Preferred Home Inspections, Inc. v. Bellsouth Telecomms., LLC

• Decision Date: 24 September 2014
• Docket Number: Civil Action No.: 3:14-cv-00673-MBS
• Court: U.S. District Court — District of South Carolina
• Parties: Preferred Home Inspections, Inc., and Charles E. Strickland, Jr., Plaintiffs, v. Bellsouth Telecommunications, LLC b/d/a AT&T Southeast or d/b/a AT&T South Carolina and Cellco Partnership d/b/a Verizon Wireless, Defendants.

Preferred Home Inspections, Inc., and Charles E. Strickland, Jr., Plaintiffs, v. Bellsouth Telecommunications, LLC b/d/a AT&T Southeast or d/b/a AT&T South Carolinaand Cellco Partnership d/b/a Verizon Wireless, Defendants.

Civil Action No.: 3:14-cv-00673-MBS

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA COLUMBIA DIVISION

September 24, 2014

ORDER AND OPINION

Plaintiff Charles Strickland, Jr., ("Strickland") is the owner and operator of Plaintiff Preferred Home Inspections, Inc., a South Carolina corporation. ECF No. 5 at 3, ¶¶ 6-7. Plaintiffs filed this action for damages, alleging various state law claims against Defendants Cellco Partnership d/b/a Verizon Wireless ("Verizon Wireless") and Bellsouth Telecommunications, LLC d/b/a AT&T Southeast or d/b/a AT&T South Carolina ("AT&T"). See ECF No. 5. Plaintiffs filed an amended complaint on March 16, 2014. ECF No. 5.

This matter is before the court on Verizon Wireless's motion to compel arbitration, ECF No. 11, and AT&T's motion to dismiss. ECF No. 18. Plaintiffs oppose both motions. See ECF Nos. 17, 23. In addition, Verizon Wireless has moved to strike a Declaration of Charles Strickland. See ECF No. 22 (Aff. in Opp'n to Mot.), 25 (Mot. to Strike).

I. FACTS

Strickland alleges that he had a business line with AT&T, but in November 2011 he decided to switch service providers to Verizon Wireless. ECF No. 5 at 3, ¶¶ 8-10. As part ofswitching providers, Strickland asked AT&T to "port" his telephone number to Verizon Wireless. ECF No. 5 at 5, ¶¶ 10-12. Telephone number portability is a wireless consumer's ability to change service providers within the same local area and still keep the same phone number.¹

Strickland allegedly encountered problems with the porting process, specifically the following:

• The business line was not disconnected from AT&T's remote call forwarding service and calls were being sent to an AT&T automated message that said the line was disconnected and no longer in service. ECF No. 5 at 3-4, ¶ 13.

• After a period of time calls began to be forwarded to "a complete stranger" who had Strickland's old cell phone number. ECF No. 5 at 4, ¶ 16.

• In February 2012, calls to the business line were once again being forwarded to an AT&T automated message stating the line had been disconnected and was not in service. ECF No. 5 at 5, ¶ 21.

• Around May 2012, callers to the business line were played an automated message from AT&T directory assistance that offered to connect callers to a similar business in the area because the number dialed was not in service. The message then provided the caller with three similar businesses that "were Preferred Home Inspection's direct competitors." ECF No. 5 at 7, ¶¶ 31-32.

In the period of time after changing his service provider, Strickland alleges he called AT&T and Verizon Wireless on numerous occasions to attempt to address the problems. See ECF No. 5 at ¶¶ 14 (AT&T), 17 (AT&T), 19 (AT&T), 22 (AT&T), 24 (AT&T), 26 (AT&T), 28 (Verizon Wireless), 30 (AT&T and Verizon Wireless). AT&T allegedly told Strickland on multiple occasions that it would correct the problem on multiple occasions and then, after failing to do so, told Strickland that the problem was with Verizon Wireless. ECF No. 5 at ¶¶ 14, 17, 19, 20, 22 (AT&T employees saying they would fix the problem); ¶¶ 27, 30 (AT&T employeessaying the problem is with Verizon Wireless). Plaintiff alleges that the situation has yet to be resolved and that each company blames the other for the problem. ECF No. 5 at 8, ¶¶ 34, 37.

When Strickland switched service providers to Verizon Wireless, he signed a receipt which included a provision obligating the parties to settle their disputes via arbitration and which also indicated Strickland's acceptance of the current Verizon Wireless Customer Agreement. See ECF No. 11-3 at 3 (receipt containing an arbitration clause and indicating Strickland's agreement to the Customer Agreement). The long-form Customer Agreement also contained provision for the settlement of disputes between the parties by arbitration. ECF No. 11-4 at 8-10.

I.VERIZON WIRELESS' MOTION TO COMPEL ARBITRATION

Verizon Wireless brings this motion pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-9 (2012). 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 in law or in equity for the revocation of any contract.

9 U.S.C. § 2. The FAA stands as "a congressional declaration of a liberal federal policy favoring arbitration agreements."MosesH. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24 (1983). Its "'primary' purpose . . . is to ensure that private agreements to arbitrate are enforced according to their terms." Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp., 559 U.S. 662, 682 (2010) (internal quotations and citations omitted). In interpreting arbitration agreements, the courts must resolve any doubts concerning the scope of arbitrable issues in favor of arbitration. Moses H. Cone, 460 U.S. at 24-25.

To compel arbitration, Verizon Wireless must demonstrate: 1) the existence of a dispute between the parties; 2) a written agreement that includes an arbitration provision that purports to cover the dispute; 3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce; and 4) the failure, neglect, or refusal of Plaintiffs to arbitrate the dispute. See Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002). "To decide whether an arbitration agreement encompasses a dispute[,] a court must determine whether the factual allegations underlying the claim are within the scope of the arbitration clause, regardless of the legal label assigned to the claim." J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F.2d 315, 319 (4th Cir. 1988).

There is no question here that there is a dispute between the parties, as evidenced by the Complaint. Further, there is no question that Plaintiffs refuse to arbitrate the dispute. The first and fourth factors are satisfied. As to the third factor, it is well settled that telephones, including cellular telephones, are instrumentalities of interstate commerce. See United States v. Mandel, 647 F.3d 710, 716 (7th Cir. 2011); United States v. Evans, 476 F.3d 1176 (11th Cir. 2007); United States v. Giordano, 442 F.3d 30, 39-40 (2d Cir. 2006); United States v. Marek, 238 F.3d 310 (5th Cir. 2001); United States v. Gilbert, 181 F.3d 152 (1st Cir. 1999); United States v. Weathers, 169 F.3d 336 (6th Cir. 1999); United States v. Clayton, 108 F.3d 1114 (9th Cir. 1997); Kerbs v. Fall River Indus., 502 F.2d 731, 738 (10th Cir. 1974) abrogated on other grounds by Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994).

Plaintiffs do not dispute the presence of these three factors in their response to Verizon Wireless' motion to compel arbitration. See ECF No. 17-1. Plaintiffs do, however, argue that "[t]he facts giving rise to this action occurred outside the terms and conditions contained in the customer agreement," ECF No. 17-1 at 8, and, therefore, that this dispute is beyond the scope ofthe arbitration clause. Plaintiffs also argue that the customer agreement is unenforceable as to Preferred Home Inspections as it did not sign the agreement. Further, Plaintiffs contend that "the arbitration clause is unenforceable because it is part of an adhesion contact [sic] and unconscionable under South Carolina law." ECF No. 17-1 at 9. Each of these arguments is considered below.

A. Is this dispute within the scope of the arbitration agreement?

There are two "Customer Agreements" relevant to this action.² The first is the Customer Agreement dated November 17, 2011, signed by Strickland. ECF No. 11-3 at 2-3. The second is the Customer Agreement dated November 29, 2011. ECF No. 17-2 at 2. Each Agreement, in its original format, provided:

I AGREE TO THE CURRENT VERIZON WIRELESS CUSTOMER AGREEMENT, INCLUDING THE CALLING PLAN, (WITH EXTENDED LIMITED WARRANTY/ SERVICE CONTRACT, IF APPLICABLE), AND OTHER TERMS AND CONDITIONS FOR SERVICES AND SELECTED FEATURES I HAVE AGREED TO PURCHASE AS REFLECTED ON THE RECEIPT AND WHICH HAVE BEEN PRESENTED TO ME BY THE SALES REPRESENTATIVE AND WHICH I HAD THE OPPORTUNITY TO REVIEW. I UNDERSTAND THAT I AM AGREEING TO AN EARLY TERMINATION FEE PER LINE AS REFLECTED ON THIS RECEIPT, LIMITATIONS OF LIABILITY FOR SERVICE AND EQUIPMENT, SETTLEMENT OF DISPUTES BY ARBITRATION AND OTHER MEANS INSTEAD OF JURY TRIALS, AND OTHER IMPORTANT TERMS IN THE CUSTOMER AGREEMENT.

ECF No. 11-3 at 3. Strickland signed the page beneath the referenced language on the November 17, 2011, Agreement. Id. However, his signature is not on the November 29, 2011, Agreement. ECF No. 17-2 at 2.

Not only does the arbitration agreement appear on the receipt within a paragraph of a term related to porting, but porting is also mentioned in the Verizon Wireless Customer Agreement current at the time Strickland signed the receipt. ECF No. 11-4 at 2-3. The long-form Customer Agreement also contains more detailed arbitration provisions (in their original formatting):

YOU AND VERIZON WIRELESS BOTH AGREE TO RESOLVE DISPUTES ONLY BY ARBITRATION OR IN SMALL CLAIMS COURT. THERE'S NO JUDGE OR JURY IN ARBITRATION, AND THE PROCEDURES MAY BE DIFFERENT, BUT AN ARBITRATOR CAN AWARD THE SAME DAMAGES AND RELIEF, AND MUST HONOR THE SAME TERMS IN THIS AGREEMENT, AS A COURT WOULD. IF THE LAW ALLOWS FOR AN AWARD OF ATTORNEYS' FEES, AN ARBITRATOR CAN AWARD THEM TOO. WE ALSO BOTH AGREE THAT:

(1) THE FEDERAL ARBITRATION ACT APPLIES TO THIS AGREEMENT. EXCEPT FOR SMALL CLAIMS COURT CASES THAT QUALIFY, ANY DISPUTE THAT RESULTS FROM THIS AGREEMENT OR FROM THE SERVICES YOU RECEIVE FROM US (OR FROM ANY ADVERTISING FOR ANY PRODUCTS OR SERVICES) WILL BE RESOLVED BY ONE

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