Shalomayev v. Altice U.S., Inc.
| Decision Date | 30 June 2022 |
| Docket Number | 21-CV-5540 (MKB) |
| Parties | ARTEM SHALOMAYEV, as owner and operator of 3715 Barber Shop, Inc., individually and on behalf of all others similarly situated, Plaintiff, v. ALTICE USA, INC., Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Plaintiff Artem Shalomayev, on behalf of himself as owner and operator of 3715 Barber Shop, Inc. (the “Barbershop”) and others similarly situated, commenced the above-captioned class action against Defendant Altice USA, Inc. on October 6 2021, alleging claims of fraudulent inducement, fraudulent concealment, deceptive acts or practices, and unjust enrichment based on Defendant's termination of Plaintiff's internet and telephone services and Defendant's refusal to reinstate services until Plaintiff paid outstanding fees and an additional “one-time set up fee.” (Compl. ¶¶ 6-8, 112-39, Docket Entry No. 1.) On March 21, 2022, Defendant moved to compel arbitration, and Plaintiff opposed the motion.[1]
For the reasons set forth below, the Court grants Defendant's motion to compel arbitration and stays this litigation.
The Court assumes the truth of the factual allegations in the Complaint for the purposes of this Memorandum and Order.
Plaintiff is a resident of Nassau County, New York, and owns, operates, and maintains the Barbershop, which is located at 3715 Riverdale Avenue in the Bronx, New York. (Compl. ¶¶ 16-17.) Defendant is incorporated in Delaware and has its principal place of business in Long Island City, New York, employs approximately 16,000 employees, and has an annual revenue of $9.2 billion. (Id. ¶¶ 18-19.) Along with its subsidiaries, Defendant provides broadband communications and video services in the United States and is the fourth largest cable provider in the United States “operating under, among other brands, Altice, Optimum, Lightpath, and Suddenlink.” (Id. ¶ 19.) Defendant also provides cable services to approximately 4.9 million residential and business customers in twenty-one states, including broadband, pay television, telephone services, proprietary content, and advertising services. (Id.)
On February 5, 2020, Plaintiff placed an order to receive internet services at the Barbershop, and a sales representative presented Plaintiff with a mobile device displaying an order receipt. (Decl. of John DeMasi in Supp. of Def.'s Mot. (“Demasi Decl.”) ¶¶ 3-4, Docket Entry No. 20-3.)[2] To complete the transaction, Plaintiff had to electronically sign the receipt under a series of “Terms & Conditions,” which provided that “[Plaintiff] agree[d] to be bound by the General Terms [and Conditions] of Service” (the “General Terms of Service”) and further “agree[d] that any use by [Plaintiff] of these services [was] deemed acknowledgement that [Plaintiff] read, understood and agreed to be bound by such terms and conditions” (the “February 2020 Agreement”). (Id. ¶ 4.) An order confirmation was emailed to the address Plaintiff provided alongside a copy of the order receipt and a copy of the version of the General Terms of Service that were then in effect. (Id. ¶ 5.) The operative General Terms of Service, which were in effect from September 28, 2018, until October 1, 2021, indicated that they “contain[ed] a binding arbitration agreement that affect[ed] [the customer's] rights, including the waiver of class actions and jury trials” and also contained provisions for opting out of arbitration. (General Terms of Service 1, annexed to Decl. of William Heberer in Supp. of Def.'s Mot. (“Heberer Decl.”) as Ex. 1, Docket Entry No. 20-2; Heberer Decl. ¶ 4, Docket Entry No. 20-1.)
The arbitration provision incorporated in the February 2020 Agreement provided that the opt-out provision did not apply if a customer had been an existing subscriber for at least thirty days before the effective date of the agreement, but that otherwise, a customer could indicate a request to opt out of arbitration by providing Defendant with written notice. (Opting out of Arbitration, General Terms of Service § 26(a).) Claims covered by the provision included “[c]laims arising out of or relating to any aspect of the relationship between [Defendant and the customer], whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory,” “[c]laims that arose before this or any prior [a]greement,” and “[c]laims that may arise after the termination of this [a]greement.” (Binding Arbitration, General Terms of Service § 26.) If the amount in dispute was less than $50,000, the customer could determine whether the arbitration would be conducted solely on the basis of documents submitted to the neutral arbitrator, by telephonic hearing, or by an in-person hearing. (Arbitration Process, General Terms of Service § 26(d).) With exceptions for frivolous or improper claims, Defendant agreed to “pay all arbitration filing, administrative, and arbitrator fees for any arbitration that [Defendant] commence[d] or that [the customer] commence[d] seeking damages of $10,000 or less.” (Arbitration Fees, General Terms of Service § 26(e).) The customer agreed to forfeit rights to class, representative, and private attorney general arbitrations and actions. (Waiver of Class and Representative Actions, General Terms of Service § 26(g).) “The terms of the arbitration provision . . . survive[d] termination, amendment or expiration of th[e] [a]greement.” (Severability and Survival, General Terms of Service § 26(h).)
In response to the rapid spread of the global Covid-19 pandemic, “every state made an emergency declaration by March 16, 2020,” and civil authorities in “nearly every state” also ordered some form of social distancing measures, including stay-at-home orders, restrictions on large gatherings, and orders closing or restricting service at restaurants and bars. (Compl. ¶ 26.) In New York, former Governor Andrew Cuomo declared a state disaster emergency on March 7, 2020, that lasted until September 7, 2020. (Id. ¶ 27.) Governor Cuomo signed Executive Order No. 202.8 on March 20, 2020, which closed all non-essential businesses statewide as of 8:00 P.M. on March 22, 2020. (Id. ¶ 32.) The Barbershop “did not qualify as an ‘essential business'” under any of the categories enumerated by New York State, and by law, Plaintiff shut down his business operations on March 20, 2020. (Id. ¶ 33.) As a result of the lockdown, the Barbershop was “physically shut down and [Plaintiff] was barred from opening up [the Barbershop] during this time period.” (Id. ¶ 45.) Plaintiff was unable to retrieve any mail, including bills from Defendant, during this time period, and did not enter the Barbershop because of his fear that “merely opening his doors would violate the Governor's decree and subject him to the imposition of penalties and fees.” (Id. ¶¶ 46, 50.)
In response to the Covid-19 pandemic, Ajit Pai, the former Chairman of the Federal Communications Commission (the “FCC”) announced the “Keep Americans Connected Initiative” on March 13, 2020, and promised that it would extend until June 30, 2020. (Id. ¶ 34.) “[T]o ensure that American individuals and small businesses did not lose their broadband and telephone service providers,” Pai specifically asked broadband and telephone service providers and trade associations to join the “Keep Americans Connected Pledge” (the “Pledge”), and more than 800 companies and associations signed the Pledge, including Defendant. (Id. ¶¶ 35, 36.) Through the Pledge, companies pledged to:
(Id. ¶ 35.) Defendant announced that it had committed to the Pledge on its website and social media, indicating its commitment for the “next [sixty] days” to “[n]ot terminate broadband and voice service to any residential or small business customers because of their inability to pay their bills due to the disruptions caused by the coronavirus pandemic” and “[w]aive any late fees that any residential or small business owners incur[red] because of their economic circumstances related to the coronavirus pandemic.” (Id. ¶ 37.) Defendant's Chief Executive Officer, Dexter Goei, made a statement that Defendant was “proud to do its part in ensuring that customers and business[es] . . . have reliable access to the connectivity services that are critically important during this rapidly evolving public health situation.” (Id. ¶ 38.)
Plaintiff read about the Pledge on or about March 15, 2020, and was “relieved,” because his business was closed and he did not have any income. (Id. ¶¶ 42-44.)
In April of 2020, Defendant sent Plaintiff an invoice “with fees for his alleged phone usage and internet usage for the period of March 16, 2020, to April 15, 2020, including a ‘Total Internet' charge of $55.44 and a ‘Total Phone' charge of $34.95,” for a total of $89.11 for Plaintiff's use of internet and phone services for this one-month period. (Id. ¶ 48.) Plaintiff was “legally barred from operating his hair salon during this same one-month period,” and did not enter the Barbershop, see the bill that Defendant had sent him, or make any payment towards the bill. (Id. ¶ 50.)
In May of 2020, Defendant sent Plaintiff another monthly bill for Plaintiff's alleged use of internet and phone services during the...
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