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Emilio v. Sprint Spectrum L.P.

United States District Court, S.D. New York

December 23, 2014

VINCENT EMILIO, individually and on behalf of all others similarly situated, Plaintiff,

For Vincent Emilio, Individually and on behalf of all others similarly situated, Petitioner: William Robert Weinstein, LEAD ATTORNEY, Law Offices of William R. Weisnstein, White Plains, NY.

For Sprint Spectrum L.P., doing business as Sprint PCS, Respondent: Joseph Andrew Boyle, LEAD ATTORNEY, Seunghwan Kim, Vincent P. Rao , Kelley Drye & Warren, LLP (NY), New York, NY; Lauri A Mazzuchetti, PRO HAC VICE, Kelley Drye & Warren LLP (NJ), Parsippany, NJ.

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J. PAUL OETKEN, United States District Judge.

Plaintiff Vincent Emilio (" Emilio" ) initially filed this action as a petition pursuant

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to the Federal Arbitration Act (" FAA" ), 9 U.S.C. § 1 et seq., to confirm a Partial Arbitration Award. The arbitrator's award terminated arbitration proceedings and authorized Emilio to pursue his claims as a putative class action in court against Defendant Sprint Spectrum L.P., d/b/a Sprint PCS (" Sprint" ). In February 2014, this Court granted Emilio's motion to confirm the award, and Emilio filed a Class Action Complaint (the " complaint" ). Sprint now moves to dismiss the complaint or to strike its class allegations. For the reasons that follow, Sprint's motion is denied.

I. Background[1]

A. The Parties

Emilio is a New York resident and was a customer of Sprint wireless telephone service during the relevant time period. (Dkt. No. 48 (" Compl." ) ¶ 7.) Sprint is a Delaware limited partnership with its principal offices located in Kansas. Sprint is wholly owned by Sprint Corporation, a Delaware corporation with its principal executive offices located in Kansas. ( Id. ¶ 8.)

B. Arbitration and Judicial Proceedings

The customer agreement between Emilio and Sprint contains an Arbitration Agreement, which provides for mandatory arbitration of disputes and states that class-wide resolution of claims is precluded. ( See Dkt. No. 1 (" Petition" ) Ex. A at 7-8). Under the terms of the agreement, " [t]he arbitrator's decision and award is final and binding, and judgment on the award may be entered in any court with jurisdiction." ( Id. at 8.) The agreement also provides that the agreement is " governed by and must be construed under federal law and the laws of the State of Kansas, without regard to choice of law principles." ( Id.)

On January 4, 2005, Emilio filed a Demand for Class Arbitration, asserting that Sprint's practice of charging customers a monthly fee to satisfy the New York State Excise Tax violated New York Tax Law § 186-e and New York General Business Law § 349 and constituted unjust enrichment. He argued that the tax was imposed solely upon Sprint and could not be passed on to customers, and estimated a class of more than two million New York Sprint customers.

In March 2005, Kathleen A. Roberts was appointed as the arbitrator in the JAMS forum. In February 2006, the parties submitted briefing regarding the enforceability of the Arbitration Agreement's class action waiver. Emilio subsequently filed a First Amended Demand for Class Arbitration, adding a claim under Kansas's Unfair Trade and Consumer Protection Act (" KCPA" ), Kan. Stat. Ann. § 50-623 et seq. (Dkt. No. 7, Ex. 1 (" Amended Demand" ).) The KCPA prohibits a supplier from engaging in any deceptive act or practice in connection with a " consumer transaction," Kan. Stat. Ann. § 50-626(a), which is defined as " a sale, lease, assignment or other disposition for value of property or services within this state . . . to a consumer," id. § 50-624(c). The statute sets forth private remedies available to consumers, including class actions, and provides that " a consumer may not waive or agree to forego rights or benefits under this act." Id. § § 50-634(d); 50-625.

On October 25, 2006, Arbitrator Roberts issued a decision holding that the class action waiver was unenforceable in light of the KCPA's anti-waiver provision. (Petition, Ex. B (" Oct. 2006 decision" ).) She

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determined that she had jurisdiction to resolve this issue because it was a " controversy or dispute" " arising out of or related to" the Arbitration Agreement, and because the agreement incorporated JAMS rules, which provided:

[J]urisdictional and arbitrability disputes, including disputes over the existence, validity, interpretation or scope of the agreement under which Arbitration is sought . . . shall be submitted to and ruled on by the Arbitrator. The Arbitrator has the authority to determine jurisdiction and arbitrability as a preliminary matter.

( Id. at 6 n.1 (quoting JAMS Comprehensive Rule 11(c); JAMS Streamlined Rule 8(c) (ellipsis in original).) The arbitrator rejected Sprint's argument that the KCPA did not apply to the dispute because the services provided to Emilio were not provided " within this state," reasoning that:

Sprint's operations are headquartered in Kansas, from which it unquestionably provides services to its customers throughout the United States. Moreover, it would be manifestly unfair for Sprint to require its customers to agree to the application of Kansas law, and at the same time deny application of its consumer protection statute. Having chosen to impose Kansas law upon its customers, Sprint cannot be permitted to make ...

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