The Sixth Circuit recently reversed a decision by the District Court for the Western District of Tennessee ordering arbitration in a putative class action lawsuit. Plaintiff brought a lawsuit against her lawn care services provider for alleged violations of the Telephone Consumer Protection Act when she received telemarketing calls from the company after terminating the parties’ contract and registering her number with the National Do-Not-Call Registry. She also sought to certify a class, although the parties’ agreement included a mandatory arbitration clause and a class action waiver. Defendant filed a motion to dismiss the complaint and compel arbitration, which the district court granted.
On appeal, plaintiff claimed the arbitration clause did not apply to her claims because she terminated the agreement prior to receiving the phone calls. Reviewing the district court’s decision de novo, the Sixth Circuit followed the framework established by the Supreme Court in Litton Fin. Printing Div. v. NLRB, 501 U.S. 190 (1991) regarding the existence of a presumption in favor of arbitration after the expiration of an agreement. Such a presumption may exist in three circumstances: first, where the dispute “involves facts and occurrences that arose before expiration”; second, when “an action taken after expiration infringes a right that accrued or vested under the agreement”; or third, when “the disputed contractual right survives expiration of the remainder of the agreement.” The Sixth Circuit agreed with plaintiff that none of the three conditions existed and the parties were therefore not required to arbitrate.
First, with regard to the timing of the relevant occurrences, the Sixth Circuit disagreed with defendant’s argument that the negotiation of the contract, the discussion of the lawn care services, plaintiff’s agreement that defendant could contact her, and the provision of her phone number suggested that the relevant facts arose before expiration, as the majority of material occurrences—the phone calls themselves—occurred after the agreement’s expiration. With regard to infringement of a vested right, the court stated that defendant’s right to call plaintiff did not accrue under the agreement because it did not accumulate over time and was instead revocable. Regarding survival of the contractual right, the court noted that the provision permitting defendant to call plaintiff about current and future services could be reasonably interpreted both as expiring with the agreement or surviving to permit calls indefinitely. Because the provision was ambiguous, the court construed it against the defendant as the drafter and held that the right to call plaintiff expired with the contract.
Finally, although reversing the district court’s decision ordering arbitration, the Sixth Circuit summarily disposed of plaintiff’s argument that the arbitration clause itself was unconscionable. The court also vacated the district court’s order denying the motion for class certification on the basis that the claim was subject to arbitration, leaving the validity of the class action waiver open for determination on remand.