DEFENDANTS' MOTION TO COMPEL ARBITRATION AND DISMISS… · IN THE CIRCUIT COURT OF LINCOLN COUNTY, ... respectfully submit this Memorandum of Law in support of their motion to dismiss,

IN THE CIRCUIT COURT OF LINCOLN COUNTY, WEST VIRGINIA

MICHAEL SHERIDAN, APRIL MORGAN, TRISHA COOKE, AND RICHARD BENNIS,

Plaintiffs for Themselves and All Others Similarly Situated,

vs.

CITIZENS TELECOMMUNICATIONS COMPANY OF WEST VIRGINIA d.b.a. FRONTIER COMMUNICATIONS OF WEST VIRGINIA, FRONTIER WEST VIRGINIA, INC.,

Defendants.

Case No. 14-C-115

DEFENDANTS' MOTION TO COMPEL ARBITRATION AND DISMISS, OR IN THE ALTERNATIVE TO STAY

Pursuant to W.Va. R. Civ. P. 12(b)(l) and 12(b)(6), Defendants Citizens

Telecommunications Comp_an~ofWest Virginia d/b/a Frontier Communications-of-West-Virginia--

and Frontier West Virginia Inc. (collectively Frontier") move to dismiss this action for lack of

jurisdiction to render judgment on the merits and failure to state a claim upon which relief can be

granted. Plaintiffs and Frontier have agreed to arbitrate the disputes described in the Complaint,

and that agreement is both in writing and involves interstate commerce, all as are shown in detail

in the attached supporting memorandum, affidavits, and exhibits. Under these circumstances, both

federal and state law- in particular Section 2 of the Federal Arbitration Act- require that the

parties' agreement to arbitrate be enforced. Accordingly, this Court should dismiss this lawsuit

and compel Plaintiffs to arbitrate their grievances as they have agreed. In the alternative, the Court

may stay this litigation until arbitration is completed.

•,1

Frontier respectfully submits that its motion should be granted.

Dated: January 30, 2015

Of Counsel:

Charleston, West Virginia 25301 (304) 346-7000

Counsel for Defendants Citizens Telecommunications Company of West Virginia d/b/a Frontier Communications of West Virginia, and Frontier West Virginia Inc.

Archis A. Parasharami (application for pro hac vice admission pending) MAYER BROWN LLP 1999 K Street NW Washington, DC 20006 (202) 263-3000

IN THE CIRCUIT COURT OF LINCOLN COUNTY, WEST VIRGINIA

MICHAEL SHERIDAN, APRIL MORGAN, TRISHA COOKE, AND RICHARD BENNIS,

Plaintiffs for Themselves and All Others Similarly Situated,

vs.

CITIZENS TELECOMMUNICATIONS COMPANY OF WEST VIRGINIA d.b.a. FRONTIER COMMUNICATIONS OF WEST VIRGINIA, FRONTIER WEST VIRGINIA, INC.,

Defendants.

Case No. 14-C-115

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION TO COMPEL ARBITRATION AND DISMISS,

OR IN THE ALTERNATIVE TO STAY

Defendants Citizens Telecommunications Company of West Virginia d/b/a

Frontier Communications of West Virginia and Frontier West Virginia Inc. (collectively

Frontier") respectfully submit this Memorandum of Law in support of their motion to

dismiss, or in the alternative to stay, this civil action and compel arbitration. Plaintiffs

Michael Sheridan, April Morgan, Trisha Cooke, and Richard Bennis must each arbitrate

their individual claims in accordance with their respective contracts with Frontier.

As a material condition of receiving Internet service from Frontier, each Plaintiff

has repeatedly assented to arbitrate "all disputes and claims" with Frontier. In September

2011, Frontier notified Plaintiffs that an arbitration provision was being added to its

Internet Service Terms and Conditions. Just a few months later, in January 2012, Frontier

further notified Plaintiffs that the arbitration provision was being revised in a manner that

would make arbitration not only less expensive, but also simpler and more convenient for

them to use. In addition, each Plaintiff was sent a copy of the then-current Internet Service

Terms and· Conditions (including the revised arbitration provision) in November 2012.

Despite being repeatedly informed of the arbitration provision, no Plaintiff has terminated

service with Frontier. None did, and to this day, none has. Plaintiffs have therefore

accepted the arbitration provision in Frontier's service terms, and they are contractually

bound by it.

Moreover, in proposing the arbitration provision to its customers, Frontier took

particular care to assure that its features were evenhanded-to ensure not only that the

provision would be enforceable, but also that it would be fair and friendly to its customers.

Accordingly, the arbitration provision proposed to and accepted by Plaintiffs provides a

favorable means for resolving any disputes they may have with Frontier: it allows

individual customers to arbitrate most disputes for free; it affords customers the

opportunity to obtain the same individualized remedies they could receive in court; it offers

the potential for additional recoveries that might not be available in court; and it provides

a simple and straightforward process for dispute resolution.

Because the arbitration provisions are valid and enforceable under the Federal

Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, these Plaintiffs must resolve their claims in

individual arbitrations, and this civil action should be dismissed. In the alternative, this

civil action should be stayed pending the completion of those arbitrations.

2

BACKGROUND

A. The Terms And Conditions Of Service.

Plaintiffs Michael Sheridan, April Morgan, Trisha Cooke, and Richard Bennis are

West Virginia residents who "contract[ed] for [I]nternet services" with Frontier. Am.

Compl. ~~ 25-26,50-51,70-71, 87-88; see also id. ~ 9 ("consumers contract for access" to

the Internet). All four Plaintiffs subscribe to residential high-speed Digital Subscriber Line

("DSL") Internet service with Frontier. Mr. Sheridan alleges that he has been a Frontier

residential High-Speed Internet subscriber since 2005 or 2006. Am. Compl. ~ 32.

According to Frontier's records, Mr. Sheridan subscribed to that service in August 2007.

Aff. of Angie McCall ~ 4.

Ms. Morgan, Ms. Cooke, and Mr. Bennis do not allege how long they have been

Frontier residential High-Speed Internet subscribers. According to Frontier's records,

Cooke has subscribed since at least June 2010 and Mr. Bennis subscribed in February 2008.

McCall Aff. ~~ 13, 16. According to Frontier's records, Ms. Morgan subscribed in August

2008, wlien Verizon controlled the entity that is now Frontier-wesCVirginia-;ffi.c. was

providing service to certain West Virginia customers; she became a Frontier customer in

July 2010, when Frontier acquired Verizon's West Virginia operations. Id. ~ 10.

The details of the contracts between Frontier and Mr. Sheridan, Ms. Morgan, Ms.

Cooke, and Mr. Bennis are stated in the Terms and Conditions upon which Frontier agrees

to provide them with high speed Internet service. Those tenns are and have been posted

on Frontier's web site (at www.frontier.com/terms). Aff. of David Zanvettor ~~ 2-7. The

Terms and Conditions explicitly and emphatically provide that "BY USING FRONTIER

HIGH SPEED INTERNET SERVICES OR EQUIPMENT, YOU ARE AGREEING

TO THESE TERMS AND CONDITIONS." !d. Ex. 3 at 1; id. Ex. 4 at 1 (same); see also

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id. Ex. 2 at 1 ("BY USING OR PAYING FOR FRONTIER HIGH SPEED INTERNET

SERVICES OR EQUIPMENT, YOU ARE AGREEING TO THESE TERMS AND

CONDITIONS.").

Aside from the public availability of these terms, Frontier affirmatively notified

Plaintiffs of these terms on multiple occasions. For example, Mr. Sheridan, Ms. Cooke,

and Mr. Bennis received monthly bills stating:

ATTENTION FRONTIER HIGH SPEED INTERNET USERS

Frontier is providing High-Speed Internet Service to its end user customers pursuant to the Terms and Conditions described at http://www.frontier.com/terms. In the past, Frontier filed this information with the Federal Communications Commission (FCC). As a result of recent FCC rulings, we are now providing High-Speed Internet service per these Terms and Conditions. If you have any questions, please call the customer service number on your bill.

E.g., McCall Aff. ~~ 5, 14, 17 & Ex. 1 at 3 (Sheridan July 2011 bill); id. Ex. 13 at 4 (Cooke

July 2011 bill); id. Ex. 19 at 3 (Bennis July 2011 bill).

In addition, since September 2011, Plaintiffs' bills have stated, under the heading

"IMPORT ANT CONSUMER MESSAGES":

Visit Frontier.com/terms, Frontier.com/tariffs, or call customer service for information on Frontier's applicable tariffs or price lists and other important Terms, Conditions and Policies related to your Local, Long Distance, High Speed Internet and/or TV service, including limitations of liability and early termination fees (Frontier.com/etf).

4

Af£ ofMakita Saloane ~ 4; see, e.g., McCall Aff. ~~ 6-7 & Exs. 2-6 (Sheridan); id. Exs. 8-

12 (Morgan); id. Exs. 14-18 (Cooke); id. Exs. 20-24 (Bennis). 1 In short, Plaintiffs'

contractual rights and obligations are defined by Frontier's then-current Terms and

Conditions.

Among these Terms and Conditions is one permitting Frontier to propose changes

to the contract. The version of this clause that was in effect between July 21, 2011, and

March 7, 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 SERVICES AFTER NOTICE IS PROVIDED.

Zanvettor Af£ W 5-6 & Ex. 3 at 3; id. Ex. 4 at 3 (same).2

1 A similar message is contained in Frontier's bills begim1ing in December 2014. See Saloane Aff. ~ 9. 2 The current version of the clause, which has been in effect since March 2013, is very similar:

OUR RIGHT TO MAKE CHANGES

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

5

In accordance with this change-in-terms provision, in September 2011 Frontier

posted revised Terms and Conditions-which included an arbitration provision-on its

web site. See, e.g., Zanvettor Aff. ~ 6 & Ex. 4 at 2-3. Frontier also sent its customers

(including all of the Plaintiffs) a notice on their bills informing them that the Terms and

Conditions for residential high-speed Internet had been revised to include an arbitration

provision. See McCall Aff. Exs. 2, 8, 14, 20; see also Saloane Aff. ~ 3.

The notice stated:

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.

McCall Aff. Exs. 2, 8, 14, 20; see also Saloane Aff. ~ 3. Each of these Plaintiffs maintained

their service beyond the 45-day notice period, thus accepting the arbitration provision. See

McCall Aff. ~~ 9, 12, 15, 18.

This initial arbitration provision stated that Frontier and the customer each agree

"to arbitrate all disputes and claims between us including, but not limited to, all claims

arising out of or relating to any aspect of our relationship, whether based in contract, tort,

statute, fraud, misrepresentation or any other legal theory, that arose either before or during

this or any prior Agreement, or that may arise after termination of this Agreement."

Zanvettor Aff. Ex. 4 at 2. The provision also specified that any arbitration would take place

on an individual basis: "class" and "representative" proceedings were not permitted. Id. at

3.

Zanvettor Aff. ~ 3 & Ex. 1 at 6; see also id. Ex. 2 at 5 (March 2013 version).

6

Frontier subsequently notified Plaintiffs in their January 2012 bills that it had

revised the arbitration provision to make arbitration even more inexpensive and convenient

for customers. See Saloane Aff. ,-r 5; see, e.g., McCall Aff. ,-r,-r 8, 11, 14,21 & Exs. 3, 9, 15,

21. The most significant difference between the revised arbitration provision and the

original is that, while the original provision required customers to pay a portion of the costs

of arbitration, the revised provision requires Frontier to pay all arbitration costs for most

customer claims. Compare Zanvettor Aff. Ex. 4 at 3 with id. Ex. 3 at 3.

Frontier also distributed in November 2012 a printed copy of its then-current

Residential Internet Service Terms and Conditions-which included the arbitration

provision revised in January 2012-to each customer who receives a paper bill by

enclosing it with that bill. See Saloane Aff. ,-r,-r 6-7 & Ex. 1. Plaintiffs' November 2012

bills included the following message:

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 s_Recial in~s,....e~rt.__ ______ _

-------------~,·-::n:-:.otrhT:is,b~ill·. By using and paying for Frontier Internet services, yo_u 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 tenns by calling 1-866-606-2849 and following the prompts within 30 days from the date of this bill.

!d. ,-r 8 (emphasis added); see, e.g., McCall Af£ Ex. 4 (Sheridan); id. Ex. 10 (Morgan); id.

Ex. 16 (Cooke); id. Ex. 22 (Bennis). All Plaintiffs were current customers in November

2012 and received paper bills. See McCall Aff. ,-r,-r 8, 11, 14, 17.

None of the Plaintiffs has terminated his or her Frontier Internet service. See

McCallAff. ,-r,-r9, 12, 15, 18.

7

B. Frontier's Consumer-Friendly And Cost-Effective Arbitration Program

In sum, Frontier and each Plaintiff must resolve their dispute by arbitration on an

individual basis. That arb1tratwn mcludes several features that ensure that Frontier

customers have a simple and efficient means of resolving their disputes in this fashion.

Those features include:

• Cost-free arbitration: For claims for damages up to $10,000 (or non-monetary relief of value up to $1 0,000), Frontier will pay all American Arbitration Association ("AAA") filing, administration, and arbitrator fees, unless the arbitrator finds that the claim or the relief sought is frivolous or improper under the standards ofFederal Rule ofCivil Procedure ll(b);

• Double recovery up to $5,000 if arbitral award exceeds Frontier's settlement offer: If the arbitrator awards a customer an amount of money greater than any settlement offer made by Frontier before the appointment of the arbitrator, but less than $5,000 (or if Frontier makes no settlement offer and the arbitrator awards the customer any monetary relief less than $5,000), "Frontier agrees to pay [the customer] double the arbitrator's awardup to, but not more than, $5,000," or the arbitral award itself if it is greater than $5,000;

• Frontier disclaims right to seek attorneys' fees: "Although Frontier may have a right to an award of attorneys' fees and expenses if it prevails, Frontier agrees that it will not seek such an award [from the ~ustom~]";

-----------------------------

• Small claims court option: Either party may bring a claim in small claims court;

• No confidentiality requirement: The customer and his or her attorney need not keep the arbitration confidential;

• Full remedies available: The arbitrator may award the consumer any form of individual relief (including punitive damages, statutory damages, attorneys' fees, and individualized injunctions) that a court could award;

• Flexible consumer procedures: Arbitration will be conducted under the AAA's Consumer Arbitration Rules, which the AAA designed with consumers in mind;

• Conveniently located hearing: Arbitration will take place "at a location that the AAA selects in the state of your primary residence unless [the customer] and Frontier agree otherwise";

8

• Choice of in-person, telephonic, or no hearing: For claims of$10,000 or less, customers have the exclusive right to choose whether the arbitrator will conduct an in-person hearing, a hearing by telephone, or a desk arbitration in which "the arbitration will be conducted solely on the basis of documents submitted to the arbitrator"·3 and

'

• Right to a written decision! "Regardless of the manner in which the arbitration is conducted, the arbitrator shall issue a reasoned written decision sufficient to explain the essential findings and conclusions on which the award is based."

Zanvettor Aff. Ex. 2 at 2-3; see also Saloane Aff. Ex. 1 at 4-5.4

C. The Present Civil Action.

Notwithstanding their arbitration agreements, Plaintiffs Sheridan, Morgan, and

Cooke filed this putative class-action lawsuit on October 14, 2014, and amended their

Complaint to add Plaintiff Bennis on November 21, 2014. In the First Amended Complaint,

Plaintiffs allege that Frontier advertises that it provides customers with Internet service at ·

3 A copy of the AAA' s current rules for consumer arbitrations is attached as Exhibit A. For the Court's information and reference, these rules are also available online through the AAA's website, www.adr.org. Undertheserules (which would otherwise ar>pJy), either party may insist on aheanng in cases involving claims of $25,000 or less. Ex. A at D-1 (b). For claims exceeding $25,000, a hearing would be held unless both parties agree to forgo it. ld. at D-1(a).

4 In December 2014, Frontier notified its customers that it had revised the arbitration provision to make arbitration even more favorable to consumers. See Saloane Aff. ~ 1 0; see, e.g., McCall Af£ Exs. 6, 12, 18, 24. The December 2014 bills for Frontier high-speed Internet customers stated that "Frontier believes that disputes between it and its customers should be resolved fairly and as promptly as possible," and had therefore "revised the DISPUTE RESOLUTION BY BINDING ARBITRATION provision applicable to your Frontier services." ld. Frontier also directed customers to "refer to the Terms and Conditions available at www.frontier.com/terms, including the specific arbitration provision at Frontier.com/terms/arbitration or call Frontier 1-800-426-6404, option 3 for more information." ld. The most significant difference between the December 2014 arbitration provision and the January 2012 version of the arbitration provision is that the newer provision makes arbitration cost-free for customers in an even wider range of cases. Compare Zanvettor Aff. Exs. 1, 5, with id. Ex. 2. Frontier also agreed in the December 2014 provision to "promptly reimburse [the customer] for [his or her] payment ofthe filing fee," or to "pay it directly upon receiving a written request." Id. Ex. 5 at-2.

9

certain speeds, but that Frontier improperly "throttles" its service and therefore provides

Internet service at speeds that are not as fast as advertised. E.g., Am. Compl. mf 3, 14, 20,

37-41,55-58,74-78,90-92. They seek to represent a putative statewide class ofFrontier

customers who receive high-speed Internet access or broadband services. !d. ~ 102.

Plaintiffs assert claims for violations of the West Virginia Consumer Credit and Protection

Act, W. Va. Code § 46A-6-104 (Am. Compl. ~~ 107-118), for unjust enrichment (id. mf

119-125), and for declaratory relief (id. ~~ 126-132), and seek monetary damages,

attorneys' fees, costs, and an injunction (id. at 21-22 (prayer for relief)).

ARGUMENT

I. THE FEDERAL ARBITRATION ACT REQUIRES ENFORCEMENT OF PLAINTIFFS' ARBITRATION AGREEMENTS.

The FAA governs the enforceability of "written" arbitration agreements that

"evidenc[e] a transaction involving commerce." 9 U.S.C. § 2. Both criteria are met here:

(i) the arbitration agreement is in writing (see page 5, supra); and (ii) it is well settled that

the Internet is a facility of interstate commerce. In fact, "courts haV'e_consistently-found-----------------------

that the use of the Internet necessarily involves interstate communications and therefore

constitutes the use of a facility of interstate commerce." Adams v. United States, 2009 WL

2060089, at *6 (S.D. Ill. July 14, 2009) (internal quotation marks omitted); see, e.g., United

States v. White, 2 F. App'x 295, 298 (4th Cir. 2001) (per curiam) ("Transmission ... by

means of the Internet ... constitutes transportation in interstate commerce.") (internal

quotation marks omitted). Indeed, the January 2012 arbitration provision itself specifies

that "[t]he Federal Arbitration Act governs the interpretation and enforcement of this

provision." Zanvettor Aff. Ex. 2 at 4.

10

As the U.S. Supreme Court has explained, it is "beyond dispute that the FAA was

designed to promote arbitration." AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740,

17 49 (20 11 ). The Supreme Court of Appeals of West Virginia has recognized that,

"[u]nder the Federal Arbitration Act, 9 U.S.C. § 2, a written provision to settle by

arbitration a controversy arising out of a contract that evidences a transaction affecting

interstate commerce is valid, irrevocable, and enforceable, unless the provision is found to

be invalid, revocable or unenforceable upon a ground that exists at law or in equity for the

revocation of any contract." State ex rel. Ocwen Loan Servicing, LLC v. Webster, 232

W.Va. 341, 356, 752 S.E.2d 372, 387 (2013) (per curiam) (citations and internal quotation

marks omitted). In addition to Section 2 ofthe FAA, Sections 3 and 4 also emphasize the

duty of courts to compel arbitration "in accordance with the terms of the [arbitration]

agreement." 9 U.S.C. §§ 3-4. Accordingly, ''the overarching purpose ofthe FAA, evident

in the text of§§ 2, 3, and 4, is to ensure the enforcement of arbitration agreements according

to their terms so as to facilitate streamlined proceedings." Concepcion, 131 S. Ct. at 1748.

Tliis''federal policy which favor[ s] arbitration agreements" applies '"notwithstanding any

state substantive or procedural policies to the contrary."' Rashid v. Schenck Constr. Co.,

190 W.Va. 363, 367, 438 S.E.2d 543, 547 (1993) (quoting Moses H. Cone Mem 'I Hosp.

v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). Accordingly, "questions ofarbitrability

must be addressed with a healthy regard for the federal policy favoring arbitration." Moses

H. Cone, 460 U.S. at 24.

The FAA plainly requires enforcement of Plaintiffs' arbitration agreements with

Frontier.

11

A. Plaintiffs Are Bound By The Internet Service Terms And Conditions.

The Internet Service Terms and Conditions-including its arbitration provision-

constitute a binding contract between Frontier and each of the Plaintiffs.5

Under West Virginia law, the manner in which Plaintiffs accepted the Terms and

Conditions is fully enforceable. By continuing to use and pay for Frontier's service after

signing up for service after plain and repeated notice of the Terms and Conditions, the

Plaintiffs accepted those terms. Conversely, in reliance on the Plaintiffs' acceptance of

the Terms and Conditions, Frontier provided service to the Plaintiffs and priced the service

at a very affordable cost.

It is well established in West Virginia that an offer may be accepted "by silence

accompanied by an act" that "constitutes a performance of that requested" in order for the

contract to be effective. First Nat'/ Bank of Gallipolis v. Marietta Mfg. Co., 151 W.Va.

636, 641-42, 153 S.E.2d 172, 176 (1967). And the Supreme Court of Appeals has

subsequently explained that West Virginia law "recognize[s]" "unilateral contrac_t[s], __

where one party makes a promissory offer and the other accepts by performing an act rather

than by making a return promise." Cook v. Hecks Inc., 176 W.Va. 368, 373, 342 S.E.2d

453, 458 (1986) (citing First Nat'/ Bank, 151 W.Va. at 641-42, 153 S.E.2d at 176); cf

Hamilton v. McCall Drilling Co., 131 W.Va. 750, 754, 50 S.E.2d 482, 484-85 (1948)

Plaintiffs allege that that they "do[] not recall signing any written contracts or agreement with Frontier." Am. Compl. ~~ 52, 72, 89; see also id. ~ 36. Plaintiffs' allegations that they cannot remember signing a contract do not contradict Frontier's showing that each Plaintiff was repeatedly informed of the terms upon which Frontier offered to contract-including the arbitration provision-and given an opportunity to terminate service or opt out of arbitration if he or she wished.

12

(holding that "[ o ]ne who has accepted benefits under a contract" is regarded as having

"ratifie[ d] the agreement").

Similarly, as the Seventh Circuit has explained, "'[a] vendor, as master of the offer,

may invite acceptance by conduct'" of "terms" provided with delivered goods by the

buyer's failure to cancel the transaction. Hill v. Gateway 2000, Inc., 105 F.3d 1147, 1148-

49 (7th Cir. 1997) (quotingProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1452 (7th Cir. 1996)).

Here, not only did Plaintiffs accept the benefits of their contracts by choosing to maintain

service, they affirmatively and repeatedly chose to continue paying for service after they

were informed on their bills that service was subject to acceptance of Frontier's Terms and

Conditions, including the arbitration provision.

For these reasons, a federal district court in Minnesota recently held that, under Hill,

Frontier's revised Terms and Conditions-including its arbitration provision-apply to

customers who continued to receive service after being notified of the revised terms and

chose not to terminate their contract. Rasschaert v. Frontier Commc'ns Corp., 2013 WL

1149549, at *6 (D---:-Minn. Mar. 19, 2013). Rasschaertis consistent with West Virginia law.

As a federal court in this State--applying Cook, Hill, and ProCD-has held, "by activating

and/or continuing [to] use" a service, a plaintiff thereby "accept[ s] the terms and conditions"

associated with that service. Schultz v. AT&T Wireless Servs., Inc., 376 F. Supp. 2d 685,

691-92 (N.D. W.Va. 2005).

B. The Arbitration Provision Was Validly Adopted By The Parties.

Frontier properly proposed the arbitration provision in September 2011 (and its

revision in January 2012) in accordance with the change-in-terms clauses of its Terms and

Conditions, as well as with firmly established principles of West Virginia law. The

Frontier change-in-terms clause in effect in July 2011 specified that if Frontier provides

13

customers with notice of a contractual change "by bill message, e-mail or other notice,

including posting notice" on Frontier's "web site," then the customer "accept[s] the

changes" by "us[ing] the services after notice is provided." Zanvettor Aff. Ex. 4 at 3

(emphasis omitted).

Not only did Frontier post the arbitration provision on its web site, it also provided

each of the Plaintiffs with notice by bill message in their September 2011 bills. Zanvettor

Aff. ,-r 6 & Ex. 4; see also Saloane Aff. ,-r 3; McCall Aff. Exs. 2, 8, 14, 20. It did the same

with respect to the revised arbitration provision, posting its contents on the web site and

providing each of the Plaintiffs with notice by bill message in their January 2012 bills.

Zanvettor Aff. Ex. 3; see also McCall Aff. Exs. 3, 9, 15, 21. In addition, in November

2012, Frontier provided "other notice" by distributing to its then-active residential high-

speed Internet customers-which included each of the Plaintiffs (see McCall Aff. ,-r,-r 8, 11,

14, 17)-a printed copy of the then-current terms and conditions, along with a paper bill

that included a message explaining that the terms and conditions had been updated, were

availaole on tlie weosile,-and had been included as an insert with-tlie paper oill~See Saloane

Aff. ,-r,-r 3, 5 & Ex. 1; McCall Aff. Exs. 4, 10, 16,22.6

And Plaintiffs accepted Frontier's proposed changes. Each Plaintiff paid the

amount that was due under his or her September 2011 bill, which is the one that announced

that Frontier was adopting an arbitration provision. See McCall Aff. Exs. 3, 9, 15, 21

(January 2012 bills reflecting no balance on the account). Plaintiffs' subsequent bills

reflect that each Plaintiff continued to use and pay for Frontier's service after receiving

6 In addition, in December 2014, Frontier again posted the revised arbitration provision on its website and provided its customers with notice by bill message. Saloane Aff. ,-r 9; see also McCall Aff. Exs. 6, 12, 18, 24.

14

notice of the new arbitration provision-including when Frontier sent each of them a

printed copy of the full Terms of Service (which contained the arbitration provision) in

November 2012. See Saloane Aff. ~ 6; see also McCall Aff. ~~ 8, 11, 14, 17 & Exs. 5, 11,

17,23 (January 2013 bills reflecting no balance on the account). Plaintiffs have continued

to use and pay for service. Indeed, each Plaintiff is still a Frontier subscriber as of the filing

of this motion. See McCall Aff. ~~ 9, 12, 15, 18.

Each of the Plaintiffs could have cancelled their Frontier service at any point

without penalty if they wished, including after they were notified in September 2011 that

an arbitration provision would become effective within 45 days of that notice, or after they

were notified in January 2012 that the arbitration provision was being revised again. See

McCall Aff. Exs. 2, 3, 8, 9, 14, 15, 20, 21. By instead repeatedly electing to continue using

and paying for Frontier service, however, each Plaintiff accepted Frontier's proposed

amendments to the parties' contract and became bound by the arbitration provision.

The federal district court in Rasschaert reached precisely that conclusion on

precisely tlie same facfs-:-_Th_e_ court examined the procedure b-y wliicnFrontier modified-­

the Terms and Conditions in September 2011 to add the arbitration agreement, and

determined that the agreement was enforceable. The "most important[]" reason why the

agreement was enforceable was that Frontier's 45-day notice on the bill provided its

customers with "constructive, if not actual, notice .that an arbitration clause would be added

to Frontier's Terms and Conditions." Rasschaert, 2013 WL 1149549, at *7. Frontier's

customers who "continued their service" and "fail[ ed] to terminate service despite the

notice" thereby accepted "the change in terms-namely the addition of the arbitration

15

clause." !d. The court rejected the plaintiffs' argument that the change was invalid because

the changed terms themselves did not appear on the face of their bills. See id. at * 8.

In sum, Frontier notified Plaintiffs that it was adopting and modifying its arbitration

provision. By continuing to use Frontier service-and obtaining the benefit of that

service-each Plaintiff accepted that provision.

C. Plaintiffs' Claims Are Within The Scope Of Their Arbitration Agreements.

The arbitration clause plainly encompasses the claims asserted here. It includes

"all disputes and claims between us including, but not limited to, all claims arising out of

or relating to any aspect of our relationship ... that arose either before or during this or

any prior Agreement, or that may arise after termination of this Agreement." Zanvettor

Aff. Ex. 2 at 3. A dispute regarding the quality of Internet service provided under the

Agreement is obviously within the scope of this clause.

And even if there were any doubt, the FAA would require that '"any doubts

concerning the scope of arbitrable issues should be resolved in !ltv or of arbitration."' State ------------------~---

ex rel. Wells v. Matish, 215 W.Va. 686, 693, 600 S.E.2d 583, 590 (2004) (per curiam)

(quoting Moses H Cone, 460 U.S. at 24-25). As the United States Supreme Court has

explained, an order compelling arbitration "should not be denied unless it may be said with

positive assurance that the arbitration clause is not susceptible of an interpretation that

covers the asserted dispute." AT&T Techs., Inc. v. Commc 'ns Workers of Am., 475 U.S.

643, 650 (1986) (internal quotation marks omitted).

D. Plaintiffs Are Required To Arbitrate On An Individual Basis.

Although Plaintiffs have filed a putative class action, their arbitration agreements

expressly require that arbitration take place on an "individual" rather than "class" basis.

16

Zanvettor Af£ Ex. 2 at 4. Any contention that Plaintiffs' arbitration agreements are

unenforceable because they do not permit classwide arbitration is foreclosed by precedents

of both the United States Supreme Court and the Supreme Court of Appeals of West

Virginia.

In Concepcion, the United States Supreme Court held that "[r]equiring the

availability of classwide arbitration interferes with fundamental attributes of arbitration and

thus creates a scheme inconsistent with the FAA." 131 S. Ct. at 1748. Moreover, "States

cannot require a procedure that is inconsistent with the FAA, even if it is desirable for

unrelated reasons." !d. at 1753. Accordingly, "the FAA prohibits States from conditioning

the enforceability of certain arbitration agreements on the availability of classwide

arbitration procedures." !d. at 1744. The Supreme Court recently reiterated this point in

American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304, 2309-12 (2013).

Mindful of the United States Supreme Court's reasoning in Concepcion and Italian

Colors, the Supreme Court of Appeals of West Virginia recently rejected the argument that

a class waiver renders an arbitration agreement unconscionable simply because "the

recovery sought ... is relatively small and may deter them from pursuing a remedy if they

are deprived of a class option." Ocwen, 232 W.Va. at 358,752 S.E.2d at 389.7 The Ocwen

holding followed an earlier memorandum decision affinning an order compelling

7 Accord, e.g., Murphy v. DirecTV, Inc., 724 F.3d 1218, 1226 (9th Cir. 2013) ("Section 2 of the FAA, which under Concepcion requires the enforcement of arbitration agreements that ban class procedures, is the law of California and of every other state.") (second emphasis added); Green v. SuperShuttle lnt'l, Inc., 653 F.3d 766, 769 (8th Cir. 2011) ("Concepcion forecloses Green's claim" that "the class action waivers in" the parties' arbitration agreement "are unenforceable under Minnesota law."); Litman v. Cellco P 'ship, 655 F.3d 225, 230-32 (3d Cir. 2011); Cruz v. Cingular Wireless, LLC, 648 F.3d 1205, 1210-15 (11th Cir. 2011).

17

arbitration on an individual basis, in which the court noted that the existence of a class

action waiver in an arbitration agreement does not render the agreement unconscionable.

Shorts v. AT&T Mobility, No. 11-1649,2013 WL2995944, at *6-*7 (W.Va. June 17, 2013)

(memorandum decision); see also State ex rei. AT&T Mobility, LLC v. Wilson, 226 W.Va.

572, 579, 703 S.E.2d 543, 550 (2010) (per curiam) (recognizing, even before Concepcion,

that as a matter of West Virginia law, "[ s ]tanding alone, the lack of class action relief does

not render an arbitration agreement unenforceable on grounds of unconscionability"). In

short, the binding precedents of the highest courts of this State and the United States

mandate the enforcement of Plaintiffs' arbitration agreements.

The FAA requires enforcing the arbitration agreements as a matter of law, and the

Court can be assured that these Plaintiffs will receive a consumer-friendly and reasonable

arbitration process. As Frontier explained above, arbitration is almost always cost-free to

consumers with individual claims valued up to $10,000. In addition, certain prevailing

consumers are guaranteed a minimum recovery: if Frontier makes a settlement offer prior

to appointment of the aroitrator and the customer does not accept it, and the arbitrator

awards an amount greater than Frontier's offer but less than $5,000, Frontier agrees to pay

double the arbitrator's award up to, but not more than, $5,000. The circumstances under

which arbitration will be conducted are, moreover, flexible and convenient to consumers.

See pages 8-9 above. Indeed, the West Virginia Supreme Court of Appeals has specifically

found a very similar arbitration clause to be valid and enforceable. See Shorts, 2013 WL

2995944, at *2 & n.3 (describing the "consumer friendly" terms of the arbitration clause at

issue there). This Court should, therefore, dismiss this case (or in the alternative issue a

18

-,

stay pending completion ofthe arbitrations) to allow this fair arbitration process to run its

required course.

CONCLUSION

This Court should compel Plaintiffs to arbitrate their dispute on an individual basis

in accordance with their arbitration agreements. Accordingly, this Court should dismiss

their claims, or in the alternative, stay them pending the resolution of the arbitrations.

Dated: January 30, 2015

Of Counsel:

Respectfully submitted,

homas R. Goodwin (WV Bar# 1435) J. David Fenwick (WV Bar# 6029) Johnny M. Knisely (WV Bar# 4968) GOODWIN & GOODWIN, LLP 300 Summers Street Suite 1500 Charleston, West Virginia 25301 (304) 346-7000

Counsel for Defendants Citizens Telecommunications Company of West Virginia dlb1a Frontier Communications of -­West Virginia, and Frontier West Virginia Inc.

Archis A. Parasharami (application for pro hac vice admission pending) MA. YER BROWN LLP 1999 K Street NW Washington, DC 20006 (202) 263-3000

19

IN THE CIRCUIT COURT OF LINCOLN COUNTY, WEST VIRGINIA

MICHAEL SHERIDAN, APRIL MORGAN, TRISHA COOKE, AND RICHARD BENNIS,

Plaintiffs for Themselves and All Others Similarly Situated,

vs.

CITIZENS TELECOMMUNICATIONS COMPANY OF WEST VIRGINIA d.b.a. FRONTIER COMMUNICATIONS OF WEST VIRGINIA, FRONTIER WEST VIRGINIA, INC.,

Defendants.

CERTIFICATE OF SERVICE

Case No. 14-C-115

I, J. David Fenwick, hereby certify that DEFENDANT'S MOTION TO COMPEL

ARBITRATION AND DISMISS, OR IN THE ALTERNATIVE TO STAY ~d MEMORANDUM OF LAW IN

SUPPORT OF DEFENDANTS' MOTION TO COMPEL ARBITRATION AND DISMISS, OR IN THE

ALTERNATIVE TO STAY was served upon counsel of record, through the regular course of the

United States Postal Service, postage prepaid, this 30th day of January 2015, addressed as follows:

Benjamin Sheridan KLEIN SHERIDAN & GLAZER LC Clyffeside Professional Building 3566 Teays Valley Road Hurricane, WV 25526 T: (304) 782-6552

Jonathan J. Marshall BAILEY GLASS, LLP 209 Capitol Street Charleston, WV 25301 T: (304) 340-2295

~ J. DAVID FENWICK