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A Washington federal court has upheld a class action waiver in a cellular telephone contract under Georgia law, but refused to enforce that same waiver under Washington law.
In McGinnis v. T-Mobile USA, Inc., No. C08-106Z, 2008 WL 2858492 (W.D. Wash. July 22, 2008), Johnson of Georgia, McGinnis of Minnesota, and Trolf of California filed a class action lawsuit against T-Mobile, alleging a violation of consumer protection laws and breach of contract. T-Mobile moved to compel arbitration in accordance with an arbitration agreement that contained a class waiver barring class-wide proceedings. The plaintiffs opposed the motion by arguing that the class waiver was unconscionable.
The Court first addressed the choice of law question, holding that Georgia law applied to Johnson's claim, while Washington law applied to McGinnis and Trolf's claims. The Court noted that Washington courts apply Washington law unless there is an actual conflict with another body of law that would produce different results on the same issue.
As to Johnson's claim, the Court analyzed the conflict between Georgia and Washington law, and found that courts in each state would come to different conclusions as to whether the class waiver was unconscionable. This demonstrated an "actual conflict" that required application of Georgia law to Johnson's claim in a Washington court.
The Court pointed out a recent federal court decision applying Georgia law that held that the availability of attorney's fees for a prevailing plaintiff provided an incentive to attorneys that would allow plaintiffs to vindicate their rights on an individual basis. See Honig v. Comcast of Ga. I, LLC, 537 F.Supp.2d 1277 (N.D. Ga. 2008). In contrast, class waivers in mobile phone contracts had already been found unconscionable under Washington law. Scott v. New Cingular Wireless, 161 P.3d 1000 (Wash. 2007).
Furthermore, the Court found no justification to apply Washington law to Johnson's claim, noting that Washington did not have a "materially greater interest" in determining the rights of Georgia citizens than did the state of Georgia.
However, the Court held that there was no actual conflict between Washington law and either Minnesota or California law as to the issue of class waivers. As to McGinnis's claim, the Court noted that no Minnesota court had addressed the issue of class waiver unconscionability, but held that T-Mobile had not sustained the burden of showing that the waiver would be treated differently under Minnesota law. As to Trolf's claim, the Court observed that the same T-Mobile waiver had already been declared unconscionable under California law. Lowden v. T-Mobile USA, Inc., 512 F.3d 1213 (9th Cir.).
Accordingly, the Court upheld T-Mobile's class action waiver as to Johnson's individual claim under Georgia law, but denied arbitration of the other claims based on Washington law.
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