Trial Practice and Procedure - Philip W. Savrin

• Publication year: 2000

Trial Practice and Procedureby Philip W. Savrin*

I. Introduction

This Article surveys the 1999 decisions of the Eleventh Circuit Court of Appeals that have a significant impact on issues relating to trial practice and procedure.

II. Removal Jurisdiction

In Blab T.V. of Mobile, Inc. v. Comcast Cable Communications, Inc.,¹ the court had to decide "whether section 612 of the Cable Communications Policy Act of 1984 completely preempts state-law tort and breach of contract claims involving 'leased access' cable channels such that the claims are removable to federal court."² At the time the lawsuit was filed, Blab T.V. was Mobile's only locally owned and operated television station. Comcast was Mobile's cable operator as defined by the Cable Communications Policy Act of 1984. After a contract dispute, Blab T.V. filed a complaint in Alabama state court against Comcast, alleging fraud and breach of contract.³

Comcast removed the case to federal district court and argued that Section 612 of the Act provided federal jurisdiction over Blab TV's state law claims.⁴ Section 612 regulates the manner in which operators like Comcast deal with local and affiliated broadcasters such as Blab T.V.⁵ Section 612 also creates a federal right of action in district court for unaffiliated programmers who are injured by a cable operator's failure or refusal to make commercial lease access channels available.⁶

Blab T.V. did not object to the removal of its lawsuit to federal court. However, it did file a motion to remand when Comcast filed a motion to strike Blab TV's demands for a jury trial and punitive damages because Comcast argued neither was permitted under Section 612.⁷

The district court ruled in favor of Comcast, holding that Section 612 comes within the "complete preemption" doctrine and that Blab TV's state law claims arose under Section 612. Upon Blab TV's motion for reconsideration, the district court certified for interlocutory appeal the question of whether Blab TV's state law claims are completely preempted by Section 612 and whether Section 612 confers removal jurisdiction on district courts.⁸

The Eleventh Circuit began its analysis by setting forth the Supreme Court's explanation that "complete preemption occurs when 'the preemptive force of a statute is so "extraordinary" that it converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule."⁹ However, the Supreme Court has never enthusiastically applied the complete preemption doctrine in areas of law other than the Labor Management Relations Act ("LMRA") and the Employee Retirement Income Security Act ("ERISA").¹⁰ Indeed, the Eleventh Circuit had never before applied the complete preemption doctrine in areas of law other than the LMRA or ERISA.¹¹

After analyzing other circuits' rulings on whether the complete preemption doctrine applies outside the LMRA or ERISA context,¹² the Eleventh Circuit noted that the inquiry focused on

"whether Congress not only intended a given federal statute to provide a federal defense to a state cause of action that could be asserted either

in a state or federal court, but also intended to grant a defendant the ability to remove the adjudication of the cause of action to a federal court by transforming the state cause of action into a federal [one]."¹³

Thus, the Eleventh Circuit concluded that it should resolve the issue by looking at congressional intent behind the Act.¹⁴

While the Act did not directly address the issue, the court noted that "Section 612(a) contains jurisdictional language that is similar to Section 301 of the LMRA, which according to [the Supreme Court], supports complete preemption."¹⁵ However, the Act's legislative history does not indicate "that Section 612(a)'s jurisdictional language is intended to function in the same manner as Section 301 of the LMRA."¹⁶ Because of the absence of such a statement, the Eleventh Circuit focused on other provisions in the Act and its legislative history.¹⁷ In so doing, the court found that the Act has a "broad policy of preserving state authority except in areas in which the exercise of this authority would be inconsistent with federal law."¹⁸ For example, one of the Act's purposes is "to 'establish guidelines for the exercise of Federal, State, and local authority with respect to the regulation of cable systems.'"¹⁹ Moreover, the Act provides that "'[n]othing in this subchapter shall be construed to restrict a State from exercising jurisdiction with regard to cable services consistent with this subchapter.'"²⁰

The Eleventh Circuit then concluded that these provisions contemplated the application of state law and state court jurisdiction to some degree in the cable services industry.²¹ The inclusion of these provisions, the court reasoned, demonstrates that Congress did not intend for the complete preemption doctrine to apply to the Act as it does to the LMRA and ERISA.²² Accordingly, the court concluded "that Section 612 of the Cable Act does not confer removal jurisdiction over [Blab T.V.'s] state law claims pursuant to the complete preemption doc-

III. Arbitration

A. Equitable Estoppel

In MS Dealer Service Corp. v. Franklin,²⁴ the Eleventh Circuit had to determine whether a nonsignatory to a contract could be compelled to submit to mandatory arbitration under a mandatory arbitration clause within that contract. Sharon Franklin purchased a vehicle from Jim Burke Motors. The Buyer's Order executed by the parties incorporated by reference a Retail Installment Contract in which Franklin was charged $990 for a service contract through MS Dealer.²⁵ The Buyer's Order contained an arbitration clause that provided that "[a]ll disputes and controversies of every kind and nature between the parties hereto arising out of or in connection with this contract. . . shall be submitted to binding arbitration."²⁶ MS Dealer did not sign either the Buyer's Order or the Retail Installment Contract.²⁷

After discovering defects in her car, Franklin filed suit in Alabama state court against Jim Burke Motors, MS Dealer, and Chrysler Credit Corporation, alleging that MS Dealer cooperated, conspired, and colluded with Jim Burke Motors and Chrysler Credit Corporation to defraud her in connection with the purchase of the service contract. Relying on the arbitration clause, MS Dealer petitioned the district court to compel Franklin to submit to arbitration. The district court dismissed the petition because MS Dealer did not sign the Buyer's Order and, thus, lacked standing to compel arbitration.²⁸

Even though arbitration is a matter of contract, the Eleventh Circuit recognized that there are three exceptions that prevent the lack of a written arbitration agreement from being an impediment to arbitration.²⁹ The first exception is equitable estoppel.³⁰ The second exception arises when "'under agency or related principles, the relationship between the signatory and nonsignatory defendants is sufficiently close that only by permitting the nonsignatory to invoke arbitration may evisceration of the underlying arbitration agreement between the signatories be avoided.'"³¹ Finally, the third exception '"arises when the parties to a contract together agree, upon formation of their agreement, to confer certain benefits thereunder upon a third party, affording that third party rights of action against them under the contract.'"³²

Although MS Dealer argued that each of the three exceptions applied, the Eleventh Circuit focused only on the equitable estoppel exception and noted that there are two circumstances in which equitable estoppel allows a nonsignatory to compel arbitration.³³ "First, equitable estoppel applies when the signatory to a written agreement containing an arbitration clause 'must rely on the terms of the written agreement in asserting [its] claims' against the nonsignatory."³⁴ Second, "'application of equitable estoppel is warranted . . . when the signatory [to the contract containing the arbitration clause] raises allegations of . . . substantially interdependent and concerted misconduct by both the nonsignatory and one or more of the signatories to the contract.'"³⁵ Thus, the Eleventh Circuit had to determine whether the nature of Franklin's fraud claims against MS Dealer fell within the scope of the arbitration clause contained in the Buyer's Order.³⁶

The Eleventh Circuit concluded that both circumstances giving rise to the application of equitable estoppel were present.³⁷ First, plaintiff's fraud claim against MS Dealer referred to the $990 charge for the service contract, which was contained in the Retail Installment Contract and incorporated by reference into the Buyer's Order.³⁸ Consequently, each of Franklin's claims relied upon her contractual obligation to pay the $990 charge for the service contract.³⁹ Additionally, Franklin's claims against Jim Burke Motors and MS Dealer were based on the same facts because she alleged that MS Dealer worked in concert with Jim Burke Motors in the alleged fraudulent plan.⁴⁰ This allegation of collusive behavior clearly demonstrated that her claims against MS Dealer were intertwined with the obligations imposed by the Buyer's

Order.⁴¹ For these reasons the Eleventh Circuit concluded that Franklin was equitably estopped from avoiding arbitration with MS Dealer.⁴²

B. Appellate Jurisdiction

The Eleventh Circuit was confronted with another issue of first impression in Randolph v. Green Tree Financial Corp.-Alabama.⁴³ In Randolph the court had to decide whether a district court's order compelling arbitration is an appealable "final decision" when it dismisses the remaining claims. Plaintiff purchased a mobile home and financed that purchase through Green Tree Financial Corp.-Alabama. The Retail Installment Contract between the parties contained an arbitration clause that required binding arbitration to resolve all disputes.⁴⁴

Plaintiff filed suit in federal court alleging that...