United States District Court, S.D. New York
November 21, 2014
WILLIAM SHERROD, Plaintiff,
TIME WARNER CABLE, INC., Defendant
For William Sherrod, Plaintiff: Jenny Diane DeFrancisco, Sergei Lemberg, Vlad Hirnyk, Lemberg & Associates L.L.C., Stamford, CT, USA.
For Time Warner Cable, Inc., Defendant: Charles Dewey Cole, Jr, LEAD ATTORNEY, Newman Myers Kreines Gross Harris, P.C., New York, NY, USA.
JAMES L. COTT, United
States Magistrate Judge.
Before the Court is Defendant Time Warner Cable, Inc.'s letter motion dated November 7, 2014, to strike Plaintiff William Sherrod's demand for a trial by jury. (Dkt. No. 34). Plaintiff submitted a response opposing the motion on November 14, 2014 (Dkt. No. 35), to which Defendant replied by letter dated November 17, 2014 (Dkt. No. 36). For the reasons stated below, Defendant's motion is denied.
Sherrod, an Ohio resident, commenced this action against Time Warner Cable, Inc. (" TWC") on March 4, 2014, alleging violations of the Telephone Consumer Protection Act (" TCPA"), 47 U.S.C. § 227 et seq. Specifically, the complaint alleges the following: TWC, in an " illegal effort to collect a consumer debt, " placed numerous calls to Sherrod's cellphone " using an automated telephone dialer system('ATDS' or 'predictive dialer') and/or by using an artificial or prerecorded voice." Complaint ¶ ¶ 1, 6, 7, 12. Although Sherrod is a TWC subscriber, these calls were placed " in an attempt to speak with a person named 'Anthony Sanford, " ' a man with whom Sherrod has no connection. Id. ¶ 6. When Sherrod answered his phone, the prerecorded message instructed him to press " 1" if he was " Anthony Sanford" and press " 2" if he was not. Id. ¶ 8. On several occasions, Sherrod pressed " 2, " spoke with a live operator, informed the operator that he was not Anthony Sanford, and requested that TWC cease calling his cellphone and remove his phone number from its call list. Id. ¶ ¶ 9-11. Despite these efforts, TWC continued to place " dozens of calls" to Sherrod's cellphone in a misguided effort to reach " Anthony Sanford." Id. ¶ 12.
Sherrod demanded a jury trial in his complaint and reaffirmed his demand in a letter to the Court dated October 31, 2014 (Dkt. No. 32), prompting TWC's motion. TWC contends that Sherrod " agreed to give up his right to a jury trial as part of his agreement to use Time Warner Cable's services." Defendant's Letter Motion to Strike Jury Demand dated November 7, 2014 (Dkt. No. 34) (" Def.'s Letter Motion") at 1. TWC attached to its Letter Motion the Residential Services Subscriber Agreement (" Subscriber Agreement") that includes the following jury waiver provision:
(g) Jury Waiver. Any Dispute properly brought in a court of law in connection with our Customer Agreements (including this Agreement) will be heard and decided by a judge, not a jury. Each of us waives (in other words, gives up) the right to a jury trial in any such Dispute.
Subscriber Agreement ¶ 15(g) (emphasis in original). TWC argues that " [t]he waiver covers any dispute, which is broadly defined to cover statutory claims" such as Sherrod's. Def.'s Letter Motion at 2. " Dispute" is defined in the Subscriber Agreement as follows:
(f) " Dispute" means any dispute, claim, or controversy between you and TWC regarding any aspect of your relationship with us or any conduct or failure to act on our part, including claims based on breach of contract, tort (for example, a negligence or product liability claim), violation of law or any claims based on any other theory, and including those based on events that occurred prior to the date of this Agreement.
Subscriber Agreement, ¶ 17(f).
A. Standards Governing Seventh Amendment Right to a Jury Trial
" When asserted in federal court, the right to a jury trial is governed by federal law." Merrill Lynch & Co. v. Allegheny Energy, Inc., 500 F.3d 171, 188 (2d Cir. 2007) (citations omitted); Allied Irish Banks, p.l.c. v. Bank of Am., N.A., 875 F.Supp.2d 352, 355 (S.D.N.Y. 2012). " The Seventh Amendment right to a jury is fundamental, and there is a presumption against its waiver." Morgan Guar. Trust Co. of N.Y. v. Crane, 36 F.Supp.2d 602, 603 (S.D.N.Y. 1999) (citing National Equip., Rental, Ltd. v. Hendrix, 565 F.2d 255, 258 (2d Cir. 1977)); see also Allegheny Energy, 500 F.3d at 188. Although the parties to a contract may knowingly and voluntarily waive the right to a jury trial, " [c]ontract provisions waiving the right are narrowly construed, and the requirement of knowing, voluntary, intentional waiver is strictly applied." Morgan, 36 F.Supp.2d at 603 (citations omitted); accord Price v. Cushman & Wakefield, Inc., 808 F.Supp.2d 670, 705 (S.D.N.Y. 2011); Urban Outfitters, Inc. v. 166 Enter. Corp., 136 F.Supp.2d 273, 275 (S.D.N.Y. 2001).
Courts consider four factors in determining whether a contractual waiver of the right to a jury trial was knowing and voluntary: " 1) the negotiability of contract terms and negotiations between the parties concerning the waiver provision; 2) the conspicuousness of the waiver provision in the contract; 3) the relative bargaining power of the parties; and 4) the business acumen of the party opposing the waiver." Morgan, 36 F.Supp.2d at 603-04 (citation omitted); accord Allied Irish Banks, 875 F.Supp.2d at 355-56; Price, 808 F.Supp.2d at 705. " The burden of proving that a waiver was knowing and intentional rests with the party attempting to enforce the purported waiver." Price, 808 F.Supp.2d at 705 (quoting Sullivan v. Ajax Navigation Corp., 881 F.Supp. 906, 910 (S.D.N.Y. 1995)); accord Allied Irish Banks, 875 F.Supp.2d at 355-56 (quoting Lehman Bros. Holdings Inc. v. Bethany Holdings Grp., LLC, 801 F.Supp.2d 224, 229 (S.D.N.Y. 2011)).
Assuming that the contractual waiver is enforceable, the court must then determine whether the particular claim asserted falls within the scope of the jury waiver. See, e.g., Allied Irish Banks, 875 F.Supp.2d at 356; Brown v. Cushman & Wakefield, Inc., 235 F.Supp.2d 291, 294 (S.D.N.Y. 2002); see also Weingarten v. Colony Brands, Inc., No. 12-CV-1079 (AWT), 2013 WL 4482836, at *4 (D. Conn. Aug. 21, 2013) (determining that plaintiffs TCPA claim fell within scope of arbitration clause). Courts must strictly construe the language of enforceable waiver provisions, mindful that a waiver " is not lightly to be inferred." Adelphia Recovery Trust v. Bank of Am., N.A., No. 05-CV-9050 (LMM), 2009 WL 2031855, at *7 (S.D.N.Y. July 8, 2009) (quoting Tray-Wrap, Inc. v. Six L's Packing Co., 984 F.2d 65, 67 (2d Cir. 1993)) (internal quotation marks omitted).
1. Sherrod Did Not Knowingly and Voluntarily Waive His Right to a Jury Trial
Sherrod argues that he did not knowingly and voluntarily waive his right to a jury trial. Plaintiff's Letter in Opposition to Motion dated November 14, 2014 (Dkt. No. 35) (" Pl.'s Opposition Letter"), at 2. As to the first, third, and fourth factors applicable here, Sherrod asserts that he " had zero negotiating leverage or bargaining power as an average consumer signing up for cable services with a company such as TWC." Id. at 3. Sherrod argues that the second factor also weighs in his favor because " the jury waiver clause is buried on page 9 of the 11 page Agreement." Id.; see also Subscriber Agreement ¶ 15(g). Sherrod cites National Equipment Rental, Ltd. v. Hendrix, 565 F.2d 255, 258 (2d Cir. 1977), in which the Second Circuit declined to enforce a jury waiver provision where the waiver provision was " literally buried in the eleventh paragraph of a fine print, sixteen clause agreement" and there was gross inequality in the parties' bargaining power.
TWC does not contest Sherrod's characterization of the inequality in bargaining power between the parties nor does it offer evidence of any negotiations between the parties; however, it argues that Sherrod " had reasonable notice [of the jury waiver provision] and chose to accept the benefit of TWC service." Defendant's Reply Letter dated November 17, 2014 (Dkt. No. 36) (" Def.' s Reply Letter"), at 3. In support of its contention that the jury waiver provision is enforceable, TWC asserts that the " the subscriber agreement ... is written in plain and understandable English, " and the jury-trial waiver itself has " a Flesch-Kincaid grade level of 8.3" (referring to a standard used by some courts for measuring the comprehensibility of a document " based on the minimum education level required for a reader to understand it"). Id. at 2. Presumably this argument is made to rebut the suggestion that Sherrod, as a typical consumer of cable services, lacked the " business acumen" to understand that he was relinquishing his constitutional right to a jury trial. See Morgan, 36 F.Supp.2d at 604.
While the waiver provision may be written in " understandable" English, TWC does not cite any case in which the comprehensibility of a jury waiver provision was a significant factor weighing in favor of enforceability. In fact, Common Cause/Georgia v. Billups, 504 F.Supp.2d 1333, 2007 WL 7600409, at* 18-20 (N.D.Ga. 2007), which it cites on this point, is inapposite, as it involved a challenge to the constitutionality of Georgia's photo identification requirement for voting, and that court, in fact, found the expert testimony relying on Flesch-Kincaid measurements to be unreliable. Moreover, the Court observes that the waiver provision in the Subscriber Agreement may not be as simple for the lay reader to comprehend as TWC suggests. The waiver contains three terms of art defined elsewhere in the agreement, one of which (" Customer Agreements") requires the reader to review and independently interpret the scope and substance of the " introduction to this Agreement, " which is neither labeled nor otherwise delineated.
Notably, the decisions enforcing contractual jury waivers that TWC cites both involved relatively sophisticated parties with greater business acumen, opportunity to negotiate, and ability to seek the advice of legal counsel than Sherrod. Def.' s Letter Motion at 2 (citing Allied Irish Banks, 875 F.Supp.2d at 354-56 (contract between two corporate entities neither of which disputed that jury waiver was entered into knowingly and voluntarily) and Price, 808 F.Supp.2d at 705-06 (employee bound by jury waiver provision in employment contract which he had actively negotiated while represented by counsel)).
TWC's strongest argument relates to the conspicuousness of the jury waiver provision by virtue of its incorporation in the section governing arbitration. " Factors to consider when making this determination include: the placement of the waiver, i.e. whether the provision was buried in a multitude of words, the size and style of the print, and the location of the provision within the entire document." Price, 808 F.Supp.2d at 705 (quoting Wechsler v. Hunt Health Sys., Ltd., No. 94-CV-8294 (PKL), 2003 WL 21878815, at *5 (S.D.N.Y. Aug. 8, 2003)) (internal quotation marks omitted). The jury waiver is the last of seven sections in paragraph 15 of the Subscriber Agreement, titled " Unless [Y]ou Opt Out, You are Agreeing to Resolve Certain Disputes Through Arbitration" (the " arbitration clause"). A text box on page one of the Subscriber Agreement contains language in red font and capital letters notifying the reader that the " Agreement contains a binding 'Aribitration [sic] Clause, ' which says that you and TWC agree to resolve certain disputes through arbitration .... You have the right to opt out of this part of the Agreement. See Sections 14, 15 and 16."  Paragraph 16 provides instructions on how to opt out of the " arbitration provisions in Section 15." If a subscriber were to complete the opt-out process for the arbitration clause, he presumably would opt out of the jury waiver provision as well by virtue of its inclusion in the arbitration clause. Neither paragraph 16, however, nor the text box on page one of the Subscriber Agreement specifically refers to the jury waiver.
The existence of the opt-out provision and the notices regarding it make the issue of conspicuousness a fairly close one. Nonetheless, the Court finds that sufficient notice regarding the resolution of disputes through arbitration does not perforce provide notice of the jury waiver. The jury waiver is not in a stand-alone paragraph with its own prominent caption. Cf. RREF RB-AL SLDL, LLC v. Saxon Land Dev., LLC, No. 2: 11-CV-925 (MEF), 2012 WL 1366720, at *2 (M.D. Ala. Apr. 19, 2012) (finding jury waiver clause conspicuous because it was in separate paragraph from other contract provisions and prefaced with caption in all-caps and bold type). It is merely listed as one section in the paragraph addressing resolution of disputes through arbitration, and requires the consumer to read a variety ofrelated provisions to ascertain how to opt out of the waiver. While this factor may not clearly tip in either party's favor, all the other factors weigh in favor of Sherrod. Consequently, the Court concludes that TWC has not met its burden of establishing that Sherrod knowingly and voluntarily waived his right to a jury trial.
2. Sherrod's TCPA Claim Does Not Come Within the Scope of the Subscriber Agreement
Even if the Court were to find the jury waiver clause enforceable, the clause does not, by its terms, apply to Sherrod' s claim under the TCPA. The Court looks to the specific language of the waiver provision to determine whether the claim at issue here falls within its scope. " The language of enforceable waiver provisions must be construed literally." Wechsler, 2003 WL 21878815, at *6. The jury waiver in Paragraph 15(g) of the Subscriber Agreement reads: " Any Dispute properly brought in a court of law in connection with our Customer Agreements (including this Agreement) will be heard and decided by a judge, not a jury." The Subscriber Agreement defines " Customer Agreements" as " the agreements, notices and policies described in the introduction to this Agreement."  As one would expect, " Agreement" refers to " this Residential Services Subscriber Agreement, as amended from time to time." See Subscriber Agreement ¶ 17 (" Definitions"). Hence, by its terms, the jury waiver applies to disputes " in connection with [TWC's] Customer Agreements." ¶ 15(g) (emphasis added). A natural reading of that provision, read in conjunction with the defined terms, is that it applies to disputes in connection with the service provider-customer relationship, including any dispute regarding the terms and conditions governing the customer's use of TWC service and/or any issues arising from the customer's use of that service. TWC makes much of the fact that the definition of Dispute in the Subscriber Agreement is broad enough to encompass " any ... claim ... regarding ... any conduct ... on [TWC's] part." Def.'s Reply Letter at 1. But TWC ignores the essential qualification that the Dispute must still be in connection with TWC's Customer Agreements.
The actions alleged in Sherrod's complaint--automated calls placed by TWC to Sherrod's cellphone requesting to speak with Anthony Sanford--may have some plausible connection to the service provider-customer relationship between TWC and Anthony Sanford but they have no connection with the service provider-customer relationship between TWC and William Sherrod . The Court recognizes that phrases such as " in connection with" or " related to" are considered broad enough to encompass all claims that are directly related to the contract, such as an action for breach of contract, and collateral issues that can fairly be said to relate to the parties' main agreement. See, e.g., Allied Irish Banks, 875 F.Supp.2d at 356-57 (fraud claims " related to" the financial transactions governed by the jury waiver); Brown, 235 F.Supp.2d at 294 (jury trial waiver in employment contract applied to all plaintiff's employment claims including federal and state discrimination claims as well as contract claims); In re MarketXT Holdings Corp., 336 B.R. 39, 62 (Bankr. S.D.N.Y. 2006) (" Courts have construed broad jury waiver provisions to extend to non-contract claims that " relate to" the relationship between the parties."); see also Coregis Ins. Co. v. Am. Health Found., 241 F.3d 123, 128-29 (2d Cir. 2001) (noting that " related to" and " in connection with" are equivalent and have a broader meaning than " arise from").
Here, however, the connection is simply too attenuated. To hold that Sherrod's TCPA claim, on the facts alleged, falls within the jury waiver provision would render the words " in connection with" practically limitless. In essence, Sherrod's Subscriber Agreement would encompass any TWC conduct as to any of its millions of subscribers, even though they are not signatories to the contract between Sherrod and TWC. See Smith v. Steinkamp, 318 F.3d 775, 777 (7th Cir. 2003) (noting that broad definition of " dispute" in arbitration agreement must be construed alongside clause limiting scope to " disputes arising from" agreement or " absurd results [would] ensue"); McNally v. Port Auth. (In re WTC Disaster Site), 414 F.3d 352, 376 (2d Cir. 2005) (in ERISA context, " if 'relate to' were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes pre-emption would never run its course, for 'really, universally, relations stop nowhere" ') (quoting N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995)) . Read properly, the jury waiver provision does not extend to Sherrod' s TCP A claim on the facts alleged here.
For the foregoing reasons, TWC's motion to strike Sherrod's demand for a trial by jury is denied. Accordingly, pursuant to the Court's October 28 Order (Dkt. No. 31), the parties shall submit proposed voir dire and requests to charge by December 2, 2014.