LEE R. WEST, District Judge.
This matter comes before the Court on the Motion to Dismiss or Alternatively to Compel Arbitration and Dismiss or Transfer filed by defendant BellSouth Telecommunications, Inc. ("BellSouth"). Plaintiff James Bollinger has responded in opposition.
In addition to the movant, Bollinger and his three co-plaintiffs, Gayen Hancock,
The plaintiffs have sought to represent a nationwide class of consumers who purchased and/or subscribed to services designed, manufactured, marketed, advertised and sold by the various defendants under the brand name "U-verse." See Doc. 1 at 2, ¶ 1; e.g., id. at 5, ¶ 26. The plaintiffs have complained that U-verse service, which generally includes three bundled or packaged components—television ("TV"), voice over Internet protocol ("VOIP" or "Voice") and Internet, is "plagued by defects and deficiencies," id. at 2, ¶ 2, and although "hyped and over-promoted as a technological advance . . . [has] fail[ed] of its essential purpose. . . ." Id. ¶ 3.
The plaintiffs have asserted claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., as well as under state law for fraud, civil conspiracy, conversion, unjust enrichment, breach of the implied covenant of good faith and fair dealing and breach of contract, and they have sought monetary, equitable and declaratory relief.
Bollinger is a citizen and resident of the State of Florida. E.g., Doc. 1 at 3, ¶ 11. He has alleged that he purchased, or subscribed to, U-verse in September 2009. E.g., id. at 11, ¶ 31.
Because U-verse services are provided by the subsidiary operating company according to the residence of the consumer, Bollinger, whose service and billing address is in the State of Florida, purchased or subscribed to services provided by movant BellSouth, the regional operating company for Florida.
The three U-verse components are governed by terms of service. The two components, TV and VOIP, are governed by a single set of terms of service; "AT & T U-verse Voice and TV General Terms of Service"
In the instant motion, BellSouth not only has challenged this Court's exercise of personal jurisdiction over it, but also, in the alternative, has moved the Court to compel arbitration of Bollinger's Internet-related claims pursuant to an arbitration agreement between the parties. BellSouth has further moved the Court to dismiss Bollinger's TV/Voice-related claims
In connection with the latter arguments, BellSouth has contended that Bollinger, the only plaintiff to whom it provided service, was required to, and did, accept the TV/Voice TOS, including its forum selection provision,
Doc. 56-3 at 30, ¶ 19(c).
Although forum selection clauses, like the foregoing clause, "are prima facie
"`Mandatory forum selection clauses contain clear language showing that jurisdiction is appropriate only in the designated forum.'" K & V Scientific Co. v. Bayerische Motoren Werke Aktiengesellschaft, 314 F.3d 494, 498 (10th Cir. 2002) (quoting Excell, Inc., 106 F.3d at 321). Permissive forum selection clauses, "`[i]n contrast, . . . authorize jurisdiction in a designated forum, but do not prohibit litigation elsewhere.'" Id. (quoting Excell, Inc., 106 F.3d at 321).
The Court finds that the forum selection clause set forth in the TV/Voice TOS in effect at the time Bollinger purchased, or subscribed to, U-verse services is mandatory. The first phrase of the clause, the choice of law provision, dictates that the TVA/Voice TOS and the relationship between the consumer and AT & T will be governed by Texas law. The second, and generally dispositive phrase, specifies that both the customer "and AT & T agree to submit to the personal and exclusive jurisdiction of the courts located within the county of Bexar County, Texas." Doc. 56-3 at 30, ¶ 19(c).
Such language is unambiguous, unequivocal and obligatory. E.g., Milk `N' More, 963 F.2d at 1345-46 (clause stating "Venue shall be proper . . . in Johnson County, Kansas,'" deemed mandatory). Accordingly, venue in any forum other than a "court[] located within the county of Bexar County, Texas," is improper, e.g., K & V Scientific Co., 314 F.3d at 499 (circuits agree that where venue is specified with mandatory language, clause is enforced), unless Bollinger, as the party resisting enforcement of the clause, can demonstrate that its enforcement in this case would be "unfair or unreasonable." Excell, Inc., 106 F.3d at 321 (citation omitted). See The Bremen, 407 U.S. at 10, 92 S.Ct. 1907 (forum selection clauses should be enforced unless shown by resisting party to be unreasonable).
In an attempt to do so, Bollinger has first argued that he cannot be bound by the terms of the forum selection clause because there is no "empirical and verifiable evidence that [he] . . . ever accepted or agreed to the forum selection clause." Doc. 69 at 6; e.g., Doc. 1 at 22, ¶ 77 (plaintiffs "never provided copy [of Terms of Service]").
David Saigh is an area manager for network process and quality in the AT & T
(1) that "[w]hen a customer places an order for U-verse, it is sent to the Global Craft Access System (`GCAS') where [p]remises [t]echnicians receive and review the order[,]" Declaration of David Saigh (October 19, 2010) at 3, ¶ 6 ("Saigh Declaration");
(2) that "[s]tandard installation practice requires the [p]remises [t]echnician to . . . provide a Welcome Kit containing the printed TV/Voice TOS to the customer for the customer's review[,]" id. ¶ 7;
(3) that "[a]ccording to standard installation procedure, the [p]remises [t]echnician provides the customer with an opportunity to review the TV/Voice TOS before the installation of U-verse services and has the customer acknowledge and agree to the TV/Voice TOS on the technician's laptop with the GCAS web application[,]" id. ¶ 8; and
(4) that "[a]cceptance of the TV/Voice TOS is required before installation proceeds." id. ¶ 10.
Saigh has further stated that because customer acceptance of the TV/Voice TOS is required before installation of the TV and VOIP components, e.g., id. (if customer refuses to accept TV/Voice TOS, technician cannot install U-verse services), Bollinger "would have necessarily agreed to the TV/Voice TOS. . . ." Id. at 4, ¶ 13.
Bollinger has responded that because the premises technician performed the installation and because Saigh has admitted that "the customer acknowledge[s] and agree[s] to the TV/Voice TOS on the technician's laptop . . .," Saigh Declaration at 3, ¶ 8, there is no evidence that he (Bollinger) accepted the TV/Voice TOS and/or the forum selection clause set forth there-in. See also Doc. 1 at 22, ¶ 77 (plaintiffs "never provided copy [of Terms of Service]").
David C. Chicoine is a senior specialist network support in the business unit of AT & T Ops, and his job responsibilities include support of the GCAS used by premises technicians in connection with U-verse installation. Chicoine has stated
(1) that "[b]efore a [p]remises [t]echnician installs U-verse service in the customer's home, the Acceptance Form[, for use by customers such as Bollinger,] is displayed electronically on the GCAS web application for the customer to read[,]" Declaration of David C. Chicoine (October 19, 2010)
(2) that "[a]fter the customer has an opportunity to read the Acceptance Form,
(3) that "[a]fter the customer indicates his acceptance of the TV/Voice TOS in this
(4) that "[t]he customer's Acceptance Form is then stored on a server and associated with the customer's account." Id. ¶ 8.
BellSouth has submitted the Acceptance Form for Terms of Service for Purchase and Use of AT & T U-verse Voice and/or AT & T U-verse TV that was generated when Bollinger purchased, and subscribed to, U-verse TV and has shown that the installation of the U-verse TV services was completed on July 20, 2009, See Doc. 58-1, Exhibit C. In response, Bollinger's counsel has concluded that "any `clicking' or `accepting' was done quickly by the installer without giving an explanation to . . . [Bollinger] or an opportunity for . . . [Bollinger] to read hundreds of pages of contracts `on the installer's time.'" Doc. 69 at 9.
Bollinger, himself, however, has provided no evidence,
In an attempt to circumvent the enforcement of the mandatory forum selection clause
Doc. 69 at 27.
Case law establishes that "clickwrap" contracts
Furthermore, forum selection clauses do not contravene any federal or state public
In this regard, Bollinger has contended that "[t]he Terms of Service are boilerplate, adhesion instruments," Doc. 1 at 22, ¶ 77, and that "[t]he fine print in the Terms of Service is unconscionable and grossly inadequate to protect . . . [him since he] . . . had no meaningful choice in determining the limitations . . . ." Id.
Neither these allegations in the complaint however nor counsel's conclusory statements in the response regarding overreaching
The Court finds that the testimony of the various declarants and the exhibits establish the existence of a mandatory forum selection clause, and that in the absence of any showing by Bollinger, by affidavit or otherwise, that enforcement of this clause would be unfair or unreasonable, BellSouth is entitled to dismissal of Bollinger's TV/Voice-related claims against it.
BellSouth has also challenged Bollinger's Internet-related claims and has argued that the Court should dismiss these claims because Bollinger is compelled to arbitrate them pursuant to the terms of a mandatory arbitration clause
Section 2 of the FAA, which has been described by the United States Supreme
9 U.S.C. § 2.
Sections 3 and 4 of the Act "establish[] [the] procedures by which federal courts implement [section] 2's substantive rule." Rent-A-Center, 130 S.Ct. at 2776. Under section 3,
9 U.S.C. § 3.
Before "the [C]ourt shall make an order directing the parties to proceed to arbitration," id., as requested by BellSouth, the Court must first find that a written agreement to arbitrate exists between Bollinger and BellSouth,
Michael Frias is employed by AT & T Ops as a senior product manager, and his
Id.
Frias has stated
(1) that "[d]uring the course of the registration process, the new customer is presented with a screen that displays the [then-current] Internet Terms of Service[,]" id.; and
(2) that "to proceed to the next step of the registration process, the customer must click a button labeled `I Agree[.]'" Id.
The Internet TOS advises new customers, such as Bollinger to read the Internet TOS carefully, see Doc. 56-1 at 64, and it further advises that a customer's "registration, payment for or use of the Site and/or Service constitutes . . . [his] agreement to be bound by the . . . terms and conditions set forth in . . . [the Internet TOS]." Id. The Internet TOS, which not only outlines Bollinger's "obligations," id., but also "AT & T's obligations," id. further dictates the manner in which disputes regarding Internet service are to be resolved.
Paragraph 13 of the Internet TOS governing Bollinger's use of U-verse Internet service is entitled "Dispute Resolution with AT & T by Binding Arbitration," id. at 74 ¶ 13 (emphasis deleted), and it admonishes customers to "read . . . carefully," id. (emphasis deleted), because their rights are "affect[ed]. . . ." Id. (emphasis deleted). Paragraph 13 provides in pertinent part:
Id.
Paragraph 13 further outlines the arbitration agreement by providing:
Id.
Paragraph 13 also cautions each new customer
Id. at 74-75 (emphasis deleted).
The Court finds there can be no dispute in this case that the Internet TOS "evidences a transaction involving commerce," 9 U.S.C. § 2,
State law principles of contract formation govern whether a valid arbitration agreement exists, and resolution of Bollinger's arguments
Mutual promises between two parties can create a contract, and the mutual promise to arbitrate and to relinquish the right to a trial by jury can constitute the necessary consideration to support an agreement to arbitrate, as in this case, where both BellSouth and Bollinger have "each agreed to resolve [their] . . . disputes through binding arbitration," Doc. 56-1 at 74, ¶ 13, and have "each . . . waiv[ed] the right to a trial by jury and to participate in a class action with respect to Arbitration Claims." Id. at 74-75, ¶ 13(a).
Bollinger has first argued that the agreement to arbitrate is illusory and therefore unenforceable because BellSouth has reserved the right to unilaterally modify and amend the Internet TOS and relieve itself of its promise to arbitrate. E.g., Johnson Enterprises of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290, 1311 (11th Cir.1998) (an illusory promise does not constitute consideration for other promise and contract is unenforceable) (citations omitted); e.g., Office Pavilion South Florida, Inc. v. ASAL Products, Inc., 849 So.2d 367, 370 (Fla.App.2003) (quoting Restatement (Second) of Contracts § 77 (promise is not consideration if by its terms the promisor reserves a choice or alternative performances)).
The Internet TOS in effect at the time Bollinger purchased, or subscribed to, Internet service provided
Doc. 56-1 at 64, ¶ 1.
It further provides however that
Id. at 76, ¶ 13(g).
BellSouth's discretionary right to change the Internet TOS and in particular the arbitration clause is subject to two limitations. First, customers must be provided with advance notice of any material changes, and second, customers may reject any change proposed by BellSouth to the arbitration clause itself. In the absence of any argument advanced by Bollinger that specifically addresses these limitations on BellSouth's ability to amend the Internet TOS, the Court finds they are sufficient to prevent BellSouth's agreement to arbitrate from being rendered illusory.
Although Florida courts have recognized that "arbitration is a favored means of dispute resolution," Miele v. Prudential-Bache Securities, Inc., 656 So.2d 470, 473 (Fla.1995) (citation omitted), and that Florida "[p]ublic policy . . . favors arbitration
Under Florida law, Bollinger must establish that the agreement "is both procedurally and substantively unconscionable." Gainesville Health Care Center, Inc. v. Weston, 857 So.2d 278, 284 (Fla.App. 2003) (emphasis in original). And, because Bollinger has failed to show that the arbitration clause is substantively unconscionable, that is to say, that the terms of the parties' agreement are unreasonable or unfair, the Court has not considered Bollinger's procedural challenges.
Florida law requires a showing that the arbitration clause is "so `outrageously unfair' as to shock the judicial conscience," Bland v. Health Care and Retirement Corporation of America, 927 So.2d 252, 256 (Fla.App.2006) (quoting Gainesville Health Care Center, 857 So.2d at 285), before it may be deemed substantively unconscionable. As case law teaches, a substantively unconscionable contract is "one that `no man in his senses and not under delusion would make on the one hand, and . . . no honest and fair man would accept on the other.'" Belcher v. Kier, 558 So.2d 1039, 1044 (Fla.App.1990) (quoting Hume v. United States, 132 U.S. 406, 415, 10 S.Ct. 134, 33 L.Ed. 393 (1889)).
Florida courts have rejected arguments that arbitration clauses are substantively unconscionable because they require arbitration to be conducted on an individual basis as in this case. E.g., Rivera v. AT & T Corp., 420 F.Supp.2d 1312, 1322 (S.D.Fla.2006). Under the instant Internet TOS, Bollinger may forego arbitration and instead pursue his Internet-related claims in small claims court. See Doc. 56-1 at 74, ¶ 13(a). The arbitration clause also contains incentives, such as cost-free arbitration,
The cases on which Bollinger has relied are distinguishable. In Powertel, Inc. v. Bexley, 743 So.2d 570 (Fla.App.1999), the Florida appellate court found the arbitration clause was substantively unconscionable because by limiting actual damages, it precluded the recovery of punitive damages regardless of how outrageous the defendant's conduct might be.
In Bellsouth Mobility LLC v. Christopher, 819 So.2d 171 (Fla.App.2002), on which Bollinger has also relied, the state appellate court found the arbitration clause was substantively unconscionable because customers were "bound to arbitration," id. at 173, but BellSouth had "the option of pursuing court action in some instances. . . ." Id.
In this case, the Internet TOS not only outlines Bollinger's "obligations," Doc. 56-1 at 65, but also "AT & T's obligations," id., and expressly provides that both BellSouth and Bollinger are obligated to arbitrate "all disputes and claims between [Bollinger] . . . and AT & T which are Arbitration Claims." Id. at 74, ¶ 13; e.g., id. ("we each agree to resolve those disputes through binding arbitration"); id. ¶ 13(a) ("You and AT & T are each waiving the right to a trial by a jury and to participate in a class action with respect to arbitration claims") (emphasis deleted).
Finally, the Court finds in the absence of any evidence to the contrary,
Having found that an agreement to arbitrate exists between Bollinger and BellSouth, the Court must next engage in "`a three-part inquiry,'" Cummings v. FedEx Ground Package System, Inc., 404 F.3d 1258, 1261 (10th Cir.2005) (quoting Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading, Inc., 252 F.3d 218, 224 (2d Cir.2001)), to determine whether Bollinger's dispute regarding his Internet service falls within the scope of the arbitration clause.
404 F.3d at 1261 (quoting Louis Dreyfus Negoce, 252 F.3d at 224) (emphasis deleted).
In accordance with extant case law, the Court finds the arbitration clause in this case is a "broad" clause,
The Court therefore acknowledges the presumption of arbitrability that arises from such a finding, e.g., Cummings, 404 F.3d at 1261, and holds that Bollinger should be compelled to arbitrate his Internet-related claims that "`implicate[] . . . the parties' rights and obligations under [the Internet TOS]." Id. (quotation omitted).
The factual allegations advanced in the complaint in support of Bollinger's federal and state law causes of action touch on matters covered by the Internet TOS,
Accordingly, Bollinger's Internet-related claims, regardless of whether they sound in tort or in contract or are statutorily based
Finally, the Court has considered Bollinger's argument that "cramming . . . arbitration on a citizen in the absence of a proper contract is unconstitutional," Doc. 71 at 6, ¶ 3,
Id. at 23.
The United States Supreme Court has declared that the FAA "`is based upon and
In light of the Supreme Court's pronouncements that the FAA "embodies Congress' intent to provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause," Perry v. Thomas, 482 U.S. 483, 490, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987), and that the FAA's application is limited to only those "`private agreements into which parties ha[ve] entered,'" id. (quotation omitted), whereby certain guaranteed rights, including the right to a trial by jury under the seventh amendment to the United States Constitution, may be waived, the Court finds that Bollinger has advanced no argument that compels this Court to find that the FAA is unconstitutional as applied to him or that an arbitral forum would be inadequate to protect those constitutional rights that he has not waived.
Accordingly, the Court
(1) GRANTS BellSouth's Motion to Dismiss or Alternatively to Compel Arbitration [Doc. 51] filed on October 20, 2010, to the extent that the Court DISMISSES with prejudice Bollinger's Internet-related claims against BellSouth and COMPELS Bollinger to arbitrate his Internet-related claims "in the manner provided for in," 9 U.S.C. § 4, and pursuant to the arbitration clause set forth in the Internet TOS;
(2) GRANTS BellSouth's Motion to Dismiss or Transfer [Doc. 51] filed on October 20, 2010, to the extent that the Court hereby ENFORCES the mandatory forum selection clause in the TV/Voice TOS and in the exercise of its discretion, DISMISSES without prejudice under Rule 12(b)(3), supra, Bollinger's TV/Voice-related claims against BellSouth;
(3) because Bollinger's Internet-related claims against AT & T Ops derive from, and are closely intertwined with his contractual relationship with BellSouth, further FINDS that AT & T Ops may also enforce the Internet TOS, including its arbitration clause, and ORDERS that Bollinger's Internet-related claims against AT & T Ops should be and are hereby DISMISSED with prejudice; and
(4) because Bollinger's TV/Voice-related claims against AT & T Ops derive from his contractual relationship with BellSouth, further FINDS that AT & T Ops may also enforce the TV/Voice TOS and, in its discretion, DISMISSES without prejudice under Rule 12(b)(3), supra, Bollinger's TV/Voice-related claims against AT & T Ops.
Under Texas law, the chosen law, courts are required to look to federal law in interpreting forum selection clauses. E.g., In re International Profit Associates, Inc., 274 S.W.3d 672, 677 (Tex., 2009), Thus, in accord with Ricoh, Yavuz and extant Texas case law, the Court has applied federal law in determining whether the instant forum selection clause should be enforced.
Doc. 56-3 at 22, ¶ 1. The TV/Voice TOS further provides that
Id. at 29, ¶ 15.
The TV/Voice TOS specifies that BellSouth must give notice of any change that would materially impact the parties' agreement. It advises each customer that the TOS is "a legal document that details [the customer's]. . . rights and obligations . . . . id. at 22, ¶ 1, that "[b]y enrolling in, activating, using, or paying for Services, [the customer] . . . agree[s] to the terms and conditions in these TOS," id., and "[i]f [the customer] do[es] not agree to the . . . terms and conditions, [the customer should] not use the Services, and cancel the Services. . . ." Id. Because the TV/Voice TOS requires notice to the customer of any material changes and because the customer can cancel if he does not agree to the same, the Court finds under the circumstances of this case that the TV/Voice TOS, including its forum selection clause, is not illusory.
Bollinger has further relied upon the decision in Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir.2002), to demonstrate the invalidity of the forum selection clause. In Specht, however, the Internet customer, unlike Bollinger, was urged to click on a button to download free software, without being advised that by doing so, the customer agreed to the terms and conditions of a proposed contract that contained an arbitration clause. The Second Circuit concluded that the customers were not given sufficient or reasonably conspicuous notice of those terms and that the plaintiffs therefore could not have manifested their assent to such terms.
The Second Circuit, however, in addressing a second agreement, which was a "clickwrap agreement," found that the customers when proceeding to initiate the installation of a program, "were automatically shown a scrollable text of that program's license agreement and were not permitted to complete the installation until they had clicked on a `Yes' button to indicate that they had accepted the license terms." Id. at 21-22. If the customer "attempted to install [the program] without clicking `Yes,' the installation would be aborted." Id.
Thus, the moving party is required to present evidence sufficient to demonstrate an arbitration agreement. Once that showing has been made, the party opposing arbitration must demonstrate a genuine issue of material fact as to the making of the arbitration agreement. E.g., Avedon Engineering, Inc. v. Seatex, 126 F.3d 1279, 1283 (10th Cir.1997) (when parties dispute making agreement to arbitrate, jury trial on existence of agreement is warranted unless there are no genuine issues of material fact regarding parties' agreement). See Gibson v. Wal-Mart Stores, Inc., 181 F.3d 1163 (10th Cir.1999) (reviewing district court's decision to grant motion to compel arbitration under summary judgment standard where parties agreed that the standard applied).
Bollinger made his demand for a jury on June 13, 2011. See Doc. 101. However, a party resisting arbitration is not entitled to a jury trial merely because he has demanded one.
BellSouth has presented evidence sufficient to demonstrate the existence of an arbitration agreement. Accordingly, Bollinger must raise a genuine issue as to the making of the agreement, using evidence that is comparable to that evidence identified in Rule 56, F.R.Civ. P., such as affidavits. Bollinger, however, has presented no evidence in support of his arguments and thus, he has failed to raise a genuine issue of material fact with regard to the existence of an arbitration agreement in the Internet TOS, warranting a trial by jury.
Rent-A-Center, West, Inc. v. Jackson, ___ U.S. ___, 130 S.Ct. 2772, 2778, 177 L.Ed.2d 403 (2010) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006)). "Only the first type of challenge is relevant to . . . [the] [C]ourt's determination whether the arbitration agreement at issue is enforceable." Id. (footnote and citations omitted). On the other hand, "a party's challenge to another provision of the contract, or to the contract as a whole, does not prevent . . . [the] [C]ourt from enforcing a specific agreement to arbitrate." Id.
Despite Bollinger's attempt to challenge the arbitration clause itself, see, e.g., Doc. 71 at 15 ("Plaintiffs never told that the technician was actually a covert contract-agent, sent to hoodwink them into contracts and arbitration agreements that were previously undisclosed"), the Court finds there are no allegations in the complaint challenging the validity or enforceability of the arbitration clause itself on the grounds of fraud; thus, Bollinger's claims of fraud, see Doc. 1 at 18, should be considered by an arbitrator, and not the Court. E.g., Buckeye Check Cashing, 546 U.S. at 445-46, 126 S.Ct. 1204
