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Steve Bayer and Aaron Lloyd, On Behalf of Themselves and Others v. Comcast Cable Communications

May 1, 2013

STEVE BAYER AND AARON LLOYD, ON BEHALF OF THEMSELVES AND OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
COMCAST CABLE COMMUNICATIONS, LLC, DEFENDANT.



The opinion of the court was delivered by: Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER

Plaintiffs Steve Bayer and Aaron Lloyd (collectively, "plaintiffs"), individually and on behalf of all others similarly situated, brought a collective and putative class action complaint against defendant Comcast Corporation, alleging violations of § 551(a) and (e) of the Cable Communication Policy Act ("CCPA"), 47 U.S.C. § 551, et seq., (Counts I & II), breach of implied contract (Count III), violation of the Illinois Cable and Video Customer Protection Law ("Illinois Cable Act") (Count IV), violation of the California Customer Records Act ("CCRA"), Cal. Civ. Code § 1798.80, et seq., (Count V), and violation of Cal. Penal Code § 637.5 (Count VI). Defendant has moved, pursuant to Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq., to compel arbitration and stay litigation. Plaintiffs oppose to the motion. For the reasons stated below, defendant's motion is granted.

BACKGROUND

Defendant is a corporation headquartered in Philadelphia, Pennsylvania, and is the nation's largest cable television operator, serving over twenty million customers. Defendant provides cable and other services to customers in thirty-nine states, including Illinois.

Plaintiff Steve Bayer ("Bayer") is a citizen of Illinois who subscribed to defendant's video and internet services from July 28, 2006, to July 17, 2007, at an apartment in Rolling Meadows, Illinois. According to defendant, Bayer received at least two copies of an arbitration agreement with defendant during that time period. He received his first copy in defendant's standard Welcome Kit when he initiated his service in July 2006, and his second copy in a notice inserted in his November 2006 bill that was mailed to him. Bayer does not deny that he received these agreements.

Plaintiff Aaron Lloyd ("Lloyd") is a citizen of the California who subscribed to defendant's internet service at a residence in Portland, Oregon from July 2, 2008, until September 13, 2010. Like Bayer, Lloyd received a Welcome Kit when he initiated his service on July 2, 2008. The Welcome Kit contained the subscriber agreement, which contained an arbitration agreement with an opt-out provision. After receiving his subscriber agreement, unlike some other subscribers in Portland, Oregon, Lloyd elected not to opt out of the arbitration agreement. Lloyd does not dispute that he received this agreement.

Bayer's and Lloyd's arbitration agreements are substantially similar and state: If you have a Dispute (as defined below) with Comcast that cannot be resolved through the informal dispute resolution process described in your Welcome Kit from Comcast, you or Comcast may elect to arbitrate that Dispute in accordance with the terms of this Arbitration Provision rather than litigate the Dispute in court. Arbitration means you will have a fair hearing before a neutral arbitrator instead of in a court by a judge or jury.

Both of the arbitration agreements later define "dispute" to mean "any dispute, claim or controversy between you and Comcast, whether based in contract, statute, regulation, ordinance, tort including, but not limited to fraud, misrepresentation, fraudulent inducement, negligence or any other intentional tort, or any other legal or equitable theory," and includes "the validity, enforceability, or scope of the arbitration provision." The agreements further provide that litigation and arbitration by either party on a class-wide basis is prohibited.

Plaintiffs filed the instant case with this court on October 27, 2012, after both terminated their contracts with defendant. Plaintiffs allege that, after the termination of services with defendant, defendant continues to maintain personally identifiable information on all of its previous customers indefinitely without notifying them, in violation of the CCPA, the CCRA, the Illinois Cable Act and the California Penal Code, and is in breach of an implied contract. In response to plaintiffs' complaint, defendant has moved to compel arbitration, arguing that plaintiffs have agreed that arbitrators, not a court, should adjudicate disputes as defined in the arbitration agreements.

DISCUSSION

The Federal Arbitration Act, 9 U.S.C. § 1, et seq., ("FAA") puts federal courts in the gatekeeper position of determining whether a dispute is one that the parties intended to arbitrate. See AT & T Techs. v. Communications Workers of Am.,475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ("arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit"). Typically, there is a presumption in favor of arbitration, and any doubts regarding whether a dispute falls within the scope of an arbitration agreement are resolved in favor of arbitration. Moses H. Cone Mem. Hosp. v. Mercury Constr. Co., 460 U.S. 1, 24--25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1982). However, in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995), the Supreme Court held that the question of whether a court or an arbitrator should determine whether a dispute is arbitrable may be agreed to ahead of time. The Court noted that, just as parties may evince their intention about the arbitrability of a suit in arbitration clauses, they may likewise form an agreement about "who has the primary power to decide arbitrability." Id. (Emphasis added.) In such a case where the parties may have contracted to have the question of arbitrability decided by an arbitrator instead of the court, the presumption in favor of arbitrability is reversed. Id. at 944. In those cases, the court should not "assume that parties agreed to arbitrate arbitrability unless there is 'clea[r] and unmistakabl[e]' evidence that they did so." Id.

In the instant case, defendant argues that the relevant arbitration agreements are clear and unmistakable evidence that the parties intended an arbitrator to determine the arbitrability of the claims. Plaintiffs acknowledge both that parties may agree to the submission of the arbitrability issue to arbitration and that the definition of "dispute" includes "the validity, enforceability, or scope of the arbitration provision" in their arbitration agreements. Plaintiffs, however, argue that other portions of the parties' agreements demonstrate the parties' intention that a court, not an arbitrator, should determine the scope of the arbitration provision, and there is therefore no "clear and unmistakable evidence" of an agreement on this matter. In support of their argument, plaintiffs point to the jury waiver provision, which states that "if a claim is brought in a Dispute that is found by a court to be excluded from the scope of this Arbitration Provision, you and Comcast have each agreed to waive, to the fullest extent allowed by law, any trial by jury." (Emphasis added.) Because of these allegedly conflicting provisions, plaintiffs claim that there is no clear evidence that the parties intended to arbitrate the arbitrability of the agreement.

To resolve this alleged conflict regarding the arbitrability issue, this court interprets the agreement "with the goal of effectuating the parties' intent, giving contract terms their plain and ordinary meaning."Kim v. Carter's Inc., 598 F.3d 362, 364 (7th Cir. 2010). The court notes that the arbitration agreements, in their definition provisions that immediately follow the binding purpose provisions, explicitly define an arbitrable dispute to include the "scope of the arbitration provision." Also, according to the arbitration agreements, an arbitrable dispute "is to be given the broadest possible meaning that will be enforced." In contrast, the jury waiver provision cited by plaintiffs is located in a subsection of arbitration clause entitled "Severability." The clause reads:

If any clause within this Arbitration Provision (other than the class action waiver clause identified in Section E (2) above) is found to be illegal or unenforceable, that clause will be severed from the Arbitration Provision, and the remainder of the Arbitration Provision will be given full force and effect. If the class action waiver clause is found to be illegal or unenforceable, the entire Arbitration Provision will be unenforceable, and the dispute will be decided by a court. In the event that this entire Arbitration Provision is determined to be illegal or unenforceable for any reason, or if a claim is brought in a Dispute that is found by a ...


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