Patricia Rowe P.A. v. AT&T, Inc., C/A No.: 6:13-cv-01206-GRA

Decision Date15 January 2014
Docket NumberC/A No.: 6:13-cv-01206-GRA
CourtU.S. District Court — District of South Carolina
PartiesPatricia Rowe P.A. and Dr. Patricia S. Rowe, individually and on behalf of other persons and entities similarly situated, Plaintiff, v. AT&T, Inc.; AT&T Corp.; BellSouth Telecommunications, LLC formerly BellSouth Telecommunications, Inc.; and Evergreen Telecom Services, LLC, Defendants.
ORDER

(Written Opinion)

This litigation arises out of Plaintiff Dr. Patricia Rowe's purchase of telecommunication services from Defendants AT&T Inc., AT&T Corp., and BellSouth Telecommunications, LLC ("BellSouth") (collectively "AT&T") for her business. Plaintiff contends that as a result of an automatic renewal provisions contained in her original services contract, AT&T charged her, and many other similarly situated customers, an early termination fee. Arguing that AT&T has been fraudulent and deceptive, Plaintiff looks to this Court to remedy AT&T's widespread practice of unauthorized contract renewals and early termination fees ("ETFs").

Defendants have not responded to the merits of Plaintiff's putative class-action complaint. Instead, AT&T argues that Plaintiff cannot seek relief in this Court because the "BellSouth Service Agreement for Business Services Bundled Offerings in South Carolina" (the "BSA") requires Plaintiff to submit all of her claims to binding arbitration. Plaintiff disagrees, asserting that she, and other customers like her, neveragreed to arbitrate or waive the right to participate in a class action regarding an early termination fee. Plaintiff further contends that the BSA is unconscionable.

This matter is formally before this Court based on two motions. The first is Defendant AT&T Inc.'s amended and re-urged motion to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). The second is Defendants AT&T Inc., AT&T Corp., and BellSouth's amended and re-urged motion to compel arbitration of all claims asserted by Plaintiff in her amended & restated complaint. After reviewing the parties' submissions and the statements of counsel at the hearing on these motions, this Court DENIES Defendant AT&T Inc.'s motion to dismiss and GRANTS Defendants' motion to compel arbitration and stay proceedings.

Background

On November 8, 2007, Plaintiff contracted with AT&T to receive telecommunications services at her chiropractic business for a twelve-month period and signed the "BellSouth Welcoming Rewards Promotion Agreement" (the "WRPA"). ECF No. 24-1. The WRPA specifies that it includes "terms incorporated by reference," including terms listed on BellSouth's website. Id. at 2. Plaintiff signed the contract under an acknowledgment stating: "[b]y signing or indicating acceptance, I acknowledge and accept all terms of the Agreement as set forth above, including all terms set forth in the 'Service Agreement, Service Descriptions and Price Lists' found at http://cpr.bellsouth.com/bst/product_line.htm." Id. at 4. Several months prior to Plaintiff signing her contract, a copy of the BSA applicable to her was posted on AT&T's (then BellSouth's) website at http://cpr.bellsouth.com/bst/product_line.htm (the web address mentioned in the acknowledgment). See ECF No. 14-2. Inaddition, AT&T contracted with a third-party vendor to mail new customers an information package that included, among other things, the BSA. See ECF Nos. 14-1 & 14-3. The BSA contained the following pertinent provisions:

BY APPLYING FOR, SUBSCRIBING TO, USING, OR PAYING FOR THE ORDERED SERVICE, YOU AGREE TO BE BOUND BY THE CHARGES, TERMS, AND CONDITIONS SET FORTH IN THIS AGREEMENT. IF YOU DO NOT AGREE WITH THE PROVISIONS OF THIS AGREEMENT, DO NOT USE THE SERVICES AND CANCEL THIS AGREEMENT IMMEDIATELY BY CONTACTING BellSouth AT 1-800-753-8172.
. . .
THIS AGREEMENT REQUIRES THE USE OF ARBITRATION TO RESOLVE CERTAIN DISPUTES AND OTHERWISE LIMTS THE REMEDIES AVAILABLE TO YOU IN THE EVENT OF A DISPUTE. PLEASE READ SECTIONS 6 AND 8.
. . .
8. DISPUTE RESOLUTION INDEPENDENT ARBITRATION
PLEASE READ THIS SECTION 8 CAREFULLY. THIS SECTION 8 SETS FORTH THE PROCEDURE FOR THE RESOLUTION OF DISPUTES UNDER THIS AGREEMENT THROUGH FINAL AND BINDING ARBITRATION BEFORE A NEUTRAL ARBITRATOR INSTEAD OF IN A COURT BEFORE A JUDGE OR JURY OR THROUGH CLASS ACTION. . . . EXCEPT AS PROVIDED IN THIS SECTION 8, ALL DISPUTES ARISING OUT OF OR RELATED TO THIS AGREEMENT (WHETHER BASED IN CONTRACT, TORT, STATUTE, FRAUD, MISREPRESENTATION OR ANY OTHER LEGAL OR EQUITABLE THEORY), INCLUDING ANY DISPUTE BASED ON ANY SERVICE OR ADVERTISING OF THE SERVICE RELATED TO THIS AGREEMENT, SHALL BE RESOLVED BY FINAL AND BINDING ARBITRATION, WHICH SHALL BE GOVERNED BY THE FEDERAL ARBITRATION ACT ("FAA"), 9 U.S.C. §§ 1-16.
. . .
DISPUTES UNDER THIS AGREEMENT MAY NOT BE (A) RESOLVED ON A CLASS-WIDE BASIS, (B) JOINED WITH ANOTHER LAWSUIT, OR (C) JOINED IN ANY ARBITRATION OF A DISPUTE OF ANY OTHER PERSON.
. . .

ECF No. 24-5 (emphasis in original).

Plaintiff continued service and paid for such services with AT&T far exceeding the original 12-month term included in the signed WRPA and exceeding the 36-month term on a BellSouth Long Distance, Inc. Auto Renew Term Plan Agreement, which Plaintiff utilized. ECF No. 24 at 6. In May 2012, Plaintiff decided to discontinue her business telecommunications services with AT&T and contacted AT&T by telephone to discontinue her services. Id. It was at this time that Plaintiff was informed she would owe an early termination fee. Id. The AT&T representative informed Plaintiff that notice of an automatic renewal for 36 months had been included in her May 5, 2010 invoice. Id. The May 5, 2010 three-page monthly billing statement included a heading titled "NEWS YOU CAN USE" and contained the following provision:

AUTOMATIC RENEWAL
Continued Savings! Although your local service agreement is scheduled to expire in approximately 180 days, it is also scheduled to automatically renew. There's nothing you need to do. Simply enjoy the ongoing savings every month, based on the terms and conditions of your existing agreement. If you wish not to renew your agreement, please call 1.866.843.1258 for direction about the notification of your intent not to renew that you must provide, in writing, at least 60 days prior to expiration date.

ECF No. 24-8 at 3. The AT&T representative further informed Plaintiff that termination of her services would result in a $600 early termination fee, which was then added to Plaintiff's May 5, 2012 AT&T invoice. ECF Nos. 24 at 8, 24-9 at 10. On May 29, 2012, AT&T mailed Plaintiff an invoice detailing the following:

We recently sent you a final bill for your former telephone service. Our records indicate that $649.72 is past due and payment has not yet been received.
Please send us your payment today or call so that we can make arrangements for payment which are convenient for you.
If your payment is already on the way, please accept our thanks.
If you have any questions, please call 1-877-977-2187.
Account Representative
AT&T Accounts Receivable Center, AT&T South Carolina

ECF No. 24-9 at 11. This invoice also included instructions on "HOW TO PAY YOUR BILL." Id. Plaintiff's final bill was revised and dated June 5, 2012 indicating her outstanding balance to be $652.31. Id. at 13. Plaintiff paid the bill "[u]nder duress that her credit rating would be compromised . . . with a letter protesting the early termination charge." ECF No. 24 at 9.

On May 3, 2013, Plaintiff instituted this action against Defendants AT&T Inc., AT&T Corp., BellSouth, and ABC Company. ECF No. 1. On September 24, 2013, Defendant AT&T Inc. filed a motion to dismiss for lack of jurisdiction, ECF No. 13, and Defendants AT&T Inc., AT&T Corp., and BellSouth, filed a motion to compel arbitration and stay litigation, ECF No. 14. On October 19, 2013, Plaintiff filed responses in opposition to both motions, ECF Nos. 21-22, and also filed an amended and restated complaint, adding Defendant Evergreen Telecom Services, LLC and asserting additional causes of action, ECF No. 24. In the amended and restated complaint, Plaintiff makes the following claims and requests for relief against Defendants: (1) violations of Section 201(b) of the Federal Communications Act ("FCA"), 47 U.S.C. § 201(b); (2) conversion; (3) violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961; (4) unjust enrichment; (5) money had and received; (6) declaratory relief pursuant to 28 U.S.C. § 2201; (7) injunction; (8) punitive damages; (9) negligent misrepresentation; (10) unfair business practices; (11) unfair trade practices; and (12) civil conspiracy. ECF No. 24. Plaintiffclaims that AT&T improperly charged her, and other customers like her, an early termination fee for cancelling a contract that had been unilaterally renewed. Id.

On November 4, 2013, Defendant AT&T Inc. replied to Plaintiff's response in opposition of its motion to dismiss, ECF No. 31, and Defendants replied to Plaintiff's response in opposition of their motion to compel arbitration, ECF No. 32. On November 11, 2013, Defendant AT&T Inc. filed an amended and re-urged motion to dismiss under Rule 12(b)(2) for lack of jurisdiction, ECF No. 33, and Defendants AT&T Inc., AT&T Corp., and BellSouth filed an amended and re-urged motion to compel arbitration and stay litigation, ECF No. 34, indicating that the prior briefings filed by the parties relating to the pending motions apply to Plaintiff's amended and restated complaint. On November 12, 2013, Plaintiff filed a sur-reply to Defendants' motion to compel. ECF No. 36. On November 20, 2013, Plaintiff filed responses to the amended and re-urged motions, incorporating her previous filings with this Court and asking this Court to deny the requested relief. ECF Nos. 38-39. On December 3, 2013, this Court heard arguments on the pending motions1. ECF No. 40. After the hearing, on December 11, 2013, Defendants AT&T Inc., AT&T Corp., and BellSouth sent a letter to ...

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