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)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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TERI BROWN, individually and on behalf of
all others similarly situated,
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Plaintiffs,
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v.
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CHARTER COMMUNICATIONS, INC., d/b/a )
SPECTRUM and JOHN DOES 1-10,
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Defendants.
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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
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initiated by Teri Brown. ECF No. 19. Charter’s motion was referred to the Magistrate Judge pursuant
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to 28 U.S.C. § 636(b)(1). ECF No. 20. The Magistrate Judge issued Findings & Recommendations
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(“F&Rs”) recommending that the motion to compel arbitration be denied. ECF No. 29. The F&Rs
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found that although the Residential Services Agreement (“RSA”) Plaintiff signed when she agreed to
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receive service from Bright House Networks (“BHN”), a subsidiary of Charter, contained a valid
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arbitration agreement, the arbitration agreement did not apply to Plaintiff by virtue of a carve out
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notice provision in the agreement that stated: “SPECIAL NOTE REGARDING ARBITRATION FOR
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CALIFORNIA CUSTOMERS: IF YOU ARE A BHN CUSTOMER IN CALIFORNIA, BHN WILL
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NOT SEEK TO ENFORCE THE ARBITRATION PROVISION ABOVE UNLESS WE HAVE
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NOTIFIED YOU OTHERWISE.” ECF No. 29 at 10-12; see also ECF No. 19-4 (RSA) § 14(f). The
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Magistrate Judge also examined other key provisions of the RSA’s arbitration agreement, including an
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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. . . .
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RSA § 14(c).
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The Magistrate Judge recommended that because Plaintiff did not receive notice that Charter
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would seek to enforce the arbitration agreement until after this lawsuit was filed, several years after
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Plaintiff stopped receiving services from BHN, the special notice provision was not satisfied, so the
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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
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11-12 (emphasis in F&Rs).
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Charter filed objections to the F&Rs, ECF No. 32, to which Plaintiff responded. ECF No. 35.
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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
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v. Marshall, 561 F.3d 930, 932 (9th Cir. 2009). The Court has carefully considered the F&Rs, the
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objections and response, in light of the entire record and concludes that the F&Rs are well-reasoned
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and entirely correct.
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It is undisputed that Plaintiff is and was at all relevant times a resident of California. It is also
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undisputed that Charter did not provide Plaintiff with notice that they intended to enforce the arbitration
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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
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whether “it may be said with positive assurance that the arbitration clause is not susceptible of an
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interpretation that covers the asserted dispute.” AT&T Tech., Inc. v. Commc’ns Workers of Am., 475
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U.S. 643, 650 (1986). Charter argues, among other things, that the Magistrate Judge’s interpretation of
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the contract provision would render the opt out provision superfluous, and that the only way to
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“effectuate Section 14(c) without rendering it meaningless by Section 14(f)” is to interpret Section
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14(f) to “to mean that a subscriber must opt-out of the Arbitration agreement within 30 days of
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receiving the RSA, and if the subscriber does not timely opt-out, that subscriber is subject to the
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Arbitration Provision; however, Charter may enforce that Arbitration Provision against California
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customers only after it provides notice of such intent.” ECF No. 32 at 4-5. Plaintiff articulated the
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absurdity of this argument succinctly by explaining that Charter’s interpretation would be tantamount
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to reading the California notice provision as follows: “SPECIAL NOTE REGARDING
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ARBITRATION FOR CALIFORNIA CUSTOMERS: IF YOU ARE A BHN CUSTOMER IN
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CALIFORNIA, BHN WILL NOT SEEK TO ENFORCE THE ARBITRATION PROVISION ABOVE
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UNLESS WE HAVE NOTIFIED YOU OTHERWISE DO.” See ECF No. 35 at 7 (emphasis in
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plaintiff’s brief, strikethrough added). The Court can say “with positive assurance” that the arbitration
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clause is not susceptible to the absurd meaning suggested by Charter. Moreover, the interpretation
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advanced by the F&Rs and the Plaintiff does not render the opt-out provision superfluous, as it would
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be operative whenever BHN gave proper notice under Section 14(f). The Court finds the remaining
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arguments in the Objections to be without merit as well.
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Accordingly, IT IS HEREBY ORDERED:
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ADOPTED IN FULL; and
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The Findings and Recommendations dated December 14, 2017 (ECF No. 29) are
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Defendant’s motion to compel arbitration (ECF No. 19) is DENIED.
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IT IS SO ORDERED.
Dated:
/s/ Lawrence J. O’Neill _____
April 13, 2018
UNITED STATES CHIEF DISTRICT JUDGE
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