Byrne v. Charter Commc'ns, Inc.

• Decision Date: 14 January 2022
• Docket Number: Civil Action No. 3:20-cv-712 (CSH)
• Citation: 581 F.Supp.3d 409
• Parties: Randall BYRNE, David Kleuskens, Jerry Henry, Jason Weber, Susan Foster-Harper, and Lisa Kinell, on behalf of themselves and all others similarly situated, Plaintiffs, v. CHARTER COMMUNICATIONS, INC., Charter Communications Operating, LLC, Spectrum Mid-America, LLC, and Spectrum Northeast, LLC, Defendants.
• Court: U.S. District Court — District of Connecticut

581 F.Supp.3d 409

Randall BYRNE, David Kleuskens, Jerry Henry, Jason Weber, Susan Foster-Harper, and Lisa Kinell, on behalf of themselves and all others similarly situated, Plaintiffs,

v.CHARTER COMMUNICATIONS, INC., Charter Communications Operating, LLC, Spectrum Mid-America, LLC, and Spectrum Northeast, LLC, Defendants.

Civil Action No. 3:20-cv-712 (CSH)

United States District Court, D. Connecticut.

Signed January 14, 2022

Avery S. Halfon, Daniel E. Seltz, Lieff Cabraser Heimann & Bernstein, LLP, New York, NY, Daniel Hattis, Hattis & Lukacs, Bellevue, WA, Hugh W. Cuthbertson, Steven C. Rickman, Zangari Cohn Cuthbertson Duhl & Grello P.C., New Haven, CT, Michael W. Sobol, Roger N. Heller, Lieff Cabraser Heimann & Bernstein, LLP, San Francisco, CA, Paul Karl Lukacs, Hattis & Lukacs, Thousand Oaks, CA, for Plaintiffs Randall Byrne, David Kleuskens, Jerry Henry, Jason Weber, Susan Foster-Harper.

Daniel E. Seltz, Lieff Cabraser Heimann & Bernstein, LLP, New York, NY, Michael W. Sobol, Lieff Cabraser Heimann & Bernstein, LLP, San Francisco, CA, for Plaintiff Lisa Kinell.

Brian E. Moran, Brian J. Wheelin, Trevor Loomis Bradley, Robinson & Cole LLP, Stamford, Stamford, CT, Daniel T. Donovan, Judson Damron Brown, Erin Elizabeth Cady, Kirkland & Ellis LLP, Washington, DC, Alexia Renee Brancato, Sara S. Tatum, Kirkland & Ellis LLP, New York, NY, for Defendants Charter Communications, Inc., Charter Communications Operating LLC.

Brian E. Moran, Trevor Loomis Bradley, Robinson & Cole LLP, Stamford, Stamford, CT, Daniel T. Donovan, Judson Damron Brown, Kirkland & Ellis LLP, Washington, DC, for Defendants Charter Communications Holdings, LLC, Spectrum Management Holding Company, LLC.

Brian J. Wheelin, Trevor Loomis Bradley, Robinson & Cole LLP, Stamford, Stamford, CT, Daniel T. Donovan, Judson Damron Brown, Erin Elizabeth Cady, Kirkland & Ellis LLP, Washington, DC, Alexia Renee Brancato, Sara S. Tatum, Kirkland & Ellis LLP, New York, NY, for Defendants Spectrum Mid-America, LLC, Spectrum Northeast, LLC.

RULING ON CHARTER'S MOTION TO DISMISS COMPLAINT OR TO COMPEL ARBITRATION

HAIGHT, Senior District Judge:

This is a purported class action brought by six individual Plaintiffs who subscribed to cable television service packages disseminated by the corporate Defendants ("Charter").¹ Plaintiffs assert that they and putative class members suffered monetary damages as the result of Charter's conduct of its cable television service business in an unfair, false, misleading, or deceptive fashion. Charter denies all allegations of wrongdoing. This Court's subject matter jurisdiction is based on the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2).

Charter has moved to dismiss Plaintiffs’ complaint under Federal Rule of Civil Procedure 12(b)(6) or—in the alternative—to compel submission of the underlying disputes of five of the six Plaintiffs to arbitration, pursuant to the Federal Arbitration Act, 9 U.S.C. § 4. Plaintiffs resist both motions. This Ruling decides them.

I

The services Charter provides, and the use Plaintiffs make of them, furnish dramatic evidence of the changes that have occurred in home entertainment over the course of a single lifetime.

Not long ago, as eternity measures time, there was no television and consequently no cable television programming. People had devices called "radios" in their homes. In the New York City area, radio owners listened principally to the four leading commercial stations—WEAF, WOR, WJZ and WABC—and the occasional independent station like WQXR (classical music). A consumer accessed those services by turning his or her radio on, turning the device's dial to a station's number, and listening to the program then being broadcast.

The television owner of today turns the device on and is confronted with literally hundreds of cable television channels to which he or she can watch and listen. Companies like Charter exist that bring order out of seeming chaos by selecting particular cable television channels and arranging them in designated groups or "packages," which are made available to television program consumers upon payment of monthly subscription fees.

II

In the case at bar, six individual Plaintiffs—Randall Byrne ("Byrne"), David Kleuskens ("Kleuskens"), Jerry Henry ("Henry"), Jason Weber ("Weber"), Susan Foster-Harper ("Foster-Harper"), and Lisa Kinell ("Kinell")—allege that they have been subscribers to cable television service packages disseminated by Defendant Charter Communications, Inc. and/or one of its subsidiaries, Defendants Charter Communications Operating, LLC, Spectrum Mid-America, LLC, and Spectrum Northeast, LLC.

Plaintiffs’ Second Amended Complaint ("SAC") is the operative pleading. Of their number, Plaintiffs allege that Byrne and Kleuskens are citizens of Ohio; that Henry is a citizen of Florida who resides in Ohio from May through October each year; that Weber and Foster-Harper are citizens of Kentucky; and that Kinell is a citizen of Massachusetts. SAC [Doc. 50] ¶¶ 12–17. The Charter entities, meanwhile, are alleged to have been formed under Delaware law, with offices located principally in Connecticut. Id. ¶¶ 18–21. The Court has subject matter jurisdiction over this action pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2).²

Plaintiffs’ theory of the case is a straightforward one. Plaintiffs allege that Charter has engaged in

a bait-and-switch scheme whereby Charter advertises to consumers that its cable television service packages will have a fixed monthly rate for a period of one to two years, but after consumers sign up or renew their service for the promised fixed-rate period, Charter ... increases the monthly rate in multiple deceptive ways.

SAC ¶ 1. Plaintiffs claim that these "deceptive ways" include: (1) adding a "Broadcast TV Surcharge" to each monthly bill for every customer, and regularly increasing the surcharge; (2) promising customers a "discounted" monthly price, without disclosing that the "discount" is pegged to a list price rate that Charter increases at its whim; (3) removing channels originally presented as part of a cable television service package, and then charging additional fees to include those channels going forward; and (4) increasing the monthly price of customer equipment such as cable boxes, which customers use to receive television service. Id. ¶¶ 2–6.

Plaintiffs’ action purports to be on behalf of three classes of Charter customers and invokes the class action provisions in Federal Rules of Civil Procedure 23(a), (b)(2), and (b)(3). Id. ¶ 178. Specifically, Plaintiffs Byrne, Kleuskens and Henry seek to represent an "Ohio Class" consisting of persons who purchased television service from Charter and "resided or received Charter television service in Ohio." Id. ¶ 179. Plaintiffs Weber and Foster-Harper seek to represent Charter television customers who "resided or received Charter television service in Kentucky." Id. ¶ 180. Plaintiff Kinell seeks to represent Charter television customers who "resided or received Charter television service in Massachusetts." Id. ¶ 181.

III

When Charter's alternative motions came on for oral argument, counsel for Charter began contentions in support of Charter's motion to compel arbitration and then discussed Charter's motion to dismiss the complaint. As the hearing progressed, counsel for both sides presented arguments in that order. The Court's discussion in this Ruling shall proceed in similar fashion.

Under the Federal Arbitration Act, where parties to a contract have agreed "to settle by arbitration a controversy thereafter arising out of such contract," the parties’ agreement to arbitrate their dispute "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The statute "establishes a national policy favoring arbitration when the parties contract for that mode of dispute resolution." In re Am. Express Fin. Advisors Sec. Litig. , 672 F.3d 113, 127 (2d Cir. 2011) (quoting Preston v. Ferrer , 552 U.S. 346, 349, 128 S.Ct. 978, 169 L.Ed.2d 917 (2008) ); see also, e.g., Nicosia v. Amazon.com, Inc. , 834 F.3d 220, 228 (2d Cir. 2016) ("The Supreme Court has repeatedly instructed that the [Federal Arbitration Act] ‘embodies a national policy favoring arbitration.’ " (quoting AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 346, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) )). If a party to an arbitration agreement resists his or her counterpart's efforts to arbitrate a dispute, the party seeking arbitration "may petition [a district court] for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4.

"When considering a motion to compel arbitration, courts must resolve two questions: ‘(1) whether the parties agreed to arbitrate, and, if so, (2) whether the scope of that agreement encompasses the claims at issue.’ " Dowe v. Leeds Brown L., P.C. , 419 F. Supp. 3d 748, 756 (S.D.N.Y. 2019) (quoting Holick v. Cellular Sales of N.Y., LLC , 802 F.3d 391, 394 (2d Cir. 2015) ).³ In determining whether the parties have agreed to arbitrate—i.e., whether an arbitration agreement has been formed—the court applies state substantive law. See, e.g. , Starke v. SquareTrade, Inc. , 913 F.3d 279, 288 (2d Cir. 2019) ; see also Deleon v. Dollar Tree Stores, Inc. , No. 3:16-CV-00767 (CSH), 2017 WL 396535, at *2 (D. Conn. Jan. 30, 2017) ("Although the FAA creates a body of federal substantive law regarding arbitration, ‘in evaluating whether the parties have entered in a valid arbitration agreement, the court must look to state law principles.’ " (quoting Cap Gemini Ernst & Young, U.S., LLC v. Nackel , 346 F.3d 360, 364 (2d Cir. 2003) )). A "party seeking to compel arbitration ‘must make a prima facie initial showing that an agreement to arbitrate existed before the burden shifts to the party opposing arbitration to put the making of that agreement in issue.’ " Scott v. Griswold Home Care , No....