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In re A2p Sms Antitrust Litigation

United States District Court, S.D. New York

March 2, 2015

IN RE A2P SMS ANTITRUST LITIGATION. THIS DOCUMENT RELATES TO: ALL ACTIONS.

ORDER

ALISON J. NATHAN, District Judge.

At its heart, this case is an antitrust action, but the last two plus years of litigation have been limited to threshold disputes. In particular, the question of who decides-the court or the arbitrator-whether an arbitration agreement permits class arbitration. When the parties were last before the Court, the Carrier Defendants[1] and CTIA-The Wireless Association (collectively, the "Moving Defendants") sought a stay pending appeal of the Court's May 29, 2014 Order holding that whether the parties' agreement required class or individual arbitration was a decision for the arbitrator, not the Court, to decide. The Court denied that request. In re A2P SMS Antitrust Litig., No. 1:12-CV-2656, 2014 U.S. Dist. LEXIS 120323, at *4 (S.D.N.Y. Aug. 27, 2014). Now, after the Second Circuit dismissed the Moving Defendants' appeal pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 16(a)(1)(B), for lack of jurisdiction, the Moving Defendants have returned to this Court seeking certification of an interlocutory appeal pursuant to 28 U.S.C. § 1292(b). For the reasons stated herein, the Moving Defendants' request is GRANTED.

I. BACKGROUND

The Court assumes familiarity with its Orders dated September 13, 2013, In re A2P SMS Antitrust Litig., 972 F.Supp.2d 465 (S.D.N.Y. 2013) ("September 2013 Order"); May 29, 2014, In re A2P SMS Antitrust Litig., No. 12 CV 2656 (AJN), 2014 U.S. Dist. LEXIS 74062 (S.D.N.Y. May 29, 2014) ("May 2014 Order"); and August 27, 2014, In re A2P SMS Antitrust Litig., No. 1:12-CV-2656, 2014 U.S. Dist. LEXIS 120323 (S.D.N.Y. Aug. 27, 2014) ("August 2014 Order"). The procedural background described here is intended only to provide context for the present motion.

On April 5, 2012, Plaintiffs Club Texting, Inc., [2] ispeedbuy LLC, and TextPower, Inc. (collectively, "Plaintiffs") commenced a putative class action against the Moving Defendants as well as the following additional defendants: Wireless Media Consulting, Inc. (d/b/a WMC Global); Air2Web, Inc.; Ericsson Inc.; Sybase, Inc.; SoundBite Communications, Inc.; 2ergo Americas, Inc.; Syniverse Technologies, LLC; Vibes Media, LLC; 3Cinteractice, LLC; mBlox, Inc.; and OpenMarket, Inc. (collectively, "Defendants"). Dkt. No. 1. On September 17, 2012, Plaintiffs filed their Second Consolidated Amended Complaint. Dkt. No. 138.

All Defendants then filed motions to compel arbitration or to dismiss Plaintiffs' Complaint. In the September 2013 Order, the Court granted the Moving Defendants', WMC Global's, and Open Market, Inc.'s motions to compel arbitration of Plaintiffs' claims against them, and the Court also compelled Plaintiff Club Texting to arbitrate its dispute with Defendant mBlox, Inc. 972 F.Supp.2d at 472. Although some Defendants moved to compel arbitration on an individual basis, the Court did not specify whether its Order compelled arbitration on an individual or class basis. In light of the facts and circumstances of the case and the remaining non-arbitrable claims against the so-called Aggregator Defendants, [3] the Court concluded that a stay rather than a dismissal was appropriate with respect to the Moving Defendants, WMC Global, and Open Market, Inc. The Court also stayed the remainder of the action, namely the non-arbitrable claims against the Aggregator Defendants (other than mBlox, Inc.). The then-pending motions to dismiss were administratively denied without prejudice to re-filing. Id. at 500.

On January 28, 2014, Plaintiffs filed a demand for class arbitration with the American Arbitration Association ("AAA"). Dkt. No. 237 Ex. 1.C. On February 11, 2014, the Moving Defendants filed a motion in this Court seeking an order "compelling individual arbitration of Plaintiffs' claims" pursuant to §§ 3 and 4 of the FAA, 9 U.S.C. §§ 3, 4. The parties stipulated that the arbitration would be stayed pending resolution of that motion. Dkt. No. 241.

On May 29, 2014, the Court declined to issue an order denying or compelling class arbitration of Plaintiffs' claims. Instead, the Court held that whether the claims could be brought as a class or must be brought on an individual basis is a matter for the arbitrator to resolve, not the Court. May 2014 Order, 2014 U.S. Dist. LEXIS 74062, at *31-32.

In late June 2014, the Moving Defendants filed a notice of appeal of the May 2014 Order. Specifically, the Moving Defendants sought an interlocutory appeal pursuant to § 16(a)(1)(B) of the FAA. On July 2, 2014, the Moving Defendants filed a motion to stay the Court's May 2014 Order pending resolution of their appeal to the Second Circuit. Dkt. No. 270. On August 27, 2014, that motion was denied. August 2014 Order, 2014 U.S. Dist. LEXIS 120323, at *15-16. On November 25, 2014, the Second Circuit dismissed the Moving Defendants' appeal for lack of jurisdiction, concluding that this Court's May 2014 Order "does not constitute an appealable order denying a petition... to order arbitration to proceed' as contemplated under" § 16(a)(1)(B). Dkt. No. 291.[4] The Moving Defendants then filed the present motion seeking certification of an interlocutory appeal pursuant to § 1292(b).

II. DISCUSSION

Section 1292(b) permits a district court to certify an otherwise non-final order for interlocutory appeal if the district court is "of the opinion that such order [1] involves a controlling question of law [2] as to which there is substantial ground for difference of opinion and [3] that an immediate appeal from the order may materially advance the ultimate termination of the litigation." Application of these three requirements is guided by the Second Circuit's admonition that "only exceptional circumstances [will] justify a departure from the basic policy of postponing appellate review until after the entry of a final judgment.'" Klinghoffer v. S. N.C. Achille Lauro Ed Altri-Gestione Motonave Achille Lauro In Amministrazione Straordinaria, 921 F.2d 21, 25 (2d Cir. 1990) (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978)). The three § 1292 requirements are sufficiently satisfied here. Moreover, the weighty question posed on appeal and its effect on the conduct of this litigation present the exceptional circumstances necessary to certify an interlocutory appeal.

A. Substantial Ground for Difference of Opinion

The Court begins its analysis with the second requirement of§ 1292(b), which is not in dispute. This prong "is met when (1) there is conflicting authority on the issue, or (2) the issue is particularly difficult and of first impression for the Second Circuit.'" Capitol Records, LLC v. Vimeo, LLC, 972 F.Supp.2d 537, 551 (S.D.N.Y. 2013) (quoting In re Enron Corp., No. 06 Civ. 7828(SAS), 2007 U.S. Dist. LEXIS 70731, at *6 (S.D.N.Y. Sept. 24, 2007)). Furthermore, "the district court must analyze the strength of the arguments in opposition to the challenged ruling when deciding whether the issue for appeal is truly one on which there is substantial ground for dispute.'" Id. (quoting In re Flor, 79 F.3d 281, 284 (2d Cir. 1996)). Although Plaintiffs oppose the Moving Defendants' motion for certification of an interlocutory appeal, they concede that this second requirement of § 1292(b) is easily satisfied here. Opp'n Br. at 5 n.4.

The Court has already twice observed that the issue of who makes the initial determination regarding class arbitration is particularly difficult precisely "because there is no controlling Supreme Court or Second Circuit precedent on point and the only available guiding precedent does not cut decisively in either direction." August 2014 Order, 2014 U.S. Dist. LEXIS 120323, at *9. Moreover, "since [the Court's May 2014 Order] was handed down, the Third Circuit joined the Sixth Circuit in reaching a conclusion contrary to this Court's by holding that whether an agreement provides for classwide arbitration is a "question of arbitrability" to be decided by the District Court.'" Id. (quoting Opalinski v. Robert Half Int'l, Inc., 761 F.3d 326, 332 (3d Cir. 2014)); see also Reed Elsevier, Inc. v. Crockett, 734 F.3d 594, 599 (6th Cir. 2013). As discussed at length in the Court's May 2014 Order, parties on either side of the issue may draw support from competing opinions of the Supreme Court and lower court precedent across the country. 2014 U.S. Dist. LEXIS 74062, at *16-31. The Court remains convinced that ...


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