Antitrust Law Daily Wrap Up, PRIVACY—WDWash: Arbitration Clause Held Unconscionable, Subscriber May Not Be Compelled to Arbitrate TCPA Claims Against Comcast, (Feb 19, 2013)

By Tobias J. Gillett, J.D., LLM.

An arbitration clause in a service agreement was procedurally unconscionable in relation to a subscriber’s Telephone Consumer Protection Act (TCPA) claims regarding telephone calls cable television and internet services provider Comcast allegedly made to him following closure of an account because Comcast had not shown that the subscriber had an opportunity to review the agreement, and therefore the arbitration clause was unenforceable if the subscriber’s claims related solely to that account, the federal district court in Tacoma, Washington has ruled (Permison v. Comcast Holdings Corp., February 15, 2013, Settle, B.). However, the subscriber’s clicking of a box indicating his assent to the agreement in installing service at a later address was sufficient to render the arbitration clause not procedurally unconscionable with relation to any claims that might be based on the later account.

The subscriber had received cable television and internet services through Comcast in Denver, Colorado; Parker, Colorado; and Gig Harbor, Washington. He filed suit against Comcast, alleging that it had violated the TCPA through its calls to him following closure of his Colorado accounts.

Comcast filed a motion to stay litigation and compel arbitration, relying on an arbitration clause in its Comcast Residential Services Agreement. The subscriber opposed the motion, arguing that the arbitration clause was procedurally unconscionable.

The court explained that the Federal Arbitration Act (FAA) limits a court’s review of a motion to compel arbitration “to a determination of (1) whether the parties entered into a valid agreement to arbitrate, and if so, (2) whether the present claims fall within the scope of that agreement.” In answering these questions, the court may consider “generally applicable state contract law defenses” such as fraud, unconscionability, and duress.

Here, the subscriber contended that the arbitration clause was procedurally unconscionable because Comcast had not shown that he ever had the opportunity to review the agreements containing the clauses, and because “requir[ing] consumers to perform Internet research to determine the meaning of the fine print before signing off on routine Work Orders unfairly capitalizes on the unequal bargaining positions of the parties.”

The court found the arbitration clause unconscionable with respect to the subscriber’s Colorado accounts. Although Comcast had provided testimony from a Comcast employee stating that Comcast’s “technicians are specifically instructed to direct customers to read and accept the terms of the Residential Customer Agreement when they are activating their services,” the testimony was insufficient on its own to demonstrate that the subscriber had received the agreement at the Denver location, or that he had a reasonable opportunity to review it and opt out of the arbitration provision if he chose to do so.

Moreover, a Work Order and an Equipment User Agreement the subscriber signed at the Parker location did not demonstrate that he also agreed to the terms of the Residential Services Agreement at that time. Those agreements had language stating that if the “work order relate[d] to initial installation of services,” then he “agree[d] to be bound by the Comcast Subscriber Agreement,” and that “[i]f other non-installation work was provided, [he] agree[d] to continue to be bound by the current Comcast Subscriber Agreement.” However, the services he received at the Parker location “did not squarely fall under ‘initial installation’ or ‘other non-installation,’” and the documents “appear[red] to bind [the subscriber] to terms of which he had no notice, no opportunity to review, or time to understand, rendering them procedurally unconscionable.”

However, the court concluded that the same analysis did not apply to the subscriber’s Washington account. There, Comcast had provided testimony indicating not only that Comcast’s technicians had a policy of providing the agreement to customers, but also that Comcast’s business records showed that the subscriber had assented to the terms of the agreement “by clicking ‘Yes, I Agree to the Terms of Service’ during the activation process” for his service. The court concluded that he had thus received the agreement, had the opportunity to review it, and could have opted out, but did not do so. Therefore, the court concluded that the agreement to arbitrate was enforceable with respect to the Washington account.

The court noted that the subscriber’s complaint stated that “some or all” of the telephone calls on which he based his claims were related to his Colorado accounts. The court ordered the subscriber to clarify whether any of his TCPA claims related to his Washington account. If they did not, the court would “likely consider retaining jurisdiction.”

The case is No, C12-5714 BHS.

Attorneys: Jon N. Robbins (Wiesberg & Meyers LLC) for Jack Permison. Kenneth E. Payson (Davis Wright Tremaine) for Comcast Holdings Corp.

Companies: Comcast Holdings Corp.

Cases: ConsumerProtection Privacy WashingtonNews