Cassity v. Gci, Inc.
| Decision Date | 27 July 2017 |
| Docket Number | Case No. 3:17-cv-00004-SLG |
| Court | U.S. District Court — District of Alaska |
| Parties | GEORGE KRIS CASSITY (pro se), Plaintiff, v. GCI, INC.; GCI HOLDINGS, INC.; GCI COMMUNICATION CORP.; GCI CABLE, INC.; MARK MODEROW, Senior Counsel, in his official and personal capacity; DAVID HYMAS, Registered Agent in his official and personal capacity, Defendants. |
This is a dispute between a telephone and internet service provider, Defendant GCI, Inc.1 and a customer, Plaintiff George Kris Cassity. Before the Court at Docket 15 is Defendant's Motion to Compel Arbitration and to Stay Complaint. The motion is fully briefed.2 Oral argument was not requested and was not necessary to the Court's decision.
The Federal Arbitration Act ("FAA") allows a party "aggrieved by the alleged . . . refusal of another to arbitrate under a written agreement for arbitration [to] petition any United States district court . . . for an order directing that such arbitration proceed in themanner provided for in such agreement."3 The FAA "leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed."4 "The court's role under the Act is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue."5
Mr. Cassity challenges GCI's motion on both prongs of this inquiry, contending both that the agreement is unenforceable and that it does not govern this dispute.
The Court has jurisdiction to determine this motion pursuant to 28 U.S.C. § 1331, federal question jurisdiction.
"[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit."6 Whether the parties agreed to arbitrate is a matter of basic contract interpretation.7 The FAA provides that "[a] written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid,irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."8
Mr. Cassity and GCI entered an agreement or series of agreements sometime before January 10, 2014 pursuant to which GCI provided internet and other services.9 There appears to have been no arbitration provision in the contract at that time. However, in June of 2015 Mr. Cassity received a monthly billing notice containing the following advisement:
The Terms and Conditions for GCI TV and Internet Service have changed. One change is an agreement to arbitrate. By continuing to use the service(s) for 30 days after this notice, you are consenting to these changes.10
Mr. Cassity acknowledges both receipt of this notice and that he continued his internet service (but not his TV service) for more than 30 days, but he denies actually reading the notice or amendment.11 The changed language provided that Mr. Cassity and GCI would "settle all disputes between [them] by binding arbitration."12
Mr. Cassity challenges the validity of the agreement on several grounds. First, he claims that he never assented to this term.13 Second, Mr. Cassity contends the provisionis voidable on grounds of fraud,14 duress,15 and unconscionability.16 Third, he contends that GCI has waived its right to pursue arbitration.17 The Court addresses each challenge in turn.18
As Mr. Cassity recognizes, the Residential Internet Terms and Conditions (Internet Terms) governed Mr. Cassity's contractual relationship with GCI with regard to the provision of internet services.19 Those terms explicitly provide for their subsequent modification:
GCI will give you at least 30 days' advance notice of any changes to this agreement or our service, if such change materially adversely affects your rights or obligations under the agreement. . . . If you do not agree to the amended agreement, you may terminate the Service . . . . If you use the Service for more than 30 days after we notify you of a change, you agree to the amended Agreement.20
In Bingham v. City of Dillingham, the Alaska Supreme Court noted that if a contract offeror declares that he will "interpret silence as acceptance," then the offeror bears "the burden to prove 'unequivocal acceptance by the [offeree] and an intent to be bound."21 Mr. Cassity contends that GCI has not met its burden of "unequivocal proof" to establishacceptance of the modification in the face of Mr. Cassity's silence.22 But here, the acceptance was not conditioned on silence; acceptance of the modification was effective upon continued use of GCI's (the offeror's) services for 30 days. Mr. Cassity did use the service for more than 30 days—indeed, he is still using it.23 By his continued use of the service after receiving notice, Mr. Cassity accepted the terms of the modification and evinced an intent to be bound by it.
Burgess v. Qwest Corp. is not to the contrary.24 There, the contract provided that acceptance of the contract became valid when the user activated the service or "fail[ed] to return the equipment and cancel service within 30 days after ordering services."25 The Court held that there was no intent to be bound by the terms because, although the customer failed to return the equipment, she had "cancelled her internet service before it was activated . . . and immediately sought to return the modem."26 Here, by contrast, Mr. Cassity not only failed to return the equipment, but continued to pay for services pursuant to the agreement. Most important, and unlike the parties in either Burgess or Knutson v. Sirius XM Radio, Inc.27 (another case cited by Mr. Cassity), Mr. Cassity and GCI had a preexisting contractual relationship that established the terms of consent to modification.And similarly important—and again distinct from either Burgess or Knutson—Mr. Cassity received several notices of the changes to the agreement.28 The Court finds that Mr. Cassity accepted the arbitration provision.
Mr. Cassity raises three grounds for voiding the arbitration provision. He first asserts that the contract and the arbitration clause constitute a "constructive fraud" and that the arbitration provision is therefore voidable.29 Relying on Graham Oil Co. v. ARCO Products Co., Mr. Cassity contends that the contract as a whole is deceptive.30 But the provision that Mr. Cassity claims renders the arbitration clause deceptive appears in the "GCI Residential TV Terms and Conditions" (TV Terms), not in the Internet Terms that contains the arbitration provision.31 Even if that provision in the TV Terms was relevant, it clearly states—in all capital letters—that the contractual dispute resolution procedures still apply.32 Mr. Cassity cannot claim to have been deceived when it turned out that, as the contract affirms, those procedures still apply. Mr. Cassity has identified no fraud in the contract that would preclude enforcement of the arbitration provision.
Mr. Cassity next contends that his assent to the arbitration provision was procured under duress because GCI might have deleted the information he sought if he didn'tcontinue his contract.33 But, as Mr. Cassity recognizes, duress is an effective defense to a contract only if three elements are met: "(1) one party involuntarily accepted the terms of another, (2) circumstances permitted no other alternative, and (3) the circumstances were the result of coercive acts by the other party."34 But Mr. Cassity hasn't identified any "coercive acts" by GCI. He suggests that the "withholding of personal information" by GCI—that is, its inability or unwillingness to provide the information he had requested—was "both tortious and potentially criminal," but claims he accepted the contract because of the risk that terminating the contract would "embolden GCI to destroy additional records."35 But the record contains no evidence that GCI ever threatened to destroy any records or conditioned the release of information on Mr. Cassity's agreement to the arbitration clause.36 The mere fact that GCI retained a contractual right to delete information upon termination of service does not amount to a "coercive act," especially when federal law prohibits destruction of information when there is a "pending request[] . . . for access to such information."37 Because there is no "coercive act" sufficient to establish duress, the arbitration clause is not voidable on that basis.
Mr. Cassity's third argument in favor of voiding the arbitration provision is unconscionability. He specifically contends that the costs of arbitration that he might face would preclude him from vindicating statutory rights.38 The arbitration clause provides that GCI will "reimburse those fees [related to filing, administration, and payment of the arbitrator] for claims totaling less than $10,000 unless the arbitrator determines the claims are frivolous."39 Contract unconscionability is determined in Alaska based on an assessment of various factors such as "weakness in the contracting process," "gross disparity in values exchanged," and "gross inequality in bargaining power."40 But the Court need not decide whether this provision, pursuant to which GCI would pay arbitration fees for a party such as Mr. Cassity unless the claim exceeds $10,000, is unconscionable. This is because GCI has stipulated to "reimburse Mr. Cassity's filing fee, and [to] pay all administration and arbitrator fees in arbitration, regardless of the amount of Mr. Cassity's claim.41 Even assuming the provision requiring Mr. Cassity to pay certain arbitration fees if his claim exceeds $10,000 is unconscionable, the proper remedy would be to sever that provision and hold that GCI "will be responsible for all of the arbitration costs" rather than "ruling...
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