Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—10th Cir.: Federal Arbitration Act barred Qwest Internet customer’s Colorado Consumer Protection Act claim, (Aug 15, 2013)

By Jody Coultas, J.D.

The U.S. Court of Appeals in Denver did not have interlocutory appellate jurisdiction to review a district court’s ruling on motions for partial summary judgment in a Colorado Consumer Protection Act claim filed by an Internet customer against Qwest Corporation (Grosvenor v. Qwest Corp., August 14, 2013, Lucero, C.). Qwest argued that the court had jurisdiction over the summary judgment ruling based on the Federal Arbitration Act (FAA).

The customer alleged that Qwest violated its “Price for Life Guarantee” by raising the price for Internet service after he signed up for the program, and sought to represent a class of Qwest Internet customers. Before installing Qwest software, customers entered into a subscription agreement through a “click-to-accept” process. The subscription agreement contained an arbitration provision that stated that any dispute or claim relating to the services, equipment, software, or terms of the agreement would be resolved by binding arbitration.

The district court held that the arbitration agreement was illusory and unenforceable. Qwest argued that the court had interlocutory appellate jurisdiction to review the ruling because it constituted an order denying a petition under the FAA to order arbitration.

In order to invoke appellate jurisdiction under the FAA, the movant must either explicitly move to stay litigation and/or compel arbitration pursuant to the FAA, or it must be unmistakably clear from the four corners of the motion that the movant seeks relief provided for in the FAA.

The court lacked appellate jurisdiction over the appeal because neither party moved to stay or compel arbitration, according to the court. The district court ruled on Qwest’s motion for partial summary judgment on the issue of whether the customer had entered into an arbitration agreement and the customer’s motion for partial summary judgment on the issue of whether the agreement was illusory. Qwest argued that whether the agreement was illusory should have been decided by an arbitrator. The district court rejected this argument in the order Qwest sought to appeal. However, an order granting the relief requested in a motion, and thus rebuffing an argument asserted in opposition, cannot be characterized as denying a petition for arbitration. Also, arguments in response to a motion are generally not considered requests for an order of arbitration.

Based on the relief requested by the customer, the court held that it was not clear from the four corners of the motion that Qwest sought relief provided for in the FAA. Qwest did not ask the district court to enter an order compelling arbitration and stated that a formal motion to compel arbitration would be forthcoming. This made it clear to the court that Qwest was not seeking an order to compel arbitration in the motion for partial summary judgment itself. Qwest needed to move, for a second time, for an order to compel arbitration in order to satisfy the appellate jurisdiction test.

Qwest was not in danger of losing the right to an interlocutory appeal under the circumstances presented by this case, according to the court. Qwest was free to file an interlocutory appeal of the district court’s prior denial of its motion to compel arbitration and could have expressly requested an order compelling arbitration at the summary judgment phase.

The case is No. 12-1095.

Attorneys: Michael D. Lieder (Mehri & Skalet, PLLC) for Richard Grosvenor. Peter J. Korneffel, Jr. (Bryan Cave, LLP) for Qwest Corp.

Companies: Qwest Corp.

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