Let It Go: Failing to Raise Arbitration During Class Certification Results in Waiver, Says Tenth Circuit
After the district court certified a class comprised of customers who had contracted with Cox Enterprises for cable services, Cox sought to compel arbitration pursuant to clauses in class members’ contracts. That bid was frozen in its tracks by the district court and icily affirmed by the Tenth Circuit. The Court’s holding? A class-action defendant with a potential arbitration defense can’t hold it back anymore, at least when the issue could impact the propriety of class certification. In re Cox Enterprises, Inc. Set-Top Cable Television Box Antitrust Litig., No. 14-6158 (10th Cir. June 24, 2015).
In particular, the Tenth Circuit emphasized that 87% of class members were potentially subject to arbitration, which undermined the district court’s findings of numerosity and predominance. Accordingly, Cox’s conceal-don’t-feel-don’t-let-them-know approach amounted to an inequitable second bite at the apple. The court explained that arbitration should be raised as early as possible, rather than for the first time in forever, to avoid wasting judicial resources.
But what about the fact that until a class is certified, absent class members are not parties to the lawsuit? Cox pointed to a variety of authorities supporting the proposition that it would have been futile to compel arbitration against such individuals. But the Tenth Circuit reasoned that Cox still couldn’t keep it in. It distinguished Cox’s opportunity to inform the court of arbitration – an issue it deemed highly relevant to the propriety of class certification – from Cox’s chances of succeeding on a motion to compel.
It’s funny how some distance makes everything seem small. We can only imagine whether that adage holds true for Cox, which appears to be facing trial against the class later this year.