Sidney v. Verizon Communications, et al

Filing 16

MEMORANDUM AND ORDER: the defendants' 5 Motion to Compel Arbitration and stay the case is granted. SO Ordered by Judge Raymond J. Dearie on 3/22/2018. (Ramesar, Thameera)

FILED
IN CLERK'S OFFICE

US DISTRICT COURT E.D.N.Y

5

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

MAR 2 3 2018 *

BROOKLYN OFFICE
LOWELL J. SIDNEY,individually and on
behalf of all others similarly situated,
Plaintiffs,

MEMORANDUM & ORDER

17 CV 1850(RJD)
(RLM)

- against VERIZON COMMUNICATIONS AND CELLCO,
PARTNERSHIP d/b/a/ VERIZON WIRELESS

SERVICES LLC,
Defendants.
X

DEARIE, District Judge
I. OVERVIEW

This putative class action arises out offraudulent purchase of a cell phone and service on

plaintiffs cell phone account with defendants, Verizon Communications and Cellco, Partnership
d/b/a/ Verizon Wireless Services LLC ("Verizon"). Plaintiff, Lowell J. Sidney, seeks to represent

a class ofindividuals who he alleges were willfully and fraudulently over-charged by Verizon for

services they did not agree to, receive, purchase, or use, and which were not part oftheir
contracts for services with Verizon. Defendants move to stay the case and compel arbitration

pursuant to an arbitration agreement between the parties. The Court finds that plaintiffs claims

fall within the range of disputes contemplated by the parties' binding arbitration agreement; thus,
defendants' motion to compel arbitration and stay the case is granted.

II. BACKGROUND

Plaintiff activated a cell phone service account with Verizon on February 28,2012.

Verizon's account activation process includes the new customer's acceptance ofthe terms and
conditions of Verizon's service agreement. A copy of the Verizon Wireless Customer Agreement
1

(the "Agreement") would typically be provided to the new customer during the activation

process along with a Welcome Package. On March 2,2012, Verizon provided plaintilff a letter
confirming service activation and enclosed a copy of the Agreement.

The Agreement explicitly provides that disputes be resolved through arbitration.' It also
requires that plaintiff pursue any disputes on an individual basis and includes a waive;r of

plaintiffs right to class action law suits.^ The arbitration and class waiver provisions have their
own dedicated section in the agreement: outlined with a border, distinct from the rest ofthe
agreement, with text in all capitalized letters, some of which is in bold-face type. Plaintiff

accepted the Agreement by activating and using his service. The Agreement preserved the option
to cancel service within 14 days if plaintiff did not accept the Agreement. Not such cancellation
occurred.

Upon upgrading his service over a year later, on May 16,2013, plaintiff once again

accepted Verizon's Agreement through defendants' telephonic service upgrade process. Def. Ex.
D. In a letter dated March 19, 2013, Verizon confirmed Plaintiffs upgrade. Def. Ex.jF.
Plaintiffs Verizon service continued without incident until October 2016.

In October 2016 an unknown individual entered a Verizon Wireless store in Florida, and,

impersonating the plaintiff, fraudulently added a second phone line to plaintiffs account.
Plaintiff alleges that Verizon was aware ofthe fraud at that time and deliberately did not notify
him. Plaintiff became aware offraudulent activity in February 2017, when he contac ted Verizon

to inquire about his bill, which included the added phone line and associated costs. Verizon

'The Agreement requires arbitration of"ANY DISPUTE THAT IS ANY WAY RELATES TO OR ARISE OUT
OF THIS AGREEMENT OR FROM ANY EQUIPMENT,PRODUCTS AND SERVICES YOU RECEIVE FROM
US..." Def. Ex. C.

2 The Agreement"DOESN'T ALLOW CALSS OR COLLECTIVE ARBITRATIONS EVEN IF TH^ AAA OR
EBB PORCEDURES OR RULES WOULD." Def. Ex. C.

eventually confirmed that the charges were indeed fraudulent. On March 3, 2017, Verizon
refunded the plaintiff for payments related to the fraudulent phone line. Plaintifffiled the instant
case on April 3,2017.

III. DISCUSSION

A. Applicable Law

The Federal Arbitration Act("FAA"),"establishes a federal policy favoring arbitration." In re
Anderson. No. 16-2496, 2018 WL 1177227, at *3(2d Cir. Mar. 7, 2018)(citing
Shearson/American Exp.. Inc. v. McMahon.482 U.S. 220, 226(1987)); Preston v. Ferrer. 552

U.S. 346,349(2008). Courts must compel arbitration "in accordance with the terms pf an
arbitration agreement, provided that there is no issue regarding its creation." Kutluka Iv. PO New
York Inc.. 266 F. Supp. 3d 691,699(2017)(citing AT & T Mobility LLC v. Concencion. 563
U.S. 333, 339(2011)(citing 9 U.S.C. § 2)). The inquiry before the Court is two-fold:(1)did the

parties enter into a valid agreement? and(2)is the dispute within the scope ofthe arbitration
agreement? Id.; See also Sacchi v. Verizon Online LLC.No. 14-CV-423-RA,2015 WL 765940,
at *4(S.D.N.Y. Feb. 23, 2015)("(1) whether the parties have entered into a valid agreement to
arbitrate, and, if so,(2) whether the dispute at issue comes within the scope ofthe arbitration

agreement.")(quoting In re American Exp. Fin. Advisors Sec. Litig.. 672 F.3d 113,128(2d Cir.
2001)).

A motion to compel arbitration pursuant to the FAA is evaluated under a standard akin to the

standard applicable for a motion for summary judgment. Nicosia v. Amazon.com. Inc.. 834 F. 3d
220,229(2d Cir. 2016)(internal citations omitted); Mever v. Uber Technologies. Inc

868 F.3d

66,74(2017). The Court "draws all reasonable inferences in favor of the non-moving party.
Id.; Faggiano v. CVS Pharmacv. Inc.. 283 F. Supp. 3d 33(E.D.N.Y. 2017). Arbitration

agreements are considered contracts and "the ultimate question of whether the parties agreed to
arbitrate is determined by state law." Kutluka, 266 F. Supp. 3d at 700 (citing Bell v. Cendant
Corp.. 293 F. 3d 563,566(2d Cir. 2002). Under New York law,to "create a binding contract,,
there must be a meeting ofthe minds." Id.(quoting Highland HC,LLC v. Scott, 113 A.D.3d 590,
978 N.Y.S.2d 302, 306(2d Dep't 2014)). "[A] party who executes a contract is considered
bound by the terms ofthat contract." Id.(citing Stem v. Espeed. Inc.. No.06 Civ. 958(PKC),
2006 WL 2741635, at *1 (S.D.N.Y. Sept. 22,2006). Further, in "the absence offraud or other
wrongful act on the part of another contracting party, a party who signs or accepts a \mtten

contract...is conclusively presumed to know its contents and to assent to them." Id.(quoting
Fleming v. J.Crew.No. l:16-cv-2663-GHW,2016 WL 6208570,*3(S.D.N.Y. Oct. 21,2016).

"Ifthe party seeking arbitration has substantiated the entitlement by a showing of evijlentiary
facts, the party opposing may not rest on a denial but must submit evidentiary facts showing that
there is a dispute offact to be tried." Id.(citing Onnenheimer & Co.. Inc. v. Neidhardt. 56 F.3d
352, 358(2d Cir. 1995).

If the Court finds that the claims are subject to a valid arbitration agreement and a stay is

requested, the Second Circuit has held that a stay is mandatory. Katz v. Cellco Partnership. 794
F.3d 341, 346(2d Cir. 2015)("[A] mandatory stay is consistent with the FAA's underlying
policy to move the parties to an arbitrable dispute out of court and into arbitration as c uickly and
easily as possible.")(quoting Moses H. Cone Mem*l Hosp. v. Mercury Constr. Corn

460 U.S.

1, 22, 103 S. Ct. 927,74 L.Ed.2d 765 (1983))(internal quotation marks omitted).
B. Validity ofthe Arbitration Agreement

The arbitration agreement between plaintiff and defendant is valid and enforceable.
Plaintiff accepted the terms ofthe agreement on two separate occasions over his six years of

service with Verizon. Plaintiff first accepted the Agreement when initiating service and opening
his Verizon account, and a second time when upgrading his account over a year later! There is no
dispute that plaintiff accepted the contract's terms on each ofthose occasions.

Plaintiff presents no argument attacking the validity ofthe arbitration agreement. Though
plaintiff does complain that the arbitration agreement and Verizon's alleged failure to notify its
customers offraudulent activity is unconscionable, he falls far short ofsucceeding on any legal

argument ofthat kind. Indeed, there is nothing in the record, beyond plaintiffs allegations, to

suggest that Verizon deliberately withheld information about fraud. More importantlj^, there is no
evidence to suggest the Agreement was improper; the terms of Verizon service, espec ially the

arbitration section, are conspicuous in the Agreement.^

DeGraziano v. Verizon Commc'ns.

Inc.. 325 F. Supp. 2d 238, 243(E.D.N.Y. 2004)(quoting Cap Gemini Ernst & Young U.S. LLC
V. Arentowicz. No.04 Civ. 0299,2004 WL 1386145, at *4(S.D.N.Y. June 22,2004))
("An
i

individual who signs a contract is presumed to know its contents and assent to them, unless he
can show special circumstances, such as duress or coercion, which would justify nonenforcement ofthe contract.")(internal quotations and citations omitted).

Further, courts in this Circuit have enforced identical arbitration agreements. Verizon's

specific arbitration agreement has been upheld numerous times as valid and enforceable. Id.
(finding the Verizon Wireless agreement to arbitrate valid); Katz. 794 F.3d at 344 (firiding that
application of FAA to compel arbitration per Verizon's service agreement is constitutional);
Schatz V. Cellco P'ship. 842 F. Supp. 2d 594, 597(S.D.N.Y. 2012)."The Federal Arbhration Act
says that an arbitration agreement 'shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equityfor the revocation ofany contracty Concepcion. 563 U.S. at

'
Moreover, plaintiffs imconscionability argument is not about the Agreement; it is about Verizon's supposed
policy.

357(citing 9 U.S.C. § 2). No such grounds exist here; thus, the arbitration agreement is valid and
enforceable.

C Claims Fall Within the Scope ofthe Agreement

Plaintiff points out that the fraudulent addition of a second phone line to his acicount
created a distinct contract between Verizon and the fraudulent phantom individual, pu tting this

conflict outside the scope of the arbitration agreement. Whatever the logic ofthis point, this
dispute arises between plaintiff and Verizon, about a billing issue that plaintiff experienced—not

any third party. Though the underlying problem involved a third party,the dispute itselfremains
a problem to be resolved by plaintiff and Verizon. Such a conflict is manifestly covered in the
broad arbitration agreement to which plaintiff agreed.

Def. Ex. C.(requiring arbitration of

"ANY DISPUTE THAT IS ANY WAY RELATES TO OR ARISE OUT OF THIS

AGREEMENT OR FROM ANY EQUIPMENT,PRODUCTS AND SERVICES YOU
RECEIVE FROM US...").

Broad arbitration agreements such as Verizon's are generally construed by courts to

cover all claims arising from the customer's relationship with defendants. Moses H. Cone Mem'l

Hosp..460 U.S. at 24-25("The Arbitration Act establishes that, as a matter offederal llw,any

doubts concerning the scope ofarbitrable issues should be resolved in favor ofarbitratijon").
"Broad arbitration clauses enjoy a presumption of arbitrability." Sacchi. 2015 WL 765940, at *9
(internal quotation omitted). There is no doubt that plaintiffs complaints regarding billing and
services are clearly within the scope of Verizon's arbitration agreement.

Where the arbitration agreement is valid and enforceable, class action waivers in

arbitration provisions are also enforceable. Concepcion. 563 U.S. at 344. Other courts, including
the Supreme Court, have held that class action waivers such as Verizon's are permitted and

enforceable, and that a finding to the contrary would undermine the efficient dispute resolution

goals underlying the FAA."* Id-; Sacchi. 2015 WL 765940, at *10; Litman v. Cellco P'ship. 655
F. 3d 225,231 (3d Cir. 2011). There is no basis for plaintiffs contention that the clajjs action
waiver should not apply.
IV. CONCLUSION

For the foregoing reasons, the defendants' motion to compel arbitration and stay the case

is granted.

'

SO ORDERED.

Dated: Brooklyn, New York

March-VKloiS

s/ RJD
RAYMOND J. DEARIE

United States District Judge

^
Concepcion. 563 U.S. at 344("The overarching purpose ofthe FAA,evident in the text of§§ 2, 3, and 4, is to
ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings.
Requiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus
creates a scheme inconsistent with the FAA.").