Altice U.S.A., Inc. v. City of Gurdon

688 S.W.3d 441

2024 Ark. App. 228

ALTICE USA, INC., d/b/a Suddenlink Communications, Appellant

v.CITY OF GURDON, Arkansas, Appellee

No. CV-22-808

Court of Appeals of Arkansas, DIVISION II.

Opinion Delivered April 3, 2024

APPEAL FROM THE CLARK COUNTY CIRCUIT COURT [NO. 10CV-21-19], HONORABLE BLAKE BATSON, JUDGE

Husch Blackwell, LLP, by: Laura C. Robinson; and McMillan, McCorkle & Curry, LLP, Arkadelphia, by: F. Thomas Curry, for appellant.

Thrash Law Firm, P.A., by: Thomas P. Thrash, Little Rock, and Will T. Crowder; and Turner & Turner, P.A., by: Todd Turner, Arkadelphia, for appellee.

CINDY GRACE THYER, Judge

₁Altice USA, Inc., d/b/a Suddenlink Communications ("Suddenlink") appeals the orders of the Clark County Circuit Court denying its motion to compel individual arbitration and granting the motion of appellee, City of Gurdon, Arkansas ("Gurdon"), for certification of its complaint as a class action. We affirm.

I. Factual and Procedural Background

Suddenlink provides cable television, internet, and telephone services to customers throughout Arkansas. In 1977, Gurdon promulgated Ordinance No. 273, which granted Suddenlink’s predecessor, Gurdon Cable TV, Inc., the right to establish a distribution system, including the right to erect and use equipment in Gurdon’s public rights-of-way, for the purpose of providing cable television to the citizens of Gurdon. To compensate Gurdon for the operation of the distribution system and in lieu of other taxes and fees, Gurdon Cable ₂TV, Inc., agreed to pay Gurdon an annual franchise fee equal to 2 percent of gross annual service revenue received by the company. In 2004, through Ordinance No. 04-007, Ordinance No. 273 was extended for an additional twenty-five years, the franchise was assigned to TCA Cable Partners d/b/a Cox Communications, and Gurdon was given the right to increase the franchise fee on gross subscription receipts up to the maximum permitted by law at any time during the term of the agreement. At that time, the franchise fee was set at 4.25 percent. In 2006, those franchise rights were assigned via Resolution No. 06-001 to Cebridge Acquisition, LP., which is now an affiliate of Suddenlink. Additionally, Gurdon is a customer of Suddenlink, using the provider for its television, internet, and phone services.

On February 21, 2021, Gurdon filed a class-action complaint against Suddenlink alleging that Suddenlink had failed to properly pay franchise fees to Gurdon and to other cities similarly situated. In addition, Gurdon claimed that Suddenlink had failed to maintain minimum standards of conduct for the benefit of its customers in Gurdon and customers in other cities. Specifically, the complaint noted that Suddenlink’s customers had been experiencing problems with Suddenlink’s services, such as excessive pricing, poor communication, poor customer service, excessive wait times for customers who attempt to contact the company, a lack of local offices, and other customer-relations issues. Gurdon thus sought judgment for itself and the other putative class members for all unpaid amounts for the use of public rights-of-way for the past five years; in addition, Gurdon sought an order ₃requiring Suddenlink to maintain the minimum customer-service standards "required by law." Gurdon formally moved for class certification on April 19, 2022.

In May 2022, Suddenlink moved to compel individual non-class arbitration.¹ In a supporting brief, Suddenlink argued that Gurdon itself had phone, internet, and television services with Suddenlink and that by paying its monthly service bills, Gurdon had repeatedly agreed to Suddenlink’s commercial services agreement. Each of Suddenlink’s billing statements contains a provision noting, "Bill payment confirms your acceptance of the Business Services Agreement." That service agreement, in turn, contained a notice that provides as follows:

THIS AGREEMENT CONTAINS A BINDING ARBITRATION AGREEMENT THAT AFFECTS CUSTOMER’S RIGHTS, INCLUDING THE WAIVER OF CLASS ACTIONS AND JURY TRIALS. THE AGREEMENT ALSO CONTAINS PROVISIONS FOR OPTING OUT OF ARBITRATION. PLEASE READ IT CAREFULLY.

The arbitration agreement itself provides that

[a]ny and all disputes arising between You and Suddenlink, including its respective parents, subsidiaries, affiliates, officers, directors, employees, agents, predecessors, and successors, shall be resolved by binding arbitration on an individual basis in accordance with this arbitration provision. This agreement to arbitrate is intended to be broadly interpreted. It includes, but is not limited to:

Claims arising out of or relating to any aspect of the relationship between us, whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory;

₄Claims that arose before this or any prior Agreement;

Claims that may arise after the termination of this Agreement.

The arbitration agreement further stated, "You agree to arbitrate your dispute and to do so on an individual basis; class, representative, and private attorney general arbitrations are not permitted." Because of the broad nature of the arbitration agreement contained in the commercial services agreement, Suddenlink argued that Gurdon was bound to arbitration.²

Suddenlink also filed a memorandum in opposition to Gurdon’s motion for class certification, arguing that Gurdon had not met the requirements of Arkansas Rule of Civil Procedure 23. Specifically, Suddenlink, challenged Gurdon’s satisfaction of the requirements of commonality, predominance, typicality, adequacy, or superiority. Gurdon responded to Suddenlink’s motion, denying its allegations and requesting a hearing.

The circuit court held a hearing on the arbitration and class-certification motions on August 29, 2022. Following the hearing, the court entered separate orders on September 21 denying Suddenlink’s motion to compel individual non-class arbitration and granting Gurdon’s motion for class certification. Regarding Suddenlink’s motion to compel arbitration, the court found that Gurdon’s franchise-fee claims did not involve the customer-service agreement by which Suddenlink provided services to the city; rather, the claims Involved Suddenlink’s obligations under the franchise agreement and under the Arkansas ₅Video Service Act. The court further found that Suddenlink had not satisfied its burden of showing that the parties formed a valid agreement to arbitrate.³ As to Gurdon’s motion for class certification, the court found that Gurdon had satisfied the requirements of Rule 23. It therefore certified a class of "all Arkansas cities which are entitled to receive franchise payments from Suddenlink and which are entitled to enforce basic customer protections [for] their citizens." Suddenlink filed a timely notice of appeal.

II. Arbitration

[1] In its first argument on appeal, Suddenlink asserts that the circuit court erred in denying its motion to compel arbitration "because Gurdon and Suddenlink agreed to arbitrate all disputes arising from their relationship." An order denying a motion to compel arbitration is immediately appealable pursuant to Arkansas Rule of Appellate Procedure-Civil 2(a)(12) (2018). We review a circuit court’s denial of a motion to compel arbitration de novo on the record. Robinson Nursing & Rehab. Ctr., LLC v. Phillips, 2019 Ark. 305, at 4, 586 S.W.3d 624, 628–29.

[2] When a court is asked to compel arbitration, it is limited to deciding two threshold questions: (1) whether there is a valid agreement to arbitrate between the parties, and (2) if such an agreement exists, whether the dispute falls within its scope. Asset Acceptance, LLC v. Newby, 2014 Ark. 280, 437 S.W.3d 119. The threshold issue is whether there was a valid ₆arbitration agreement. Hot Springs Nursing & Rehab. -A Waters Cmty., LLC v. Hooker, 2024 Ark. App. 80, 684 S.W.3d 632.

[3–5] Even though an arbitration agreement may be subject to the Federal Arbitration Act ("FAA"), this court looks to state contract law to determine if the parties’ agreement is valid. GGNSC Holdings, LLC v. Chappel, 2014 Ark. 545, 453 S.W.3d 645. In determining the threshold inquiry of whether a valid agreement to arbitrate exists, we have held that, as with other types of contracts, the essential elements for an enforceable arbitration agreement are (1) competent parties, (2) subject matter, (3) legal consideration, (4) mutual agreement, and (5) mutual obligation. Crawford Operations, LLC v. Davis, 2023 Ark. App. 277, 668 S.W.3d 527. Suddenlink, as the proponent of the arbitration agreement, has the burden of proving these essential elements. See LNH One, LLC v. Gaspar, 2024 Ark. App. 93, 686 S.W.3d 1. Because arbitration is a matter of contract between the parties, it is a way to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration. Erwin-Keith, Inc. v. Stewart, 2018 Ark. App. 147, 546 S.W.3d 508.

[6] Suddenlink argues that the circuit court erred in finding that it failed to satisfy its burden of showing the parties formed a valid agreement to arbitrate and in finding that the contract lacked mutuality of agreement. In order to have a valid agreement to arbitrate, there must be mutual agreement with notice as to the terms and subsequent assent. Crawford Operations, supra. In support of its argument, Suddenlink points to the commercial services agreement, which contained the arbitration agreement. Suddenlink contends that Gurdon ₇was on notice of the terms of the arbitration agreement because, by paying its bills, Gurdon accepted the terms of service.

In a series of recent cases involving Suddenlink, this court held that individual customers had entered into a valid agreement to arbitrate because the customers’ payment of their monthly invoices and acceptance of Suddenlink’s services manifested their agreement to the arbitration provision contained in their respective residential services agreements. See Altice USA, Inc. v. Peterson, 2023 Ark. App. 116, 661 S.W.3d 699...