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Dan Valentine and W. Brand Bobosky, Individually, and On Behalf of v. Wideopen West Finance

March 26, 2012

DAN VALENTINE AND W. BRAND BOBOSKY, INDIVIDUALLY, AND ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
WIDEOPEN WEST FINANCE, LLC, DEFENDANT.



The opinion of the court was delivered by: Judge Edmond E. Chang

MEMORANDUM OPINION AND ORDER

Plaintiffs Valentine and Bobosky brought this putative class action suit against Internet service provider WideOpen West (WOW), alleging that WOW violated several state and federal laws as a provider of Internet services.*fn1 Before the Court are WOW's motion to dismiss, R. 59, WOW's motion to compel arbitration, R. 69, and WOW's motion to strike the class allegations of the original complaint, R. 74. For the reasons explained below, the motion to dismiss is denied without prejudice, the motion to compel arbitration is granted, and the motion to strike the class allegations is denied without prejudice as moot.

I.

WideOpen West is a cable-based Internet service provider in several states, including Illinois. R. 101-1 ¶ 7. WOW provided Internet services to approximately 330,000 customer accounts, including Plaintiffs Dan Valentine and Brand Bobosky. Id. Among the provisions in the Terms of Service between customers and WOW is an arbitration provision. R. 72-1. Listed under the heading of "ARBITRATION" on page 26 of the 30-page document is a class-action waiver and limitation of recoverable damages. Id. at 26. Relevant to this motion, the arbitration clause provides that:

Any controversy or claim arising out of or related to this agreement that cannot be resolved informally (except for [four exceptions, one of which is applicable here, claims arising under 18 U.S.C. § 2510]) shall be resolved by binding arbitration. . . . Each party shall bear its own expenses and the cost of arbitrator(s) shall be shared. The parties expressly waive any entitlement to attorneys' fees or punitive damages to the fullest extent permitted by law. Consolidated or class action arbitration shall not be permitted.

Id. (The actual arbitration provision is in all caps in the Terms of Service).

According to Plaintiffs, in or around late 2007, WOW began installing spyware devices on its broadband networks, which directed all users' Internet communications to a third-party Internet advertisement-serving company, NebuAd. R. 101-1 ¶ 1. In December 2009, Plaintiffs filed a complaint alleging WOW installed hardware at their facilities that intercepted all online communications for advertisement services. R. 1. On June 8, 2011, WOW filed the pending motion to compel arbitration. R. 69.

II.

Under the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., if the parties have an arbitration agreement and the asserted claims are within its scope, a motion to compel must be granted. 9 U.S.C. §§ 3-4; Sharif v. Wellness Int'l Network Ltd., 376 F.3d 720, 726 (7th Cir. 2004) (citing Kiefer Specialty Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907, 909 (7th Cir. 1999)). Section 3 of the FAA specifically requires granting a motion to stay a lawsuit where "the issue involved in such suit . . . is referable to arbitration" under a written agreement. 9 U.S.C. § 3. And Section 4 requires that the court order the parties to proceed in arbitration if there is an agreement to arbitrate. 9 U.S.C. § 4.

Here, Plaintiffs do not dispute that they agreed to the Terms of Service quoted above. See generally R. 84. Instead, Plaintiffs contend that WOW cannot compel arbitration because it has waived its right to do so. Id. at 1. In the alternative, Plaintiffs also argue that the arbitration provision is unconscionable. Id. Because neither of these arguments have merit, the motion to compel is granted.

A. Waiver

Plaintiffs' first argument is that WOW implicitly waived its right to arbitrate because it waited until June 8, 2011 to file a motion to compel in response to a complaint filed 18 months earlier. R. 84 at 3. Although those dates are correct, a brief examination of the context in which the parties interacted establishes that WOW never acted in a way to waive its rights.

"A contractual right to arbitrate may be waived expressly or implicitly . . . ." Ernst & Young LLP v. Baker O'Neal Holdings, Inc., 304 F.3d 753, 756 (7th Cir. 2002). In determining whether there has been waiver, the Court "must examine the totality of the circumstances and determine whether based on all the circumstances, the party against whom the waiver is to be enforced has acted inconsistently with the right to arbitrate." Id. (internal citation, quotation, and bracketing omitted). Among the circumstances to be considered, "uncertainty about the right to arbitrate is a factor that tends to undermine a finding of waiver . . . ." Iowa Grain Co. v. Brown, 171 F.3d 504, 509 (7th Cir. 1999).

This case was filed in December 2009. R. 1. WOW filed a motion to dismiss on February 22, 2010. R. 22. Briefing on the motion was held in abeyance while the parties attempted to resolve their dispute through mediation. R. 42 at 1. Thereafter, the previously-assigned judge denied the motion to dismiss, in part due to a lack of sufficient detail regarding the technology at issue; the judge suggested limited discovery on that subject. Id. at 4-5. Shortly after that decision, the case was transferred to this Court, R. 49, and an initial status hearing was held February 9, 2011, R. 52. At that time, the Court permitted one deposition of a WOW employee in an effort to foster the parties' understanding of the technology at issue. Id. Armed with the knowledge, WOW was in a position to reassert its motion to dismiss, which it did on April 25, 2011. R. 59. On April 27, the United States Supreme Court released its opinion in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). As explained below, Concepcion altered the state of the law with regards ...


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