Brown v. Charter Communications, Inc.

Filing 44

ORDER ADOPTING in FULL the FINDINGS AND RECOMMENDATIONS DENYING Defendant's Motion to Compel Arbitration 19 & 29 , signed by Chief Judge Lawrence J. O'Neill on 4/13/2018. (Hellings, J)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

10
11
12
13
14
15
16
17

TERI BROWN, individually and on behalf of
all others similarly situated,

)
)
)
Plaintiffs,
)
)
v.
)
)
CHARTER COMMUNICATIONS, INC., d/b/a )
SPECTRUM and JOHN DOES 1-10,
)
)
Defendants.
)

Case No.: 1:17-cv-00670-LJO-JLT
ORDER ADOPTING IN FULL THE
FINDINGS AND RECOMMENDATIONS
DENYING DEFENDANT’S MOTION TO
COMPEL ARBITRATION
ECF Nos. 19 & 29.

Defendant Charter Communications (“Charter”) seeks to compel arbitration for this action

18

initiated by Teri Brown. ECF No. 19. Charter’s motion was referred to the Magistrate Judge pursuant

19

to 28 U.S.C. § 636(b)(1). ECF No. 20. The Magistrate Judge issued Findings & Recommendations

20

(“F&Rs”) recommending that the motion to compel arbitration be denied. ECF No. 29. The F&Rs

21

found that although the Residential Services Agreement (“RSA”) Plaintiff signed when she agreed to

22

receive service from Bright House Networks (“BHN”), a subsidiary of Charter, contained a valid

23

arbitration agreement, the arbitration agreement did not apply to Plaintiff by virtue of a carve out

24

notice provision in the agreement that stated: “SPECIAL NOTE REGARDING ARBITRATION FOR

25

CALIFORNIA CUSTOMERS: IF YOU ARE A BHN CUSTOMER IN CALIFORNIA, BHN WILL

26

NOT SEEK TO ENFORCE THE ARBITRATION PROVISION ABOVE UNLESS WE HAVE

27

NOTIFIED YOU OTHERWISE.” ECF No. 29 at 10-12; see also ECF No. 19-4 (RSA) § 14(f). The

28
1

1

Magistrate Judge also examined other key provisions of the RSA’s arbitration agreement, including an

2

opt-out provision that provided, in pertinent part:
Right to Opt Out: IF YOU DO NOT WISH TO BE
BOUND BY THIS ARBITRATION PROVISION, YOU
MUST NOTIFY BHN IN WRITING WITHIN 30 DAYS
FROM THE DATE THAT YOU FIRST RECEIVE THIS
AGREEMENT. . . .

3
4
5
6
RSA § 14(c).
7

The Magistrate Judge recommended that because Plaintiff did not receive notice that Charter
8
would seek to enforce the arbitration agreement until after this lawsuit was filed, several years after
9
Plaintiff stopped receiving services from BHN, the special notice provision was not satisfied, so the
10
11
12
13

arbitration agreement did not apply to Plaintiff. The F&Rs specifically reasoned that “the plain
language of the special notice to California customers that BHN would ‘not seek to enforce the
arbitration provision . . . unless we have notified you otherwise,’ [ ] indicates notice would be
provided prior to the customer entering the agreement or contemporaneously with it.” ECF No. 29 at

14
11-12 (emphasis in F&Rs).
15
Charter filed objections to the F&Rs, ECF No. 32, to which Plaintiff responded. ECF No. 35.
16
17
18
19
20

A district judge may “accept, reject or modify, in whole or in part, the findings and recommendations
made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C). If objections to the findings and
recommendations are filed, “the court shall make a de novo determination of those portions of the
report or specified proposed findings or recommendations to which objection is made.” Id. A de novo
review requires the court to “consider[] the matter anew, as if no decision had been rendered.” Dawson

21
v. Marshall, 561 F.3d 930, 932 (9th Cir. 2009). The Court has carefully considered the F&Rs, the
22
objections and response, in light of the entire record and concludes that the F&Rs are well-reasoned
23
and entirely correct.
24
It is undisputed that Plaintiff is and was at all relevant times a resident of California. It is also
25
undisputed that Charter did not provide Plaintiff with notice that they intended to enforce the arbitration
26
agreement until after this lawsuit was filed. Therefore, the key dispute is how the above-quoted carve27
out/notice language operates. In the context of a motion to compel arbitration, the key legal question is
28
2

1

whether “it may be said with positive assurance that the arbitration clause is not susceptible of an

2

interpretation that covers the asserted dispute.” AT&T Tech., Inc. v. Commc’ns Workers of Am., 475

3

U.S. 643, 650 (1986). Charter argues, among other things, that the Magistrate Judge’s interpretation of

4

the contract provision would render the opt out provision superfluous, and that the only way to

5

“effectuate Section 14(c) without rendering it meaningless by Section 14(f)” is to interpret Section

6

14(f) to “to mean that a subscriber must opt-out of the Arbitration agreement within 30 days of

7

receiving the RSA, and if the subscriber does not timely opt-out, that subscriber is subject to the

8

Arbitration Provision; however, Charter may enforce that Arbitration Provision against California

9

customers only after it provides notice of such intent.” ECF No. 32 at 4-5. Plaintiff articulated the

10

absurdity of this argument succinctly by explaining that Charter’s interpretation would be tantamount

11

to reading the California notice provision as follows: “SPECIAL NOTE REGARDING

12

ARBITRATION FOR CALIFORNIA CUSTOMERS: IF YOU ARE A BHN CUSTOMER IN

13

CALIFORNIA, BHN WILL NOT SEEK TO ENFORCE THE ARBITRATION PROVISION ABOVE

14

UNLESS WE HAVE NOTIFIED YOU OTHERWISE DO.” See ECF No. 35 at 7 (emphasis in

15

plaintiff’s brief, strikethrough added). The Court can say “with positive assurance” that the arbitration

16

clause is not susceptible to the absurd meaning suggested by Charter. Moreover, the interpretation

17

advanced by the F&Rs and the Plaintiff does not render the opt-out provision superfluous, as it would

18

be operative whenever BHN gave proper notice under Section 14(f). The Court finds the remaining

19

arguments in the Objections to be without merit as well.

20

Accordingly, IT IS HEREBY ORDERED:

21

1.

ADOPTED IN FULL; and

22
23
24
25
26

The Findings and Recommendations dated December 14, 2017 (ECF No. 29) are

2.

Defendant’s motion to compel arbitration (ECF No. 19) is DENIED.

\
IT IS SO ORDERED.
Dated:

/s/ Lawrence J. O’Neill _____

April 13, 2018

UNITED STATES CHIEF DISTRICT JUDGE

27
28
3