Klein v. Verizon Communications, Inc.

920 F. Supp. 2d 670, 84 Fed. R. Serv. 3d 933, 2013 WL 399222, 2013 U.S. Dist. LEXIS 14137
CourtDistrict Court, E.D. Virginia
DecidedJanuary 31, 2013
DocketCase No. 1:12-cv-757 (GBL/IDD)
StatusPublished
Cited by3 cases

This text of 920 F. Supp. 2d 670 (Klein v. Verizon Communications, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Klein v. Verizon Communications, Inc., 920 F. Supp. 2d 670, 84 Fed. R. Serv. 3d 933, 2013 WL 399222, 2013 U.S. Dist. LEXIS 14137 (E.D. Va. 2013).

Opinion

MEMORANDUM OPINION AND ORDER

GERALD BRUCE LEE, District Judge.

THIS MATTER is before the Court on Defendants Verizon Communications, Inc., Verizon Online LLC, and Verizon Online-Maryland LLC’s (collectively, ‘Verizon’s”) Motion to Compel Arbitration, or in the alternative, Motion to Dismiss. (Dkt. No. 11.) This case concerns the validity of a communications services provider’s contract provision assessing an early termination fee to a customer’s account. Plaintiff Jason Klein (“Klein”) brings this action against Verizon, alleging violations of Virginia’s Consumer Protection Act due to Verizon assessing an early termination fee against his account because he canceled his internet service before the expiration of his one-year contract term.

There are four issues before the Court. The first issue is whether Verizon’s Rule 68 Offer of Judgment, made prior to Klein filing a motion for class certification, moots both Klein’s individual and putative class claims. The Court holds that Defendants’ offer to provide Klein with all available remedies in accordance with Rule 68 does not remove Klein’s individual stake, where, as here, a class complaint has been filed and the Court has yet to rule on class certification. If, in such a case, a plaintiff timely files a motion to certify the class, the Court should relate back the motion to the date the complaint was filed. Accordingly, the offer of judgment does not necessarily moot the putative class claims.

The second issue is whether an arbitration clause embedded in an email as a contract modification is enforceable against Klein where Klein simply continued using Verizon’s service without taking any affirmative action to demonstrate acceptance of the contract modification when Klein previously agreed to such mode of acceptance. The Court holds the arbitration clause is valid because the parties’ initial agreement explicitly provided that continued use of the service after receipt of contract modification received via email is sufficient consent to contract modifications. Therefore, Klein accepted the proposed contract modifications, including the arbitration provision, by his continued use of Verizon’s services after receiving notice of the contract modification via email.

The third issue is whether Verizon’s arbitration clause applies retroactively to disputes between the parties occurring pri- or to the contract modification. The Court holds that, where an arbitration clause indicates its applicability to “any dispute” between the parties, such broad language sufficiently encompasses past and present disputes. Therefore, the arbitration clause in this case applies even to those disputes arising before the modification.

The fourth issue is whether the arbitration clause is unenforceable due to both procedural and substantive unconscionability. The Court holds that the arbitration [674]*674clause does not demonstrate both procedural and substantive unconscionability for two reasons. First, Klein fails to show substantive unconscionability where he only suggests hypothetical situations, an insufficient basis upon which to invalidate contract terms, and he fails to identify a provision that can be considered illegal or contrary to public policy. Second, the Court also finds that the arbitration clause is not procedurally unconscionable because Klein had other meaningful choices for the contracted services and Verizon gave proper notice in accordance with the agreement between the parties.

I. BACKGROUND

A. Plaintiffs Verizon Service

Plaintiff Jason Klein ordered Verizon High Speed Internet (“HSI”) online as part of the Double Freedom Bundled Services in October 2010. (Compl. ¶ 31, Dkt. No. 1.) Plaintiff is a citizen of Maryland and receives these HSI and telephone services at his home in Baltimore, Maryland. {Id. ¶¶ 5, 31.)

To initiate service as a Verizon Bundled Services customer, Verizon required Klein to agree to the standardized Verizon Online Terms of Service (“TOS”). (Compl. ¶ 33, Ex. A.) As part of the agreement, Klein agreed to a provision that if he were to choose to terminate telephone, Internet, or both services “between months 2 and 12,” an early termination fee (“ETF”) would be applied and the discount on any remaining service would be discontinued. (Compl. ¶ 35.) After ordering and receiving the Verizon Bundled Services, Klein encountered significant billing issues and Internet connectivity problems. {Id. ¶ 37.)

Klein canceled his service after two full months of service. {Id.) As a result, Verizon charged him a $135 ETF. {Id.) In May 2011, Klein, after considering options provided by Verizon’s competitors, subscribed to Verizon again. {Id. ¶ 38.) As before, service initiation required Klein’s agreement to the Verizon Online TOS. {Id. ¶ 39.) As of the date of his Complaint, Klein continued to use Verizon’s service. (Compl. ¶ 40.)

B. Verizon’s Online Terms of Service Agreement and Arbitration Provision

Klein agreed to Verizon’s TOS in both October 2010 (the “October 2010 Agreement”) and May 2011 (the “May 2011 Agreement”).1 (Compl. ¶¶ 31, 33, 39, Exs. A, B.) These agreements provided for both conditions of service and any future modifications to the terms. {See Compl. Ex. A § 1; Ex. B § 1.) Verizon committed to providing notice of revisions “by posting revisions to the Website Announcements page, or sending an email to the email address [customers] provide to receive communications.” (Compl. Ex. A § 3; Ex. B § 3 (including a nearly identical clause but specifying that a “Primary Email Address” would be used to receive communications)). Under both the October 2010 and May 2011 Agreements, Verizon’s TOS established that “the substantive laws of the Commonwealth of Virginia” would apply to any dispute. (Compl. Ex. A § 15.4; Ex. B § 15.4.)

[675]*675On June 20, 2012, Verizon proposed contract modifications to the customer agreement (the “Current Customer Agreement”) pursuant to the above guidelines and sent these modifications to Klein. (Walker Decl. ¶5, Ex. 3, Dkt. No. 14.) Verizon’s records demonstrated that on July 10, 2012, Klein received and opened this email, sent from Verizon to Klein’s primary email address, containing a notice of the revised terms of the Current Customer Agreement.2 (Walker Decl. ¶¶ 5-6.) Verizon’s email to Klein explained that “[t]he terms now require that you and Verizon resolve disputes only by arbitration or in small claims court” and provided links to more information about Verizon’s dispute resolution procedures as well as the full terms of the Current Customer Agreement.3 (Walker Decl., Ex. 2.) The Current Customer Agreement further specifies “the Federal Arbitration Act and the substantive laws of the state of the customer’s billing address ... will be applied to govern, construe, and enforce all of the rights and duties of the parties arising from or relating in any way to the subject matter of this Agreement. ” (Walker Deck, Ex. 3 § 15.4 (emphasis added)).4 The email in which the agreement was sent stated that “[b]y continuing to use the services after the date of this notice, [customers] accept and agree to abide by the revised terms.” (Walker Deck, Ex. 2.) Finally, the Current Customer Agreement states that it “supersedes any and all prior or contemporaneous agreements,” both written and oral. (Walker Deck, Ex. 3 § 15.7.)

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Cite This Page — Counsel Stack

Bluebook (online)
920 F. Supp. 2d 670, 84 Fed. R. Serv. 3d 933, 2013 WL 399222, 2013 U.S. Dist. LEXIS 14137, Counsel Stack Legal Research, https://law.counselstack.com/opinion/klein-v-verizon-communications-inc-vaed-2013.