Cappuccitti v. DirecTV, Inc.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 09-14107 ELEVENTH CIRCUIT
OCT 15, 2010
________________________
JOHN LEY
CLERK
D. C. Docket No. 09-00627-CV-CAP-1

RENATO CAPPUCCITTI,
on behalf of himself and all
others similarly situated,

Plaintiff-Appellee,

versus

DIRECTV, INC.,
a California Corporation,

Defendant-Appellant.

________________________

Appeal from the United States District Court
for the Northern District of Georgia
_________________________

(October 15, 2010)
ON PETITION FOR REHEARING

Before TJOFLAT, WILSON and EBEL,* Circuit Judges.

*
Honorable David M. Ebel, United States Circuit Judge for the Tenth Circuit, sitting by
designation.
PER CURIAM:

On July 19, 2010, we issued an opinion in this case. Cappuccitti v.

DirecTV, Inc., No. 09-14107, slip op. (11th Cir. July 19, 2010). We based our

decision on our interpretation of the jurisdictional requirements of the Class

Action Fairness Act of 2005 (“CAFA”), Pub. L. No. 109-2, 119 Stat. 4 (codified in

scattered sections of 28 U.S.C.), which we have elsewhere called a “statutory

labyrinth.” Lowery v. Ala. Power Co., 483 F.3d 1184, 1199 (11th Cir. 2007).

Subsequent reflection has led us to conclude that our interpretation was incorrect.

Specifically, CAFA’s text does not require at least one plaintiff in a class action to

meet the amount in controversy requirement of 28 U.S.C. § 1332(a). Accordingly,

we construe both parties’ petitions for rehearing en banc to include petitions for

panel rehearing,1 vacate our earlier opinion, and replace it with this one.

I.

DirecTV, Inc. (“DirecTV”), a California corporation, is the largest direct-to-

home satellite television provider in the United States, beaming a wide variety of

programs to millions of subscribers throughout the country. In June 2004, Renato

Cappuccitti, a Georgia resident, entered into an agreement (the “Customer

1
11th Cir. R. 35-5 (“A petition for rehearing en banc will also be treated as a petition for
rehearing before the original panel.”).

2
Agreement”) to receive DirecTV’s service and thereby became a DirecTV

subscriber.2 In March 2008, Cappuccitti cancelled his subscription. In response,

in April 2008, DirecTV charged him a $420 “early cancellation fee” in accordance

with the terms of the Customer Agreement.

On March 6, 2009, Cappuccitti, on behalf of himself and a putative class of

DirecTV subscribers in Georgia, brought this action against DirecTV in the United

States District Court for the Northern District of Georgia. Although Cappuccitti

had not paid the cancellation fee, his complaint sought recovery of the fee in

Count I, a claim for “Money Had and Received,” and in Count II, a claim for

“Unjust Enrichment.” In Count III, Cappuccitti sought a declaratory judgment

invalidating the cancellation fee on the ground that it is unlawful and therefore

unenforceable under Georgia law.3 On May 11, 2009, DirecTV filed a motion to

compel arbitration under the arbitration clause of the Customer Agreement or,

alternatively, to dismiss Counts I and II, under Rule 12(b)(6) of the Federal Rules

2
The Customer Agreement was modified a number of times—in accordance with its
terms—between its formation and Cappuccitti’s cancellation of DirecTV’s service. Like the
district court, we analyze the provisions of the Customer Agreement in effect at the time
Cappuccitti cancelled the service.
3
Georgia law provides the rule of decision in this case since the Customer Agreement
was entered into in Georgia and performed there. As we indicate in part II.B., infra, nowhere in
the three counts of his complaint does Cappuccitti identify the specific Georgia law—whether
statutory or case law—that purportedly renders the early cancellation fee unlawful.

3
of Civil Procedure, on the ground that Cappuccitti had not paid the cancellation

fee.4 On July 17, 2009, the district court issued an order denying the motion to

compel arbitration and granting the motion to dismiss Counts I and II. Count III

remained undisturbed. DirecTV now appeals the part of the order denying

arbitration. We have jurisdiction under 9 U.S.C. § 16(a)(1)(B).

II.

In subpart A., we address the question of whether CAFA afforded the

district court subject matter jurisdiction to entertain this class action. Concluding

that the court did possess jurisdiction, we address, in subpart B., the question of

whether the district court erred in denying DirecTV’s motion to compel

arbitration.

A.

Under 28 U.S.C. § 1332(d)(2)(A):

The district courts shall have original jurisdiction of any civil action
in which the matter in controversy exceeds the sum or value of

4
On June 29, 2009, with leave of court, Cappuccitti filed a First Amended Class Action
Complaint to add David Ward as a named plaintiff (along with Cappuccitti). Ward had become a
DirecTV subscriber in August 2008. In May 2009, he refused to enter into a new customer
agreement and cancelled his subscription. DirecTV charged him a $300 early cancellation fee.
Ward is not a party in this appeal. In denying arbitration, the district court did not consider the
amended complaint (which, with the exception of references to Ward, is substantively identical
to the initial complaint) and Ward’s individual claim. Instead, the district court treated the initial
complaint as the operative pleading. We do likewise.

4
 $5,000,000, exclusive of interest and costs, and is a class action in
which–
(A) any member of a class of plaintiffs is a citizen of a State
different from any defendant . . . .

A “class action” includes “any civil action filed under rule 23 of the Federal Rules

of Civil Procedure or similar State statute or rule of judicial procedure authorizing

an action to be brought by 1 or more representative persons as a class action.” Id.

§ 1332(d)(1)(B).

Additionally, the putative class must contain at least 100 members for a

district court to exercise subject matter jurisdiction under CAFA. Id. § 1332(d)(5).

To determine whether the amount in controversy requirement is met “[i]n any class

action, the claims of the individual class members shall be aggregated to determine

whether the matter in controversy exceeds the sum or value of $5,000,000,

exclusive of interest and costs.” Id. § 1332(d)(6).

There is no requirement in a class action brought originally or on removal

under CAFA that any individual plaintiff’s claim exceed $75,000. See, e.g., 14AA

Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and

Procedure § 3704 (Supp. 2010) (“CAFA . . . extends federal subject matter

jurisdiction to class actions when there is minimal diversity and the total amount

in controversy exceeds $5,000,000, exclusive of interest and costs, and provides

5
for aggregation even if no individual class member asserts a claim that exceeds

$75,000.”).5 Eleventh Circuit precedent does not contradict this proposition.6

Applying these requirements to the controversy at hand, it becomes clear

that the district court had subject matter jurisdiction as an original matter.

Cappuccitti brought the action on behalf of himself and all persons similarly

situated pursuant to Rule 23. The putative class exceeded 100 persons,7 and the

amount of controversy—in the aggregate—exceeded $5,000,000, exclusive of

interest and costs.8 As the plaintiff class was comprised entirely of Georgia

5
We note that for a mass action to be brought under CAFA, however, additional
jurisdictional requirements must exist. See 28 U.S.C. § 1332(d)(11)(B)(i); see also Lowery v.
Ala. Power Co., 483 F.3d. 1184, 1199–1207 (11th Cir. 2007).
6
See Miedema v. Maytag Corp., 450 F.3d 1322, 1330–32 (11th Cir. 2006) (considering
whether individual claims valued at less than $1,000 exceeded $5,000,000 in the aggregate in an
extensive discussion of subject matter jurisdiction over a class action under CAFA); Evans v.
Walter Indus., Inc., 449 F.3d 1159, 1163 (11th Cir. 2006) (stating that, “[u]nder CAFA, federal
courts now have original jurisdiction over class actions in which the amount in controversy
exceeds $5,000,000 and there is minimal diversity” and making no mention of a further
requirement that any one plaintiff satisfy the amount in controversy requirement of 28 U.S.C. §
1332(a)).
7
Plaintiffs do not specifically allege that the class is larger than 100 persons, but simple
arithmetic dictates that it must be far larger. With damages to individuals ranging from $175 to
$480, the class size must be at least 10,417 ($5,000,000 divided by $480).
8
In his amended complaint, Cappuccitti states that “the matter in controversy exceeds the
value of $5,000,000, exclusive of interests and costs,” and DirecTV does not challenge this
assertion. “If the jurisdictional amount is either stated clearly on the face of the documents
before the court, or readily deducible from them, then the court has jurisdiction.” Lowery, 483
F.3d at 1211. We assume that the sum claimed here by Cappuccitti was made in good faith, and
it therefore controls. See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288–89, 58
S. Ct. 586, 590, 82 L. Ed. 845 (1938). We note, however, that discovery may uncover certain
facts—such as an insufficient number of Georgia subscribers, and therefore an insufficient

6
residents, there was sufficient diversity, since DirecTV is a California corporation.

These factors alone were sufficient to allow the district court to exercise subject

matter jurisdiction, and the further requirements and exceptions to jurisdiction

under CAFA neither apply nor warrant discussion here.

In sum, Cappuccitti properly requested that the district court certify his

proposed class pursuant to Rule 23(c) in order to obtain declaratory and injunctive

relief under Rule 23(b)(2) and damages under Rule 23(b)(3).

B.

Contractual disputes between Cappuccitti and DirecTV are subject to

binding arbitration9 in accordance with Section 9 of the Customer Agreement.

Section 9 states:

You may, in arbitration, seek any and all remedies otherwise available
to you pursuant to your state’s law. . . . Unless we agree to pay your
fee for you, you only need to pay an arbitration initiation fee equal to
[the] filing fee [you would be charged by the state court], not to
exceed $125. . . . We also agree to pay the costs of the arbitration
proceeding. Other fees, such as attorney’s fees and expenses of travel

number of class members, to allow for a potential recovery of $5,000,000—that would destroy
the district court’s jurisdiction over the case and require the district court to dismiss the case
under Federal Rule of Civil Procedure 12(b)(1). See id. at 289 (discussing the “legal certainty”
test).
9
At the top of the Customer Agreement is the following statement: “THIS
DOCUMENT DESCRIBES THE TERMS AND CONDITIONS OF YOUR RECEIPT
AND PAYMENT OF DIRECTV® SERVICE AND IS SUBJECT TO ARBITRATION
(SECTION 9).”

7
 to the arbitration will be paid in accordance with JAMS Rules.10 The
arbitration will be held at a location in your hometown area unless
you and we both agree to another location or telephonic arbitration.

The JAMS Rules in effect at the time the contract was made and when

Cappuccitti cancelled his service provide that the arbitrator can award attorney’s

fees and expenses if allowed by applicable state law, here Georgia law. JAMS

Streamlined Arbitration Rules & Procedures 18–19 (2007), available at

http://www.jamsadr.com/files/Uploads/Documents/JAMS-streamlined_arbitration

_rules-2007.pdf.

Section 9 also states: “Neither you nor we shall be entitled to join or

consolidate claims in arbitration by or against other individuals or entities, or

arbitrate any claim as a representative member of a class or in a private attorney

general capacity.”11 Section 9 therefore requires that Cappuccitti, proceeding

individually, arbitrate his claim that the early cancellation fee is invalid.

Under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., arbitration

agreements generally are considered valid and enforceable.12 They may be held

10
JAMS is an alternative dispute-resolution provider.
11
Section 9 contains a severability clause, which states that “[i]f . . . the law of your state
would find this agreement to dispense with class arbitration procedure unenforceable, then this
entire Section 9 [provision for arbitration] is unenforceable.”
12
The FAA provides that,

8
unenforceable, however, if, under the controlling state law of contracts, requiring

arbitration of a dispute would be unconscionable.13 See Doctor’s Assocs., Inc. v.

Casarotto, 517 U.S. 681, 686–87, 116 S. Ct. 1652, 1656, 134 L. Ed. 2d 902

(1996). Cappuccitti contends that requiring him individually to arbitrate the

validity of the early cancellation fee would be unconscionable under Georgia law.

The Georgia law of contracts deems an arbitration clause unenforceable if,

“in the light of the general commercial background and the commercial needs of

A written provision in . . . a contract evidencing a transaction involving commerce
to settle by arbitration a controversy thereafter arising out of such contract or
transaction, or the refusal to perform the whole or any part thereof, or an
agreement in writing to submit to arbitration an existing controversy arising out of
such a contract, transaction, or refusal, shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation
of any contract.

9 U.S.C. § 2 (emphasis added).
13
We refer to the law of contracts governing “contracts generally and not arbitration
agreements specifically.” Dale v. Comcast Corp., 498 F.3d 1216, 1219 (11th Cir. 2007) (quoting
Bess v. Check Express, 294 F.3d 1298, 1306 (11th Cir. 2002)).

What States may not do is decide that a contract is fair enough to enforce all its
basic terms (price, service, credit), but not fair enough to enforce its arbitration
clause. The Act makes any such state policy unlawful, for that kind of policy
would place arbitration clauses on an unequal “footing,” directly contrary to the
Act’s language and Congress’s intent.

Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 686, 116 S. Ct. 1652, 1655, 134 L. Ed. 2d 902
(1996) (quoting Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 281, 115 S. Ct. 834, 843,
130 L. Ed. 2d 753 (1995)). In Doctor’s Associates, the Court mentioned “unconscionability” as a
typical contract law basis for declining to enforce an arbitration agreement. 517 U.S. at 687, 116
S.Ct. at 1656.

9
the particular trade or case, the clause[ ] involved [is] so one-sided as to be

unconscionable under the circumstances existing at the time of the making of the

contract.” NEC Techs., Inc. v. Nelson, 478 S.E.2d 769, 771 (Ga. 1996) (internal

citations omitted) (emphasis added).14

Georgia’s unconscionability doctrine contemplates both procedural

unconscionability, which “addresses the process of making the contract,” and

substantive unconscionability, which “looks to the contractual terms themselves.”

Id. (internal citations omitted). When considering procedural unconscionability,

the Georgia courts examine “the age, education, intelligence, business acumen and

experience of the parties, their relative bargaining power, the conspicuousness and

comprehensibility of the contract language, the oppressiveness of the terms, and

the presence or absence of a meaningful choice.” Id. at 772 (internal citations

omitted). As for the substantive element, “courts have focused on matters such as

the commercial reasonableness of the contract terms, the purpose and effect of the

terms, the allocation of the risks between the parties, and similar public policy

concerns.” Id. (internal citations omitted). It is obvious from these quotations that

14
The Supreme Court of Georgia noted that unconscionability is a “flexible doctrine
designed to allow courts to directly consider numerous factors which may adulterate the
contractual process.” NEC Techs., Inc. v. Nelson, 478 S.E.2d 769, 771 (Ga. 1996) (internal
quotations and citations omitted).

10
resolving the issue of unconscionability under Georgia law is a fact-intensive

exercise.

A finding that enforcing a contract provision would be unconscionable is a

finding of an ultimate fact; it is inferred from a variety of circumstances depending

on the nature of the case.15 In a sense, a court must conduct a mini-bench trial to

reach the finding.16 The precise issue we must resolve here is whether the

evidence before the district court, and its subsidiary fact findings, were sufficient

to justify the inference—the ultimate finding—that requiring Cappuccitti

individually to arbitrate his claim that the early cancellation fee is invalid would

be unconscionable and would have been so “under the circumstances existing at

the time” he and DirecTV entered into the Customer Agreement in force at the

time he cancelled his subscription. See id. at 771.

In the district court, Cappuccitti argued that it would be unconscionable to

require him individually to submit his claim that the early cancellation fee is

15
One could argue that the ultimate finding on the unconscionability issue is also a legal
conclusion, i.e., unconscionability is a mixed question of fact and law. If so, because
unconscionabilty is determined on a case-by-case basis, the determination is nonetheless heavily
fact laden.
16
In most cases, the court will make the finding on the basis of the claims the plaintiff is
asserting, the contract documents (including the arbitration clause), the representations of the
parties, judicial notice of court judgments, statutes, regulations (such as the amount of state and
federal court filing fees), adjudicative facts (see Fed. R. Evid. 201), affidavits, or testimony.

11
invalid to arbitration for two interrelated reasons. First, he claimed that the

amount he could recover in arbitration, $420, would be far less than the expenses

he would incur in obtaining the recovery. This was so because his claim was

labeled as one for money had and received or for unjust enrichment, and Georgia

law did not afford a claimant prevailing on either claim the right to reimbursement

for attorney’s fees and costs. Second, Cappuccitti argued that his inability to

recover attorney’s fees and costs in combination with Section 9’s bar against

consolidating claims for arbitration or pursuing them as a member of a class

worked effectively to preclude him from obtaining legal representation. As a

result, DirecTV was charging and being paid an invalid cancellation fee with

impunity.

The sine qua non of Cappuccitti’s argument was, and remains, the

unavailability of attorney’s fees and costs. DirecTV met the argument head on by

drawing the district court’s attention to Georgia’s Fair Business Practices Act

(“FBPA”), O.C.G.A. § 10-1-390 et seq. The FBPA, in O.C.G.A. § 10-1-399(d),

provides that

[i]f the court finds in any action that there has been a violation of [the
FBPA], the person injured by such violation shall, in addition to other
relief provided for in this Code section and irrespective of the amount
in controversy, be awarded reasonable attorneys’ fees and expenses of
litigation incurred in connection with said action.

12
(Emphasis added).17

The FBPA, in O.C.G.A. § 10-1-393(a), states that “[u]nfair or deceptive acts

or practices in the conduct of consumer transactions and consumer acts or

practices in trade or commerce are declared unlawful.” DirecTV contended that

its practice of charging its subscribers an early cancellation fee clearly involved

“consumer transactions” and “practices in . . . commerce.” And, reduced to its

essentials, Cappuccitti’s claim was that the early cancellation fee was “[u]nfair or

deceptive.”18 Count III alleged as much; it sought a declaration that the

cancellation fee is “unenforceable under Georgia law” and is an “illegal penalty

provision” that lacks “support in the law.” First Am. Class Action Compl. 14,

June 29, 2009, ECF No. 29. Thus, at least in substance, Count III stated an unfair

or deceptive acts or practices claim without citing § 10-1-393(a).

17
Still another FBPA provision, O.C.G.A. § 10-1-399(c), provides a private right of
action for treble damages “so long as the alleged violation [of the FBPA] involves ‘the breach of
a duty owed to the consuming public in general’ and therefore has at least some potential ‘impact
on the consumer marketplace.’ ” Johnson v. GAPVT Motors, Inc., 663 S.E.2d 779, 784 (Ga. Ct.
App. 2008) (quoting Brown v. Morton, 617 S.E.2d 198, 202 (Ga Ct. App. 2005)).

Presumably, Cappuccitti could have brought suit under this provision if he had cause to believe
that DirecTV intended to act unfairly or deceptively in inserting the early cancellation fee into the
Customer Agreement. A showing of intent, however, is not required to prevail on all FBPA
claims. See O.C.G.A. § 10-1-399(a).
18
This essentially is the basis for Cappuccitti’s causes of action for money had and
received and unjust enrichment. See infra notes 20 and 21.

13
 In determining whether requiring Cappuccitti to submit his claim to

arbitration would be unconscionable, the district court faced the same question we

face here: would it have been be unconscionable “under the circumstances existing

at the time of the making of the contract”? NEC Techs., 478 S.E.2d at 771. To

answer that question the district court needed to consider all of the remedies

available to Cappuccitti under Georgia law at the moment he contracted with

DirecTV. The FBPA provided the basis for one of those remedies in O.C.G.A.

§ 10-1-393(a)—namely, a declaration that the cancellation fee was unfair or

deceptive and thus unlawful. The FBPA also authorized, in O.C.G.A. § 10-1-

399(d), the recovery of “reasonable attorneys’ fees and expenses of litigation.”

Cappuccitti acknowledged all of this in his memorandum in opposition to

DirecTV’s motion to compel arbitration. The memorandum stated that he could

have “theoretically pleaded” an FBPA claim in his complaint, and “d[id] not deny”

that he “purposely did not plead [the FBPA] claim in order to be able to proceed as

a class.”19 Pl.’s Mem. in Opp’n 18, 17 n.14, May 29, 2009, ECF No. 21.

Cappuccitti also acknowledged that the FBPA “provide[d] for enhanced damages

and attorneys’ fees.” Id. at 17.

19
O.C.G.A. § 10-1-399(a) authorizes private actions under the FBPA but specifically
precludes a private plaintiff from bringing such a claim “in a representative capacity.”

14
 According to Cappuccitti, he was “entitled to have DIRECTV’s motion

evaluated on the basis of his complaint as filed, not based on additional causes of

action he could have pleaded.” Id. at 18. The district court bought this argument.

In doing so, the court disregarded the circumstances prevailing at the time of the

contract, and, instead, substituted for those circumstances the circumstances

Cappuccitti’s attorneys created in limiting their client’s remedies to money had

and received20 and unjust enrichment.21 In effecting this substitution, the court

20
In Georgia, a claim for money had and received is quasi contractual. It “is comprised
of the following elements: a person has received money of the other that in equity and good
conscience he should not be permitted to keep; demand for repayment has been made; and the
demand was refused.” Fernandez v. WebSingularity, Inc., 681 S.E.2d 717, 721 (Ga. Ct. App.
2009) (internal quotations and citations omitted). More generally,

[a]n action for money had and received, although legal in form, is founded on the
equitable principle that no one ought to unjustly enrich himself at the expense of
another, and is a substitute for a suit in equity. Such a claim exists only where
there is no actual legal contract governing the issue.

Id. (internal quotations and citations omitted); see generally Gulf Life Ins. Co. v. Folsom, 349
S.E.2d 368 (Ga. 1986).

Although we need not decide the issue, it appears that a cause of action for money had and
received is not available in this case because the dispute at issue arises out of an express contract,
the Customer Agreement.
21
In Georgia,

The theory of unjust enrichment is basically an equitable doctrine that the
benefitted party equitably ought to either return or compensate for the conferred
benefits when there was no legal contract to pay. The concept of unjust
enrichment in law is premised upon the principle that a party cannot induce,
accept, or encourage another to furnish or render something of value to such party
and avoid payment for the value received.

15
was able to conclude that Cappuccitti could not recover his attorney’s fees and

costs if he prevailed individually in arbitration.22

The court erred. As Cappuccitti readily conceded in opposing DirecTV’s

motion to compel arbitration, attorney’s fees and litigation expenses would be

available to him if he prevailed on the theory that the early cancellation fee is

invalid as “[u]nfair or deceptive” under O.C.G.A. § 10-1-393(a). The JAMS Rules

provide for the award of attorney’s fees and litigation expenses if allowed by state

law, and O.C.G.A. § 10-1-399(d) authorizes them.

In light of this, it is apparent that the district court’s order denying

arbitration must be vacated and the case remanded for further proceedings

Morris v. Britt, 620 S.E.2d 422, 424 (Ga. Ct. App. 2005) (internal quotations and citations
omitted); see also Tuvim v. United Jewish Cmtys., Inc., 680 S.E.2d 827, 829–30 (Ga. 2009)
(quoting Engram v. Engram, 463 S.E.2d 12, 15 (Ga. 1995)) (“Unjust enrichment applies when as
a matter of fact there is no legal contract, but when the party sought to be charged has been
conferred a benefit by the party contending an unjust enrichment which the benefitted party
equitably ought to return or compensate for.”). As we observed in note 20, supra, the dispute
here arises out of an express contract, not a quasi contractual obligation.
22
The district court denied DirecTV’s motion to compel arbitration on paper as opposed
to a face-to-face hearing with counsel. The evidence therefore was limited to Cappuccitti’s
complaint, DirecTV’s motion to compel arbitration or, alternatively, to dismiss Counts I and II,
and Cappuccitti’s memorandum in opposition to DirecTV’s motion to compel. In its order
denying the motion, the court made no reference to the FBPA or to the specific provisions of
Section 9 of the Customer Agreement and the JAMS Rules, which incorporated Georgia law and
thus authorized the award of attorney’s fees and litigation expenses to successful FBPA
claimants in arbitration.

16
consistent with this opinion. We therefore VACATE the order and REMAND the

case for further proceedings.23

SO ORDERED.

23
We note that this action has been transferred pursuant to 28 U.S.C. § 1407 to the
District Court for the Central District of California for consolidated pretrial proceedings. Transfer
Order, Oct. 13, 2009, ECF No. 45.

17