Citizens Telecomms. Co. of W. Va. v. Sheridan

799 S.E.2d 144

CITIZENS TELECOMMUNICATIONS COMPANY OF WEST VIRGINIA db/a Frontier Communications of West Virginia, Frontier West Virginia, Inc., Defendant Below, Petitioner

v.Michael SHERIDAN, April Morgan, Trisha Cooke, and Richard Bennis, Individually, and on behalf of other similarly-situated Individuals, Plaintiffs Below, Respondents

No. 16-0005

Supreme Court of Appeals of West Virginia.

Submitted: January 24, 2017

Filed: April 20, 2017

Thomas R. Goodwin, Esq., J. David Fenwick, Esq., Goodwin & Goodwin, Charleston, West Virginia, Archis A. Parasharami, Esq., (admitted pro hac vice), Mayer Brown LLP, Washington, DC, Joseph J. Starsick, Jr., Esq., Frontier Communications, Charleston, West Virginia, Counsel for the Petitioner

Benjamin Sheridan, Esq., Mitchel Lee Klein, Esq., Klein Sheridan & Glazer LC, Hurricane, West Virginia, Jonathan J. Marshall, Esq., Bailey Glasser, LLP, Charleston, West Virginia, Counsel for the Respondents

WALKER, Justice:

Citizens Telecommunications Company of West Virginia d/b/a Frontier Communications of West Virginia, Frontier West Virginia, Inc. ("Frontier") appeals the November 30, 2015 order of the Circuit Court of Lincoln County denying Frontier's motion to compel arbitration in a putative class action filed by Michael Sheridan, April Morgan, Trisha Cooke, and Richard Bennis on behalf of themselves and similarly-situated persons ("Respondents").

Frontier contends that the circuit court erred in refusing to enforce an arbitration provision in the parties' agreement. Upon consideration of the parties' briefs and arguments, the submitted record and pertinent authorities, we agree with Frontier, reverse the circuit court's order and remand with instructions to enter an order compelling arbitration on an individual basis.

I. FACTUAL AND PROCEDURAL BACKGROUND

Respondents are West Virginia residents who initially subscribed to Frontier's residential "high-speed Internet service" between August 2007 and June 2010. Respondents sued Frontier in October 2014 alleging that the service was much slower than advertised and that Frontier had intentionally reduced the speed at which Respondents could connect to the Internet.

As subscribers, Respondents' relationship with Frontier was governed by Frontier's Residential Internet Service Terms and Conditions ("Terms and Conditions"). The Terms and Conditions, available on Frontier's Internet website, provided that "BY USING FRONTIER HIGH SPEED INTERNET SERVICES OR EQUIPMENT YOU ARE AGREEING TO THESE TERMS AND CONDITIONS ." (Emphasis in original). At the time Respondents subscribed to the service, the Terms and Conditions did not contain a dispute resolution provision. However, the Terms and Conditions contained a provision that permitted Frontier to propose changes to the terms, upon notice to customers. Continued use of the service by a customer after any change was considered to be the customer's acceptance of the new term. For example, the Terms and Conditions in effect from July 2011 until March 2013 provided:

OUR RIGHT TO MAKE CHANGES

UNLESS OTHERWISE PROHIBITED BY LAW, FRONTIER MAY CHANGE PRICES, TERMS AND CONDITIONS AT ANY TIME BY GIVING YOU 30 DAYS NOTICE BY BILL MESSAGE, E-MAIL, OR OTHER NOTICE, INCLUDING POSTING NOTICE OF SUCH CHANGES ON THIS WEBSITE, UNLESS THE PRICES, TERMS AND CONDITIONS ARE GUARANTEED BY CONTRACT. YOU ACCEPT THE CHANGES IF YOU USE THE SERVICE AFTER NOTICE IS PROVIDED.

(Emphasis in original).¹

In September 2011, Frontier altered the Terms and Conditions and added an arbitration provision requiring any dispute between a customer and Frontier to be resolved by binding arbitration on an individual basis. More specifically, the arbitration provision included waivers of the right to a trial by jury and the right to participate in a class action, a representative proceeding or a private attorney general action. Frontier included a notice of this change in the September 2011 billing statement, which provided as follows:

As part of our Terms and Conditions of service, Frontier has recently instituted a binding arbitration provision to resolve customer disputes. This provision will become effective 45 days from the date of this bill. Please refer to www.frontier.com or call Frontier 1-800-426-7320, option 3 for more information.

Respondents assert that they never read this portion of the billing statement because Frontier placed it toward the end of a multipage billing statement after many other notices. Respondents further contend the terms of the arbitration provision were not contained in the billing statement.

In January 2012, Frontier revised the arbitration provision to include terms that Frontier describes as more "consumer friendly."² Frontier sent a notice of these revisions to Respondents in their January 2012 billing statement.

In November 2012, Frontier placed a folded, paper copy of the Terms and Conditions, including the arbitration provision, in each customer's billing statement and included the following notice:

Frontier has made revisions to the Terms and Conditions that apply to your Residential Frontier Internet service. The revised Terms and Conditions are posted at www.frontier.com/terms/ and are included as a special insert in this bill. By using and paying for Frontier Internet services, you are agreeing to these revised Terms and Conditions and the requirement that disputes be resolved by individual arbitration instead of class actions and/or jury trials. You may opt out of the revised Terms and Conditions and instead remain subject to your previously applicable terms by calling 1-866-606-2849 ... within 30 days from the date of this bill.

On October 14, 2014, Respondents filed a putative class action complaint alleging that Frontier never provided Internet service at advertised speeds and purposefully "throttled" the speed of its customers' Internet service. In the complaint, Respondents sought declaratory relief that they had not agreed to arbitrate any claims arising from Frontier's service and that their putative class action was not subject to arbitration. Respondents also sought monetary damages, attorneys' fees and an injunction.

On January 30, 2015, Frontier filed a motion to compel arbitration and to dismiss the action, or, in the alternative, to stay the action. In an order dated November 30, 2015, the circuit court denied the motion to compel arbitration and to dismiss and found that: (1) an agreement to arbitrate was never formed because Respondents never assented to the arbitration provision; (2) the arbitration provision was illusory and lacked consideration; (3) the arbitration provision did not cover claims that pre-dated adoption of the provision; and (4) the arbitration provision was unenforceable due to its prohibition of class-wide injunctive relief. It is from this order and these particular findings that Frontier appeals.

II. STANDARD OF REVIEW

Frontier appeals the circuit court's denial of its motion to compel arbitration and to dismiss. This Court has held previously that "[a]n order denying a motion to compel arbitration is an interlocutory ruling which is subject to immediate appeal under the collateral order doctrine." Syl. Pt. 1, Credit Acceptance Corp. v. Front , 231 W.Va. 518, 745 S.E.2d 556 (2013). We recently held that "[w]hen an appeal from an order denying a motion to dismiss and to compel arbitration is properly before this Court, our review is de novo ." Syl. Pt. 1, West Virginia CVS Pharmacy, LLC v.McDowell Pharmacy, Inc. , 238 W.Va. 465, 796 S.E.2d 574 (2017). Similarly, we "we apply a de novo standard of review to [a] circuit court's interpretation of [a] contract." Zimmerer v. Romano , 223 W.Va. 769, 777, 679 S.E.2d 601, 609 (2009). Accordingly, we apply a de novo standard of review to the issues presented in this appeal, which is properly before this Court.

III. DISCUSSION

In support of its challenge to the circuit court's order, Frontier argues that an agreement to arbitrate was properly formed with Respondents in a unilateral contract. First, Frontier asserts that the parties mutually assented to the arbitration provision. Second, Frontier contends that there was consideration for the parties' overall agreement and that the arbitration provision is not illusory in that it binds both parties. Next, it argues that an arbitration provision may apply to disputes that arose prior to the formation of the agreement to arbitrate. Finally, Frontier asserts that an arbitration agreement may prohibit class-wide injunctive relief. We address each of these four issues, in turn, below.

A. Mutual Assent

Frontier first asserts that the circuit court erred in finding that the agreement lacked mutual assent and thereby erred in concluding that no agreement to arbitrate was ever formed. The circuit court based its finding, in part, on its characterization of the Terms and Conditions and the arbitration provision contained therein as an online browsewrap agreement. Frontier disagrees with this characterization, arguing that it is an enforceable unilateral contract that Respondents received in a printed, physical form in November 2012. Finally, Frontier argues that the circuit court erred in its conclusion that the agreement lacked mutual assent because it found the obscured placement of the notice of Terms and Conditions in the billing statements and the one-time inclusion of a paper copy of the Terms and Conditions insufficient to show that the Respondents had agreed to such terms.

Respondents agree with the circuit court's characterization of the Terms and Conditions as a browsewrap agreement and also assert that Frontier cannot prove that any of the Respondents actually visited Frontier's website or read the Terms and Conditions. Respondents further assert that they did not assent to the addition of the arbitration provision to the Terms and Conditions because they were not given adequate notice by the billing statements or by the one-time inclusion of the paper copy of the written terms.

A...