446 F.3d 25 (1st Cir. 2006), 04-2619, Kristian v. Comcast Corp.
|Docket Nº:||04-2619, 04-2655.|
|Citation:||446 F.3d 25|
|Party Name:||Martha KRISTIAN and James D. Masterman, Plaintiffs, Appellees, v. COMCAST CORPORATION; Comcast Mo Group, Inc.; Comcast Cable Holdings, LLC; Comcast Cable Communications Holdings, Inc.; Comcast Cable Communications, Inc.; and Comcast Holdings Corporation, Defendants, Appellants, AT & T Broadband, Defendant. Jack Rogers and Paul Pinella, Plaintiffs,|
|Case Date:||April 20, 2006|
|Court:||United States Courts of Appeals, Court of Appeals for the First Circuit|
Heard Sept. 14, 2005.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, Hon. Edward F. Harrington, Senior U.S. District Judge.
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Jaime A. Bianchi, with whom Christopher M. Curran, George L. Paul, Noah A. Brumfield, and White & Case LLP; and Christopher F. Robertson and Seyfarth Shaw LLP were on brief, for appellants.
Alan Gilbert, with whom Stacey L. Mills, Samuel D. Heins, David Woodward, Jessica N. Servais, and Heins Mills & Olson, P.L.C; John P. Zavez, Noah Rosmarin, and Adkins, Lelston & Zavez, P.C.; and Barry Barnett, John Turner, and Susman Godfrey LLP were on brief, for appellees.
Before Lipez and Howard, Circuit Judges, and Restani, Judge [*]
LIPEZ, Circuit Judge.
This appeal requires us to evaluate the enforceability of arbitration agreements that Comcast, a cable television provider, invoked against a group of its subscribers, who have sued it for violations of state and federal antitrust laws. Concluding that the arbitration agreements did not have retroactive effect, the district court ruled that the subscribers could not be compelled to arbitrate their antitrust claims. In so ruling, the district court did not have to reach a number of other issues raised by the subscribers in opposition to Comcast's demand for arbitration.
We disagree with the district court's interpretation of the arbitration agreements. Their language does have retroactive effect. This ruling requires us to address the other arguments raised by the subscribers against the enforceability of the arbitration agreements. We find that Comcast provided adequate notice of the arbitration agreements. However, we conclude that the provision of the arbitration agreements barring the recovery of treble damages is invalid as applied to the subscribers' federal antitrust claims because it prevents the vindication of a federal statutory right. Similarly, we conclude that the provisions of the arbitration agreements barring the recovery of attorney's fees and costs and barring class arbitration are invalid because they prevent the vindication of statutory rights under state and federal law. Nevertheless, the arbitration agreements contain savings clauses that provide for severance of these invalid provisions. With these provisions severed, the arbitration can go forward. Thus, we reverse the district court's ruling that the subscribers
cannot be compelled to arbitrate their antitrust claims.
Plaintiffs-Appellees James D. Masterman, Paul Pinella, Jack Rogers, and Martha Kristian (collectively, "Plaintiffs") are Boston area subscribers of cable services obtained from Defendant-Appellant Comcast Corporation ("Comcast"). Plaintiffs subscribed for cable services through Comcast predecessor companies in 1987, 1991, 1994, and 1999, respectively. Their two complaints -- one in state court, one in federal court -- allege that the prices that they have been paying for cable services are inflated as a result of anticompetitive practices on the part of Comcast and AT&T Broadband, Comcast's predecessor-in-interest.
The complaints allege that Comcast has been consolidating its hold on markets and territories through agreements to swap or exchange cable television assets ("swapping agreements").1 The complaints specifically reference two swapping agreements, one in 1999 and another in 2001. Plaintiffs Kristian and Masterman allege that Comcast engages in conduct that excludes, prevents, or interferes with competition, including Comcast's refusal to provide programming access to competitors either before or after Comcast merged with AT&T Broadband in 2002. Plaintiffs seek certification of class actions comprised of individuals who subscribed to Comcast cable services in the Boston area at anytime from December 1999 to the present.
When Plaintiffs first subscribed for cable services, none of their service agreements contained an arbitration provision. In 2001, Comcast began including an arbitration provision in the terms and conditions governing the relationship between Comcast and its subscribers. These terms and conditions are contained, in part, in notices that inform subscribers at the time of cable installation -- and at least annually thereafter -- of the terms and conditions governing their subscriptions ("Policies & Practices"). Comcast included the Policies & Practices with each Boston area subscriber's invoice as a billing stuffer during the November 2001 billing cycle.
The version of the Policies & Practices mailed in November/December 2002 contained an arbitration agreement that, at first blush, substantially differed from the one in the 2001 Policies & Practices. The arbitration agreement contained in the November/December 2003 Policies & Practices remained unchanged from 2002. Comcast seeks to compel arbitration pursuant to the language of the arbitration agreements contained in the 2002/2003 Policies & Practices; the 2002/2003 arbitration agreements are the focus of this appeal.
Rogers and Pinella filed a complaint ("Rogers" complaint) against Comcast and AT&T Broadband in Massachusetts state court, alleging a cause of action under the Massachusetts Antitrust Act, Mass. Gen. Laws. Ch. 93. Comcast removed this action to the U.S. District Court for the District of Massachusetts. Contemporaneously, Kristian and Masterman filed a complaint ("Kristian" complaint) against Comcast, as well as several other Comcast
entities, in the U.S. District Court for the District of Massachusetts, alleging causes of action under the Clayton Antitrust Act, 15 U.S.C. §§ 15 and 26.
Pursuant to the arbitration agreements at issue, Comcast filed motions to compel arbitration in both cases. Plaintiffs in Rogers presented several arguments to the district court in opposition to Comcast's motion to compel arbitration (Plaintiffs' opposition to Comcast's motion to compel arbitration in Kristian was in all relevant respects identical to the opposition filed by the Rogers' Plaintiffs). They asserted, inter alia, that the facts that gave rise to their complaint occurred before the existence of the 2002/2003 arbitration agreements; therefore, the agreements did not apply to their antitrust claims. Plaintiffs also contended that the arbitration agreements prevented them from vindicating their causes of action under federal antitrust law, and that they violated public policy and were unconscionable under state law. Concluding that the language of the 2002/2003 arbitration agreements did not have retroactive effect, the district court ruled that they did not apply to the state antitrust claims at issue. The district court did not reach Plaintiffs' other arguments.
The district court applied its decision in Rogers to Kristian as both complaints were based on the same underlying facts, the arbitration agreements at issue in both cases were identical, and the district court's reasoning applied equally to both complaints. Thereafter, Comcast filed an interlocutory appeal contesting the district court's denial of its motions to compel arbitration. Both cases are currently stayed, pending resolution of this appeal. As the district court's order refusing to compel arbitration applied to both the Rogers and Kristian complaints, the two cases have been consolidated for purposes of this appeal.
We evaluate the district court's denial of a motion to compel arbitration de novo. Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 551 (1st Cir. 2005). However, in deciding this appeal, "[w]e are not wedded to the lower court's rationale, but, rather, may affirm its order on any independent ground made manifest by the record." InterGen N.V. v. Grina, 344 F.3d 134, 141 (1st Cir. 2003).
As noted, the district court found that the arbitration agreements in the 2002/2003 Policies & Practices did not apply retroactively. Below, in relevant part, is the 2002/2003 arbitration language at issue, set forth in bold face as it appears in the agreements:
IF WE ARE UNABLE TO RESOLVE INFORMALLY ANY CLAIM OR DISPUTE RELATED TO OR ARISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED, WE HAVE AGREED TO BINDING ARBITRATION EXCEPT AS PROVIDED BELOW. YOU MUST CONTACT US WITHIN ONE (1) YEAR OF THE DATE OF THE OCCURRENCE OF THE EVENT OR FACTS GIVING RISE TO A DISPUTE . . . OR YOU WAIVE THE RIGHT TO PURSUE A CLAIM BASED UPON SUCH EVENT, FACTS OR DISPUTE.
THERE SHALL BE NO RIGHT OR AUTHORITY FOR ANY CLAIMS TO BE ARBITRATED ON A CLASS ACTION OR CONSOLIDATED BASIS OR ON BASES INVOLVING CLAIMS BROUGHT IN A PURPORTED REPRESENTATIVE CAPACITY ON BEHALF OF THE GENERAL PUBLIC (SUCH AS A PRIVATE ATTORNEY GENERAL), OTHER SUBSCRIBERS, O
OR OTHER PERSONS SIMILARLY SITUATED UNLESS YOUR STATE'S LAWS PROVIDE OTHERWISE.
The district court focused its attention on the first sentence of the first paragraph, in particular the phrase "the services provided":
The inclusion of the word "the" before "services provided" indicates to the Court that the services being discussed are those specifically provided under "this agreement." It is also noteworthy that...
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