Freedman v. Comcast Corp., 435 September Term, 2008.

• Decision Date: 28 January 2010
• Docket Number: No. 2102, September Term, 2008.,No. 435 September Term, 2008.,435 September Term, 2008.,2102, September Term, 2008.
• Parties: Michael A. FREEDMAN v. COMCAST CORPORATION, et al.
• Court: Court of Special Appeals of Maryland

988 A.2d 68

190 Md. App. 179

Michael A. FREEDMAN v. COMCAST CORPORATION, et al.

No. 435 September Term, 2008.

No. 2102, September Term, 2008.

Court of Special Appeals of Maryland.

January 28, 2010.

Charles J. Piven (Yelena Trepetin, Brower Piven, on brief), Baltimore, for Appellant.

Adam S. Caldwell (Elizabeth A. Drogula, Davis, Wright, Tremaine LLP, on brief), Washington, DC, for Appellee.

Panel: WOODWARD, MATRICCIANI and RAYMOND G. THIEME, JR. (Retired, Specially Assigned), JJ.

MATRICCIANI, J.

Appellant, Michael A. Freedman, claimed that appellee, the group of corporate entities known and commonly referred to as "Comcast," violated the 1997 Maryland Wiretapping and Electronic Surveillance Act, Md.Code (1974, 2006 Repl.Vol.), § 10-402 et seq. of the Courts and Judicial Proceedings Article ("CJ"). Appellant filed suit in the Circuit Court for Baltimore City and the parties filed several initial pleadings. The circuit court denied appellee's motion to compel arbitration and dismissed the suit, without prejudice.¹ Appellant twice amended his complaint, and appellee moved again to dismiss and to compel arbitration. The circuit court denied appellee's motion to dismiss but granted appellee's motion to compel arbitration and stayed the case. Appellant then timely noted this appeal.²

QUESTION PRESENTED

Appellant presents one question for our review, which we have edited for clarity:

I. Did the Circuit court err in compelling arbitration of appellant's claims?

For the reasons set forth below, we affirm the judgment of the circuit court.

FACTS AND PROCEEDINGS

Appellant was a Comcast customer from approximately 2001 until the time of this suit.³ Appellant claims that, at various times and under various circumstances, he dialed 1-800-COMCAST and he did not hear the well-known warning that his phone call might be recorded for security or training purposes. According to appellant, Comcast recorded these conversations in violation of the Maryland Wiretapping and Electronic Surveillance Act.

In May of 2007, appellee distributed a bill insert that notified customers, including appellant, of changes to their "Service Agreements." The insert gave notice of a new arbitration provision (the "Arbitration Provision"), which we have reproduced, in part:

NOTICE FROM COMCAST REGARDING ARBITRATION

THIS NOTICE CONTAINS AN IMPORTANT CHANGE TO YOUR SUBSCRIBER AGREEMENT WITH COMCAST (THE "AGREEMENT"). PLEASE NOTE THAT THIS CHANGE TO THE AGREEMENT AS SET FORTH BELOW RESTATES AND SUPERSEDES ANY PREEXISTING PROVISION IN THE AGREEMENT CONCERNING ARBITRATION AND TAKES EFFECT THIRTY (30) DAYS AFTER THIS NOTICE WAS MAILED TO YOU (THE "EFFECTIVE DATE").

IF YOU DO NOT WISH TO BE BOUND BY THIS ARBITRATION PROVISION, YOU MUST NOTIFY COMCAST IN WRITING WITHIN THIRTY (30) DAYS FROM THE DATE THAT YOU FIRST RECEIVE THIS AGREEMENT BY VISITING WWW.COMCAST.COM/ARBITRATIONOPTOUT, OR BY MAIL TO COMCAST . . .

IF YOU DO NOT OPT OUT OF ARBITRATION IN THE MANNER INDICATED ABOVE YOUR CONTINUED USE OF THE SERVICE AFTER THE EFFECTIVE DATE SHALL BE DEEMED TO BE YOUR ACCEPTANCE OF THIS CHANGE. THIS CHANGE MAY HAVE A SUBSTANTIAL IMPACT ON THE WAY IN WHICH YOU OR COMCAST WILL RESOLVE ANY DISPUTE WITH ONE ANOTHER.

ARBITRATION

a. Purpose: If you have a Dispute (as defined below) with Comcast that cannot be resolved through the informal dispute resolution process described in the Agreement, you or Comcast may elect to arbitrate that Dispute in accordance with the terms of this Arbitration Provision rather than litigate the Dispute in court. Arbitration means you will have a fair hearing before a neutral arbitrator instead of in a court by a judge or jury.

b. Definitions: As used in this Provision, the term "Dispute" means any dispute, claim or controversy between you and Comcast regarding any aspect of your relationship with Comcast that has accrued or may hereafter accrue, whether based in contract, statute, regulation, ordinance, tort (including, but not limited to, fraud, misrepresentation, fraudulent inducement, negligence or any other intentional tort), or any other legal or equitable theory, and includes the validity, enforceability or scope of this Arbitration Provision (with the exception of the enforceability of the class action waiver clause provided in paragraph f(2)). "Dispute" is to be given the broadest possible meaning that will be enforced. As used in this Provision, "Comcast" means Comcast Cable Communications, LLC, its officers, directors, employees and agents, and all entities using the brand name "Comcast", including your local cable company, its employees, authorized agents, and its parents, subsidiaries and affiliated companies. As used in this Provision, the term "Arbitration Provision" means all the terms of this notice.

Appellant paid the bill containing this insert and he did not choose to opt out of the new arbitration provision within the allotted time.

Appellant filed his original complaint on September 11, 2007, in the Circuit Court for Baltimore City, simultaneously moving for a temporary restraining order ("TRO"). Appellee opposed the TRO and noted its right and intent to arbitrate appellant's claims, but acknowledged that the Arbitration Provision may allow appellant to seek injunctive relief to maintain the status quo. The circuit court denied appellant's TRO motion on September 27, 2007.

On October 11, 2007, appellee filed a motion to compel arbitration and stay or dismiss the complaint, as well as a separate motion to dismiss or for summary judgment,⁴ which reasserted appellee's right and intent to arbitrate the dispute. That day, appellee also filed notice of removal to federal court. The case was remanded on January 31, 2008. On March 21, 2008, the circuit court granted appellee's motion to dismiss for failure to state a claim and denied appellee's motion to compel arbitration.⁵

Appellant twice amended his complaint, in May and June of 2008, and each time appellee moved to dismiss and to compel arbitration, maintaining its right and intent to arbitrate the dispute. Appellee did not seek summary judgment in these subsequent motions.

On October 22, 2008, the circuit court denied appellee's motion to dismiss but granted appellee's motion to compel arbitration and stayed the case. Appellant then timely noted this appeal.⁶

DISCUSSION

In Maryland, an order of a circuit court compelling arbitration completely terminates the action in the circuit court and is an appealable final judgment under CJ § 12-301. Wells v. Chevy Chase Bank, F.S.B., 363 Md. 232, 241, 768 A.2d 620 (2001) (citing Horsey v. Horsey, 329 Md. 392, 402-404, 620 A.2d 305 (1993); Litton Bionetics, Inc. v. Glen Constr. Co., 292 Md. 34, 41-42, 437 A.2d 208 (1981)); accord Addison v. Lochearn Nursing Home, LLC, 411 Md. 251, 983 A.2d 138 (2009).

Appellant's primary argument in support of his point of error is that the parties did not agree to arbitrate his claims. Appellant also presents three alternative arguments:⁷ first, that appellee waived its right to arbitrate the claims; second, that the Arbitration Provision is unenforceable because it fails to identify certain parties; and third, that the arbitration provision is unconscionable.⁸

A. The Arbitration Provision

The Maryland Uniform Arbitration Act ("Maryland Arbitration Act"), now codified in Maryland Code (1974, 2006 Repl. Vol.), CJ § 3-206(a), provides:

Except as otherwise provided in this subtitle, a written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy arising between the parties in the future is valid and enforceable, and is irrevocable, except upon grounds that exist at law or in equity for the revocation of a contract.

A trial court's decision to compel or deny arbitration is a conclusion of law, which we review de novo to determine whether an agreement to arbitrate existed. Holloman v. Circuit City Stores, Inc., 391 Md. 580, 588, 894 A.2d 547 (2006). The Court of Appeals has detailed its approach to these cases:

First . . . if an arbitration clause is clear, it is initially for the courts to determine whether the subject matter of a dispute falls within the scope of the arbitration clause. Second, . . . in determining whether a dispute falls within the scope of an arbitration clause, arbitration should be compelled if the arbitration clause is broad and does not expressly and specifically exclude the dispute. Third, . . . if an arbitration clause is unclear as to whether the subject matter of the dispute falls within the scope of the arbitration agreement, the question of arbitrability ordinarily should be left to the arbitrator.

Allstate Ins. Co. v. Stinebaugh, 374 Md. 631, 643, 824 A.2d 87 (2003) (citing Crown Oil & Wax Co. v. Glen Constr. Co., 320 Md. 546, 578 A.2d 1184 (1990); Gold Coast Mall, Inc. v. Larmar Corp., 298 Md. 96, 468 A.2d 91 (1983)) (internal quotation marks omitted).

When construing an arbitration provision, Maryland Courts follow the objective law of contract interpretation. Koons Ford of Balt., Inc. v. Lobach, 398 Md. 38, 47, 919 A.2d 722 (2007).

A court construing an agreement under this objective test must first determine from the language of the agreement itself what a reasonable person in the position of the parties would have meant at the time it was effectuated. In addition, when the language of the contract is plain and unambiguous there is no room for construction, and a court must presume that the parties meant what they expressed. In these circumstances, the true test of what is meant is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant. Consequently, the clear and unambiguous language of an agreement will not give way to what the parties thought that the agreement meant or intended it to mean.

Id. (quoting Gen. Motors Acceptance Corp. v. Daniels, 303 Md. 254, 261, 492...