Southern Communications Services, Inc. v. Derek Thomas, 720 F.3d 1352

Background

SouthernLINC required customers to sign standard Terms & Conditions containing a $200 early termination fee (ETF) and an arbitration clause that referenced AAA Wireless Industry Arbitration Rules but said nothing about class arbitration.
Derek Thomas, a former customer, filed an AAA demand alleging the ETF was unlawful and sought class relief; he also moved for a Clause Construction Award under AAA Supplementary Rule 3.
The arbitrator issued a Partial Final Clause Construction Award finding the contract permitted class arbitration (relying in part on Eleventh Circuit interpretations of Georgia law) and later certified a class after concluding certification standards were met.
SouthernLINC petitioned the district court under 9 U.S.C. § 10(a)(4) to vacate both awards; the district court denied vacatur. The case was stayed pending the Supreme Court’s decision in Sutter.
The Eleventh Circuit, applying the Supreme Court’s Sutter standard, affirmed denial of vacatur, holding the arbitrator at least arguably construed the contract and did not exceed his powers under § 10(a)(4).

Issues

Issue	Thomas's Argument	SouthernLINC's Argument	Held
Whether the arbitrator exceeded his § 10(a)(4) powers by construing the arbitration clause to permit class arbitration	Award properly interpreted the contract text and applicable AAA rules to allow class procedures	Contract silence on class arbitration means arbitrator lacked authority; Stolt‑Nielsen controls and requires a clear contractual basis	Arbitrator "arguably construed" the contract; under Sutter deference applies and arbitrator did not exceed powers
Whether the arbitrator exceeded his powers by certifying a class despite defendant-specific defenses (e.g., voluntary payment)	Class certification criteria were met; common legal question (validity of ETF) predominates	Individualized defenses make commonality, typicality, predominance impossible; arbitrator refused to apply applicable law	Court treated SouthernLINC’s complaints as legal errors, not excess of power; arbitrator did not exceed authority
Whether an incorrect legal conclusion or manifest disregard of law justifies vacatur	N/A (Thomas seeks to uphold awards)	Vacatur warranted because arbitrator misapplied law	Eleventh Circuit law (and Hall Street) rejects incorrect legal conclusions or manifest disregard as grounds for vacatur; § 10(a)(4) is narrowly applied
Whether the arbitrator’s reliance on AAA Rule 3 and state law was proper for clause construction	Incorporation of AAA rules and state contract law provided legal basis for class procedures	Incorporation and state-law reliance insufficient to authorize class arbitration	Arbitrator engaged with contract language and AAA rules; his construction was "arguably" contractual and stands

Key Cases Cited

Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013) (arbitral decision that "arguably construes" the contract must stand under § 10(a)(4))
Stolt‑Nielsen S.A. v. Animalfeeds Int’l Corp., 130 S. Ct. 1758 (2010) (arbitrator exceeds powers where decision lacks any contractual basis for class procedures)
Hall Street Assoc., LLC v. Mattel, Inc., 128 S. Ct. 1396 (2008) (Sections 10 and 11 provide exclusive grounds for vacatur/modification)
E. Associated Coal Corp. v. United Mine Workers, 121 S. Ct. 462 (2000) (deference where parties bargained for arbitrator’s construction)
United Steelworkers v. Enterprise Wheel & Car Corp., 80 S. Ct. 1358 (1960) (arbitrator’s construction of contract is binding though it may be right or wrong)
White Springs Agric. Chems., Inc. v. Glawson Invs. Corp., 660 F.3d 1277 (11th Cir. 2011) (incorrect legal conclusion is not a ground for vacatur)
Frazier v. CitiFinancial Corp., 604 F.3d 1313 (11th Cir. 2010) (manifest disregard of law is not an independent ground for vacatur)
Dale v. Comcast Corp., 498 F.3d 1216 (11th Cir. 2007) (circuit precedent on class treatment when individual recovery is meager)