Arbitration & Mediation

Middle District of Florida Court Upholds Comcast's Arbitration Clause, Class Action Waiver, and One-Year Period to Bring Claim

By Christopher B. Hopkins, Esq.

A federal district court in Jacksonville handed down an order enforcing the arbitration notice between a cable company and its subscribers in Brian Sanders et al. v. Comcast Cable Holdings, LLC et al. Given that we have not seen much Florida-based case law on "billing inserts," class action waivers, and contractual terms which shorten the statute of limitation, this case may be a big decision for 2008.

The underlying dispute is that Comcast did not provide "On Demand" service which was free from technical difficultly. Instead, there were alleged lengthy disruptions which were purportedly an unfair trade practice (under Florida's statute) and a breach of the service agreement. Apparently, this had been (or still is?) an issue given the existence of comcastwatch.com and ComcastFixMyProblem.com. More recently, Microsoft's Xbox Live service was accused of similar shortcomings which lead to a Texas-based suit against them (note that the service agreement limits damages to "actual damages" of one month of service and that Microsoft can disconnect a person at their discretion...).

"Bill Stuffers / Billing Inserts"

In Sanders, the court first dealt with the question of whether there was even an agreement to arbitrate; neither Comcast nor its subscribers signed an agreement. Instead, Comcast used a "billing insert" or "bill stuffer" where they put the Arbitration Notice in with the subscribers' bill envelopes. We haven't seen a lot of Florida jurisprudence on this issue but it is a fairly common business practice, particularly in the credit card industry. The Third DCA recently upheld a "billing insert" practice in Bank of America v. Michele L. Evans.

The parties disputed whether there was an agreement to arbitrate -- Comcast filed affidavits about its common practice and the plaintiffs countered with the claim that they never received the insert. Plaintiffs' counsel cleverly asked the court for a jury trial to resolve the issue under the FAA. Likely, counsel was hoping that a jury would side with a consumer. The federal court denied that request, claiming that the defendant's affidavits created a rebuttable presumption that the billing insert was sent and received; plaintiffs' affidavits to the contrary created an issue of fact but was not enough since their affidavits only proved that they didn't see it, not that it wasn't there. For more on billing stuffers / billing inserts, take a look at Rivera v. AT&T. We also provided a more recent and longer discussion of the practice when we discussed the California Discover Bank decision.

Failure to Put "Class Action Waiver" in Title of Insert Was Not Fatal

The plaintiffs further argued that the class action waiver was procedurally unenforceable since it was on page 3 of the 4 page Arbitration Notice. Moreover, class action waiver was more than an arbitration agreement and the failure to entitle the insert more clearly was allegedly deceptive and unconscionable.

Not so, according to the Middle District. First, the class action waiver was in all capital letters. Second, the plaintiffs' arguments "ring hollow" since the Arbitration Notice had an opt out class (with no penalty) and its was not a take-it-or-leave-it adhesion contract. Thus, no need to reference "class action waiver" in the title of the billing insert.

Class Action Waiver

The Eleventh Circuit recently struck down a different arbitration provision in Dale v. Comcast. In that case, however, the 11th Circuit said that these waivers should be viewed on a case-by-case basis. In Dale and prior cases, the waiver was defeated because of violations of statutory attorney fee provisions. Since then, it appears Comcast has tidied up its agreement language. Herein, attorney's fees are available thus an individual plaintiff would still be motivated to pursue a small claim. Moreover, Comcast pays for the arbitrators and there is an opt-out provision. Thus, waiver was enforced.

One Year Limitation

The Eleventh Circuit previously stated in Maxcess, Inc. v. Lucent Technologies, Inc. that "a contractual provision shortening the period of time for filing a suit was not contrary to a strong [New York] public policy." This decision brings that principle home to Florida as the Middle District likewise claimed that there was no strong contrary public policy in Florida either -- thus a contract could shorten the period to one year.

There is a lot to this opinion and the stakes are fairly high so we would not be so surprised to see this taken to the 11th Circuit. We'll be watching.

Full post as published by Florida Arbitration Law on January 22, 2008 (boomark / email).