - 5 -
allegations          must        be        stricken        in    light        of      the

class-action-lawsuit waiver contained in the Arbitration Clause.

Id.     In    a    separate      order,       the    district   court      granted    the

Underlying Defendants’ motion to dismiss, dismissed the entire

action, and “directed” the Underlying Plaintiffs “to arbitrate

their   claims      against      [the      Underlying]     [D]efendants,       (if    they

choose to pursue them).”                   Id.      Notably, the district court’s

opinion      in    Genus    I   did     not      address   whether   the     Underlying

Plaintiffs could proceed with class-wide claims in arbitration,

and the district court later wrote counsel for all parties to

clarify its intention that the arbitrator should decide whether

arbitration        should       be    of      class-wide    claims      or    only    the

individual claims asserted by the Underlying Plaintiffs.                             Genus

Credit Mgmt. Corp. v. Jones (Genus II), 2006 WL 905936 at *1 (D.

Md. April 6, 2006).

      In February 2005, the Underlying Plaintiffs commenced an

arbitration action against the Underlying Defendants before the

American      Arbitration            Association       (AAA),    asserting      various

federal      and   state    law       claims.       Pursuant    to   AAA     rules,   the

parties jointly chose Donald H. Green as the sole arbitrator

(the Arbitrator).           Thereafter, the Arbitrator issued a decision

entitled the “Partial Final Clause Construction Award,” in which

the Arbitrator determined that, in the abstract, the arbitration

between the Underlying Plaintiffs and the Underlying Defendants

                                            - 6 -
could proceed as a class arbitration.                  Id.     Dissatisfied with

this decision, on November 7, 2005, the Underlying Defendants

brought an action in the district court, seeking to have the

Partial Final Clause Construction Award vacated.                     The Underlying

Plaintiffs     moved     to    dismiss     the   action.            The    Underlying

Defendants opposed the motion and moved for summary judgment.

The district court granted the Underlying Plaintiffs’ motion and

dismissed the action.          Id. at *3.      The Underlying Defendants did

not appeal this dismissal.

     After the parties engaged in discovery in the arbitration

proceeding,      the     Underlying        Plaintiffs        moved        for      class

certification     of    all     claims     asserted    in      their      arbitration

complaint.      On May 7, 2009, the Arbitrator issued a decision

entitled     “Class    Determination       Award,”    in    which    he    determined

that several of the claims, including claims under the Credit

Repair Organizations Act and the Maryland Consumer Protection

Act, could proceed in arbitration as nationwide class claims.

The Arbitrator also named the Underlying Plaintiffs as class

representatives.

     Dissatisfied       with     the     Class   Determination            Award,     the

Underlying     Defendants      filed   a   second     action    in     the      district

court; this time seeking to vacate the Class Determination Award

in   part.     Specifically,      they      sought     to    vacate       the      Class

Determination Award to the extent the Arbitrator:                            (1) ruled

                                       - 7 -
that   the    Choice-of-Law     Provision          required     the    application     of

Maryland substantive law to the state law tort claims alleged by

the Underlying Plaintiffs; and (2) certified a nationwide class

of plaintiffs with respect to their alleged violations of the

Maryland Consumer Protection Act.

       The   Underlying      Plaintiffs      moved     for    confirmation       of   the

Class Determination Award.             By order dated September 8, 2009,

the district court denied the Underlying Defendants’ request for

partial vacatur of the Class Determination Award, granted the

Underlying      Plaintiffs’    motion     for      confirmation,        and    confirmed

the Class Determination Award.               The Underlying Defendants noted

a timely appeal of such order, resulting in the appeal presently

before    us.      Following    our    hearing       of   oral    argument       in   the

present      appeal     on   September       22,    2011,     Genus     and     InCharge

Institute     of   America,    Incorporated          on   the    one    hand    and   the

Underlying Plaintiffs on the other hand jointly moved to dismiss

the present appeal as between themselves.                        See Fed. R. App.

Proc. 42(b) (providing for voluntary dismissal by agreement of

the    parties).        We   granted     their      motion.       Accordingly,        the

remaining       appellants      in     the     present        appeal      are     Amerix

Corporation,       3C   Incorporated,        CareOne      Services      Incorporated,

Freedompoint Financial Corporation, Ascend One Corporation, and

Bernaldo Dancel (the Remaining Underlying Defendants).

                                       - 8 -
                                             II.

       On appeal, the Remaining Underlying Defendants ask us to

vacate the portion of the Class Determination Award in which the

Arbitrator        certified      a    nationwide       class         of     consumers          with

respect      to   the   claims        asserted      under    the          Maryland      Consumer

Protection        Act   on     the    ground      that,     in       so    certifying,         the

Arbitrator        exceeded      his    powers.        See        9    U.S.C.       §    10(a)(4)

(arbitration         award     may     be    vacated        “where         the    arbitrators

exceeded their powers”).                The Remaining Underlying Defendants

attribute the Arbitrator’s alleged exceeding of his powers to

the following two conclusions reached by the Arbitrator:                                       (1)

that    Maryland        substantive         law     applies          to     the    Underlying

Plaintiffs’ state law tort claims; and (2) that the Maryland

Consumer Protection Act applies to the Underlying Plaintiffs.

According      to     the    Remaining       Underlying      Defendants,               these   two

conclusions are erroneous.

       We     begin     our     consideration         of     these          contentions         by

reiterating our extremely narrow scope of review in these types

of appeals.         “[J]udicial review of arbitration awards is . . .

among the narrowest known to the law.”                            United States Postal

Serv. v. Am. Postal Workers Union, 204 F.3d 523, 527 (4th Cir.

2000)       (internal       quotation       marks    omitted).              Vacatur       of    an

arbitration         award     must,    therefore,      be     a      “rare        occurrence.”

Raymond James Fin. Servs., Inc. v. Bishop, 596 F.3d 183, 184

                                            - 9 -
(4th Cir.), cert. denied, 131 S. Ct. 224 (2010).                    In reviewing

the Class Determination Award under § 10(a)(4), we are limited

to determining whether the Arbitrator did the job he was told to

do, i.e., whether he acted within the scope of his powers; not

whether he did it well, correctly, or reasonably, but simply

whether he did it.        Central West Virginia Energy, Inc. v. Bayer

Cropscience LP, 645 F.3d 267, 272 (4th Cir. 2011); Raymond James

Fin. Servs., Inc., 596 F.3d at 190.                See also AT&T Mobility LLC

v. Concepcion, 131 S. Ct. 1740, 1752 (2011) (“review under § 10

[of the Federal Arbitration Act] focuses on misconduct rather

than mistake”).

     Our    consideration       of    the   parties’   arguments     and   careful

review of the record on appeal convince us that the Arbitrator

did not exceed his powers in certifying a nationwide class of

consumers with respect to the claims under the Maryland Consumer

Protection Act as alleged in the arbitration complaint.                         There

is no dispute that the Arbitrator was charged with the duty of

determining      which    state’s       substantive     law     applies    to    the

Underlying Plaintiffs’ state law claims.                     In discharging this

duty,    the    Arbitrator      construed     the    first     sentence    of    the

Arbitration      Clause    in        conjunction     with     the   Choice-of-Law

Provision.       The first sentence of the Arbitration Clause, as

quoted     in   the   Class     Determination       Award,    provides:         “‘Any

dispute between us that cannot be amicably resolved, and all

                                        - 10 -
claims or controversies arising out of this Agreement, shall be

settled solely and exclusively by binding arbitration in the

City of Columbia, Maryland.’”              (J.A. 33).      The Choice-of-Law

Provision, as quoted in the Class Determination Award, states:

“‘All questions concerning the construction, validity, and the

interpretation of this Agreement will be governed by the laws of

the State of Maryland without reference to any conflict of laws

rules.’”   Id.

      According     to   the   Remaining      Underlying      Defendants,   the

Choice-of-Law Provision limited the application of Maryland law

to   matters   of   contract    construction       only.      Particular    tort

claims,    they     contend,   are    to      be   governed    by   Maryland’s

choice-of-law jurisprudence, which follows the rule of lex loci

delecti as the ordering principle in tort cases.               See Kortobi v.

Kass, 957 A.2d 1128, 1139 (Md. Ct. Spec. App. 2008) (Maryland

adheres to lex loci delecti (the law of the place of injury) as

the ordering principle in tort cases).

      The crux of the Arbitrator’s analysis of this issue, as set

forth in the Class Determination Award, is as follows:

      [The Underlying Plaintiffs] contend these provisions
      mandate the application of Maryland law to all state
      law aspects of this arbitration.    [The Arbitration
      Clause] is, in the parlance, a “broad” arbitration
      clause.

           As noted, [the Underlying Defendants] assert [the
      Choice-of-Law Provision] applies only to construction
      of the [Debt Management Plan].     They further argue

                                     - 11 -
     that [the Arbitration Clause] merely establishes a
     situs and not the applicable law.     It follows, they
     say, the class should not be certified if it is
     necessary to resort to the laws of 50 states to
     resolve the individual claims of the putative class
     members.    [The Underlying Plaintiffs] disagree and
     also note that, even if that were so, case law
     demonstrates that such resort need not toll the death
     knell to their class aspirations.    Both the [Choice-
     of-Law Provision] per se, and the introductory words
     of [the Arbitration Clause] compel this Arbitrator to
     accept [the Underlying Plaintiffs’] argument.

                                 *     *        *

          Finally, reading [the Arbitration Clause] and
     [the   Choice-of-Law  Provision]   together,   as   is
     appropriate in contract construction, and employing
     the doctrine of contra proferent[e]m, they support the
     interpretation that Maryland law was intended to
     apply.

(J.A. 34). 3

     Based upon this excerpt from the Class Determination Award,

we are confident the Arbitrator did exactly the job the parties

asked him to do——construe and apply the Debt Management Plan in

determining    the    law   applicable     to       the   Underlying   Plaintiffs’

state    law   tort   claims.        Accordingly,          we   have   no   trouble

concluding that the Arbitrator acted within the scope of his

arbitral authority in construing the EasyPay Contract to provide

     3
       The doctrine of contra proferentem provides that ambiguous
contractual provisions must be construed against the interests
of the drafter.    Maersk Line, Ltd. v. United States, 513 F.3d
418, 423 (4th Cir. 2008) (“The basic contract law principle
contra proferentem counsels that we construe any ambiguities in
the contract against its draftsman.”).

                                     - 12 -
that    Maryland    substantive    law      applies   to    the   Underlying

Plaintiffs’ state law tort claims.

       There is also no dispute that the Arbitrator was charged

with determining the elements for class certification of the

claims under the Maryland Consumer Protection Act.                Before the

Arbitrator, the Underlying Defendants argued that, because none

of the Underlying Plaintiffs were residents of Maryland, they

“cannot be certified as a class under the [Maryland Consumer

Protection Act] because that Act only prohibits communications

to   Maryland   residents   of    false   or   misleading    statements   or

inducements.”      (J.A. 51) (internal quotation marks and emphasis

omitted).

       The crux of the Arbitrator’s analysis on this issue, as set

forth in the Class Determination Award, is as follows:

            The answer lies in our prior ruling that Maryland
       law applies to the state law claims.       As we have
       already noted the [Arbitration Clause] and [the
       Choice-of-Law Provision] fairly read require the
       application of Maryland law to non-federal disputes
       here. Thus the parties to the contract agreed to have
       Maryland substantive rules of liability apply to their
       disputes without reference to whether the particular
       customer was or was not a Maryland resident.    If the
       effect of this agreement were to eliminate all
       Maryland remedies defined to entitle only Maryland
       residents to a remedy, this would be a perverse result
       depriving the customer of the benefit of any consumer
       protection law in Maryland so framed, as well as any
       other state law remedy. This is contrary to the maxim
       pacta sunt servanda, namely that agreements are
       presumed to lead to enforceable obligations, not
       nullities.

                                   - 13 -
Id.    Based upon this excerpt from the Class Determination Award,

we are again confident that the Arbitrator did exactly the job

the parties requested him to do——interpret and enforce the Debt

Management Plan in order to determine the elements for class

certification          of   the        claims    asserted      by     the   Underlying

Plaintiffs        under     the        Maryland       Consumer       Protection       Act.

Accordingly, we have no trouble concluding that the Arbitrator

acted within the scope of his arbitral authority in interpreting

the    EasyPay     Contract       to    provide       that   the    Maryland     Consumer

Protection Act applies to the Underlying Plaintiffs.

       To summarize, in concluding that Maryland substantive law

applies to the Underlying Plaintiffs’ state law tort claims and

that    the      Maryland    Consumer          Protection     Act    applies     to   the

Underlying       Plaintiffs,       the     Arbitrator        was    construing    and/or

applying the EasyPay Contract and acting within the scope of his

authority.         A    fortiori,       the     Arbitrator     did    not   exceed     his

authority in certifying a nationwide class of consumers with

respect to the claims under the Maryland Consumer Protection

Act.

                                           III.

       As   an    alternative          basis    for    obtaining     vacatur     of   that

portion of the Class Determination Award certifying a nationwide

class of consumers with respect to claims under the Maryland

                                          - 14 -
Consumer         Protection      Act,     the    Remaining    Underlying      Defendants

contend the Arbitrator acted in manifest disregard of the law.

Specifically,           the    Remaining     Underlying      Defendants    contend      the

Arbitrator acted in manifest disregard of the law by ruling that

the Maryland Consumer Protection Act applies to their disputes

with       the    Underlying         Plaintiffs     and    potential    class    members

without regard to whether any such person was a resident of

Maryland         at   the     time   of    the   alleged    tortious    conduct. 4       In

support of this contention, the Remaining Underlying Defendants

rely upon Consumer Protection Div. v. Outdoor World Corp., 603

A.2d 1376, 1382 (Md. Ct. Spec. App. 1992), for the proposition

that the Maryland Consumer Protection Act prohibits false or

misleading statements or inducements from being sent to Maryland

residents         within      Maryland’s        borders,   but   does   not     apply   to

protect non-Maryland residents under the same circumstances.

       We begin our consideration of this issue by noting that

manifest disregard of the law is not an enumerated ground for

vacating an arbitration award under the Federal Arbitration Act.

9 U.S.C. § 10(a); MCI Constructors, LLC v. City of Greensboro,

610    F.3d      849,    857    (4th      Cir.   2010).      However,   prior     to    the

Supreme Court’s opinion in Hall Street Assocs., LLC v. Mattel,

       4
       As we previously stated, none of the Underlying Plaintiffs
resided in Maryland during the time relevant to their claims
under the Maryland Consumer Protection Act.

                                            - 15 -
Inc., 552 U.S. 576 (2008), many courts, including the Fourth

Circuit, recognized an arbitrator’s manifest disregard of the

law as a viable common law ground for vacating an arbitration

award.     See, e.g., Remmey v. PaineWebber, Inc., 32 F.3d 143, 149

(4th Cir. 1994).           Since Hall Street Assocs. issued, some courts

have     expressed      skepticism     about    the    continued        validity     of

manifest disregard of the law as a valid basis for vacating an

arbitration award.          See, e.g., T.Co Metals, LLC v. Dempsey Pipe

& Supply, Inc., 592 F.3d 329, 338–40 (2d Cir. 2010).

       Because     we     conclude   the   Remaining       Underlying        Defendants

have not established that the Arbitrator manifestly disregarded

the law as they allege, we need not decide whether a court may

still     vacate     an     arbitration    award      if     it    flows     from   the

Arbitrator’s manifest disregard of the law.                        Specifically, the

Remaining    Underlying         Defendants     fail   to     establish       that   the

Arbitrator, in making his Class Determination Award, was “aware

of the law, understood it correctly, found it applicable to the

case before [him], and yet chose to ignore it in propounding

[his]     decision        . . .”;    all   requirements           of   the     manifest

disregard of the law ground for vacatur.                      Remmey, 32 F.3d at

149.     Rather, the record makes clear that the Arbitrator found

the Maryland residency requirement recognized in Outdoor World

Corp. inapplicable to the claims of the Underlying Plaintiffs

and     potential       class    members     under     the        Maryland    Consumer

                                       - 16 -
Protection    Act    based    upon   language     in    the   EasyPay   Contract.

See, e.g., (J.A. 51) (“[T]he parties to the contract agreed to

have   Maryland     substantive      rules   of   liability     apply   to   their

disputes without reference to whether the particular customer

was or was not a Maryland resident.”).                 Under this circumstance,

we cannot say that the Arbitrator manifestly disregarded the law

with   respect    to   his   certification        of   a   nationwide   class   of

consumers    under     the   Maryland   Consumer       Protection   Act    without

regard to whether such consumers are residents of Maryland.

       In conclusion, we affirm the district court’s confirmation

of the Class Certification Award.

                                                                          AFFIRMED

                                      - 17 -