Appeal from the United States District Court for the Western District of Washington Ricardo S. Martinez, District Judge, Presiding D.C. No. 2:06-cv-00944-RSM
The opinion of the court was delivered by: Graber, Circuit Judge:
Argued and Submitted January 9, 2012-Seattle, Washington
Before: Susan P. Graber, Raymond C. Fisher, and
Johnnie B. Rawlinson, Circuit Judges.
Plaintiffs are current and former customers of Defendants, New Cingular Wireless Services, Inc., and AT&T Mobility, LLC (collectively, "AT&T"). Plaintiffs filed a class action against AT&T, which responded by seeking to enforce an arbitration agreement contained in its contracts with Plaintiffs. The district court refused to enforce the arbitration agreement on state-law unconscionability grounds, relying primarily on the agreement's class-action waiver provision. AT&T appeals. We reverse the district court's substantive unconscionability ruling and remand for further proceedings related to Plaintiffs' procedural unconscionability claims.
FACTUAL AND PROCEDURAL HISTORY
In this putative class action, the named plaintiffs are residents of eight different states: California, Washington, Alabama, Arizona, Florida, Illinois, New Jersey, and Virginia. Plaintiffs initially filed several separate nationwide class actions, which were consolidated. Plaintiffs assert diversity jurisdiction under 28 U.S.C. § 1332(d) and allege unjust enrichment and breach of contract; they also allege violations of the Federal Communications Act and various state consumer-protection statutes.
Well before filing the lawsuits, each Plaintiff had entered into a service agreement, which included an arbitration clause, with AT&T. Plaintiffs acknowledge that a 2006 version of the arbitration provision applies. It requires individualized arbitration of "all disputes and claims," and it prohibits both class actions and class arbitrations. At the district court, the parties agreed that the relevant service agreements contained a choice-of-law clause that selected the law of the state in which an individual plaintiff 's billing address is located.
Citing the arbitration provision, AT&T moved to compel arbitration. Plaintiffs argued that the arbitration provision was unenforceable due to both substantive and procedural unconscionability.
The district court denied AT&T's motion, applying Washington law and finding the class-action waiver substantively unconscionable and therefore unenforceable. Because it concluded that substantive unconscionability alone was a sufficient basis to void a contract under Washington law, the district court did not rule on Plaintiffs' alternative, procedural unconscionability argument. Because the arbitration provision stated that it would be unenforceable in ...