Vernon v. Qwest Commc'ns Int'l, Inc.

• Decision Date: 08 March 2012
• Docket Number: Civil Action No. 09–cv–01840–RBJ–CBS.
• Parties: Robin VERNON, Rory Patrick Durkin, Byran Sandquist, and Ted Moore, on behalf of themselves and all others similarly situated, Plaintiffs, v. QWEST COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation; Qwest Services Corporation, a Colorado corporation; Qwest Corporation, a Colorado corporation; Qwest Communications Corporation, a Delaware corporation; and Qwest Broadband Services, Inc., a Delaware corporation, Defendants.
• Court: U.S. District Court — District of Colorado

857 F.Supp.2d 1135

Robin VERNON, Rory Patrick Durkin, Byran Sandquist, and Ted Moore, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
QWEST COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation; Qwest Services Corporation, a Colorado corporation; Qwest Corporation, a Colorado corporation; Qwest Communications Corporation, a Delaware corporation; and Qwest Broadband Services, Inc., a Delaware corporation, Defendants.

Civil Action No. 09–cv–01840–RBJ–CBS.

United States District Court,
D. Colorado.

March 8, 2012.

[857 F.Supp.2d 1138]

Beth E. Terrell, Kimberlee L. Gunning, Toby James Marshall, Jennifer Rust Murray, Terrell Marshall Daudt & Willie, PLLC, Seattle, WA, Darby K. Kennedy, Jeffrey Allen Berens, Dyer & Berens, LLP, Denver, CO, Michael D. Lieder, Sprenger & Lang, PLLC, Washington, DC, for Plaintiffs.

Peter John Korneffel, Jr., Timothy R. Beyer, Zhonette M. Brown, Kathryn Reed Debord, Brownstein Hyatt Farber Schreck, LLP, Denver, CO, for Defendants.

[857 F.Supp.2d 1139]

ORDER ON DEFENDANTS' RENEWED MOTION TO COMPEL ARBITRATION
CRAIG B. SHAFFER, United States Magistrate Judge.

THIS MATTER comes before the court on Defendants Qwest Communications International, Inc., Qwest Services Corporation, Qwest Corporation, Qwest Communications Corporation, and Qwest Broadcast Services, Inc.'s (collectively “the Qwest Defendants” or “Qwest”) Renewed Motion to Compel Arbitration (doc. # 132) filed on May 25, 2001. Plaintiffs Robin Vernon, Rory Patrick Durkin, Byran Sandquist and Ted Moore filed their Response to Defendants' [Renewed] Motion to Compel Arbitration (doc. # 138) on June 15, 2011, and Plaintiffs' Designation of Supplemental Authority (doc. # 150) on September 30, 2011. The Qwest Defendants filed a Reply in Support of their Renewed Motion to Compel Arbitration (doc. # 144) and their Designation of Supplemental Authority (doc. # 151) on July 5, 2011 and October 2, 2011, respectively. Plaintiffs filed yet another Designation of Supplemental Authority (doc. # 161) on February 28, 2012 to apprise this court of a recent Opinion and Order entered in a very similar case, Richard Grosvenor v. Qwest Corporation, et al., Civil Action No. 09–cv–02848–MSK–KMT.

Pursuant to an Order of Reference to Magistrate Judge (doc. # 8) dated August 11, 2009, this matter was referred to the Magistrate Judge to, inter alia, “hear and determine pretrial matters, including discovery and other non-dispositive motions,” and to “conduct hearings, including evidentiary hearings, and submit proposed findings of fact and recommendations for rulings on dispositive motions.” The court heard oral argument on the pending motion during a hearing on October 7, 20011. I have carefully reviewed the parties' briefs and attached exhibits, the entire case file, and the applicable case law, and considered the arguments presented at the October 7, 2011 hearing.

PROCEDURAL BACKGROUND

While the parties are well versed in the underlying circumstances of the pending litigation, a brief recitation of its procedural history may assist the uninitiated reader. This action was transferred from the Western District of Washington to the District of Colorado on August 4, 2009 following dismissal with prejudice of Plaintiffs' first claim for relief, and dismissal without prejudice of Plaintiff Vernon's claims for unjust enrichment and violation of Washington's Consumer Protection Act, as well as Plaintiff Durkin's claim under the Minnesota Prevention of Consumer Fraud Act. See doc. # 65. When the case was transferred, Plaintiffs' First Amended Complaint was the operative pleading.

Plaintiffs filed their Second Amended Class Action Complaint (doc. # 20) on September 2, 2009, as a “multi-state consumer class action on behalf of Qwest internet service customers who are subject to an invalid $200 Early Termination Fee (‘ETF’) if they cancel their internet service before the end of a purported contractual commitment, in most cases, two years.” Plaintiffs asserted that the $200 fee was imposed regardless of the customer's reasons for cancelling service, the time remaining on the subscriber's alleged commitment, and “the lack of an agreement signed by the customer agreeing to such terms.” The Second Amended Class Action Complaint asserts claims for declaratory relief (Count One on behalf of all Plaintiffs), unjust enrichment (Count Two on behalf of all Plaintiffs), violation of the Colorado Consumer Protection Act (Count Three on behalf of all Plaintiffs), and violation of the Washington Consumer Protection Act (Count Four on behalf of Plaintiffs

[857 F.Supp.2d 1140]

Vernon and Sandquist). Plaintiffs specifically seek a declaration that the arbitration and class action waiver provisions and the alleged ETF imposed by Qwest on its customers are unenforceable, violate public policy, and are unconscionable, injunctive relief as to the same provisions, and an award of actual, statutory, exemplary damages, and attorneys fees and costs.

The Qwest Defendants filed a Motion to Compel Arbitration (doc. # 26) on September 15, 2009, arguing that Plaintiffs' claims all arise out of and are subject to the parties' Subscriber Agreement and its mandatory arbitration clause. In summary, the Qwest Defendants assert that, based upon Plaintiffs' consent to the terms and conditions of the Subscriber Agreement, the arbitration clause is enforceable under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., and that federal and Colorado law preclude a finding of unconscionability as to the arbitration clause's class action ban. Briefing on that motion did not close until September 7, 2010 with the filing of Defendants' Notice of Supplemental Authority in Support of Their Motion to Compel Arbitration (doc. # 107).

In the mean time, Plaintiffs filed their Third Amended Class Action Complaint (doc. # 54) on November 5, 2009. The Third Amended Class Action Complaint

(1) amend[s] the allegations of Plaintiff Ted Moore to reflect his recent payment of the ETF; (2) amend[s] the allegations of Plaintiff Bryan Sandquist to make clear he paid the ETF after he moved to Washington; (3) amend[s] the allegations of Plaintiffs Robin Vernon, Bryan Sandquist and Ted Moore to allege facts relating to the materiality of Qwest's failure to disclose the term commitment and ETF, as well as the anxiety and stress they suffered as a result of Qwest's attempts to collect the invalid ETFs; and (4) amend[s] Plaintiffs' claim under the Colorado Consumer Protection Action (sic) to clarify the basis of their claim that Qwest's conduct is “unfair and deceptive.”

See Plaintiffs' Motion to Amend Second Amended Class Action Complaint (doc. # 41), at 2.

On September 8, 2010, the Qwest Defendants filed a Motion to Stay Ruling on Defendants' Motion to Compel Arbitration (doc. # 109), in light of the United States Supreme Court's decision to grant certiorari in AT & T Mobility, LLC v. Concepcion, ––– U.S. ––––, 130 S.Ct. 3322, 176 L.Ed.2d 1218 (2010) to address whether the FAA preempts states from invalidating arbitration clauses that include a class action ban. The district judge granted that motion with an Order (doc. # 110) dated September 29, 201, staying this action “through the Supreme Court's resolution of AT & T Mobility, LLC v. Concepcion ” and striking the Qwest Defendants' then-pending Motion to Compel Arbitration, “with leave to re-file within twenty-one days of the Supreme Court's” decision in Concepcion. Consistent with the district court's directive, the Qwest Defendants filed their Renewed Motion to Compel Arbitration on May 25, 2011. The associated briefing and attached exhibits comprise more than 732 pages of the court record.

ANALYSIS

As a threshold matter, this court must address its authority under 28 U.S.C. § 636. A review of the case law reveals that courts are divided on whether motions to compel arbitration are dispositive for purposes of 28 U.S.C. § 636(b)(1). Compare Wilken Partners, L.P. v. Champps Operating Corp., 2011 WL 1257480, at *1 (D.Kan.2011) (noting that “district courts that have considered the nature of an order to stay proceedings pending arbitration and to compel arbitration

[857 F.Supp.2d 1141]

have concluded that these are non-dispositive orders”) and Coxcom, Inc. v. Egghead Telecom, Inc., 2009 WL 4016629, at *1 (N.D.Okl.2009) (suggesting that “[c]ourts generally regard a motion to compel arbitration either as a case dispositive matter or a matter not within the statutory authority of a U.S. Magistrate Judge to resolve by Order”). See also Chen–Oster v. Goldman, Sachs & Co., 785 F.Supp.2d 394, 399 n. 1 (S.D.N.Y.2011) (finding persuasive those cases concluding that motions to compel are not case-dispositive) and BBCM, Inc. v. Health Systems International, LLC, 2010 WL 4607917, at *1 n. 1 (N.D.Iowa 2010) (the magistrate judge, after noting a split of authority, issued a report and recommendation “out of an abundance of caution”).

Unfortunately, the Tenth Circuit has not weighed in on this precise issue. In the absence of controlling authority, I am persuaded by Magistrate Judge Bostwick's analysis in Jackman v. Jackman, 2006 WL 3792109, at *1–2 (D.Kan.2006). There, as in this case, the arbitration provision in question explicitly stated that the arbitration would be governed by the Federal Arbitration Act and that judgment on any arbitration award may be entered by any court of competent jurisdiction. The arbitration provision in the Qwest Subscriber Agreement also acknowledges that “[a]rbitration is final and binding” and will be “conducted by the American Arbitration Association (“AAA”).” Judge Bostwick noted that in P & P Industries, Inc. v. Sutter Corp., 179 F.3d 861, 866–67 (10th Cir.1999), the Tenth Circuit held that a district court has the authority to confirm an arbitration award pursuant to Section 9 of the FAA where the parties “have agreed, explicitly or implicitly, that any eventual arbitration award shall be subject to judicial...