United States District Court, S.D. New York
JOHN SACCHI, an individual, on behalf of himself and all others similarly situated, Plaintiff,
VERIZON ONLINE LLC and DOES 1 through 100, inclusive, Defendants.
OPINION AND ORDER
RONNIE ABRAMS, District Judge.
Plaintiff John Sacchi brings this putative class action against Defendants Verizon Online LLC ("Verizon") and Does 1 through 100. Before this Court is Verizon's motion to dismiss, or in the alternative to stay and compel arbitration. For the reasons that follow, Verizon's motion to compel arbitration is granted and the case shall be stayed pending the completion of arbitration.
I. Plaintiff's Claims
Plaintiff, a resident of New Jersey, initially purchased DSL internet service from Verizon in September 2005. (Lamison Cert. at ¶ 2.) Plaintiff alleges that Verizon solicited him to purchase an "upgrade" in DSL internet speed from the "low" speed package to the "high" speed package for an increase of approximately $15.00 per month. (Compl. at ¶ 9.) Plaintiff purchased the upgrade in 2009. (Id.) Despite making the requisite payments, however, Plaintiff was unable to obtain internet speeds that were as fast as what he had obtained with his prior "low" speed package. (Id. at ¶ 11.)
Verizon informed Plaintiff that "due to the geographic distance between Plaintiff's residence and Verizon's Central Office..., the maximum DSL speed obtainable for Plaintiff's Internet access could... only be provided by the Verizon low' speed package...." (Id. at ¶ 12.) According to Plaintiff, Verizon further acknowledged that "the same circumstances prevented countless other Verizon customers from obtaining the high' speed Internet access for which they had been charged increased monthly fees...." (Id. at ¶ 13.)
On July 12, 2010, Plaintiff requested a refund of the upgrade fees he had paid, but Verizon refused the request and purportedly continues to do so. (Id. at ¶¶ 14-16.)
On January 23, 2014, Plaintiff brought this action on behalf of himself and all persons similarly situated, claiming conversion, fraud, and breach of contract.
Verizon responded by filing the instant motion, arguing that Plaintiff is contractually bound to submit his claims to arbitration and that the contract does not allow him to arbitrate his claims on a class or collective basis. Oral argument was held on January 15, 2015.
II. The Agreements
Plaintiff's initial DSL internet services were provided pursuant to a contract entitled the Verizon Internet Access Service Terms of Service (the "Original Agreement"). (Opie Cert. at ¶ 3.) At the time Sacchi ordered his internet service, Verizon's business practice was to send customers a "starter kit" that included the Original Agreement and a CD-ROM that the customer would use to register for the services. (Chennupati Cert. at ¶¶ 3, 5.) As part of the registration process, the customer was required to review and affirmatively accept or decline the Original Agreement, which could be viewed in its entirety on the customer's computer screen. (Id. at ¶¶ 4, 6, 8.) The acceptance screen of the registration system gave the customer two options: (1) he could accept the terms of the Original Agreement by affirming that "I have read and agree to the above Terms of Service. I understand that selecting this option constitutes my electronic signature accepting these terms"; or (2) he could reject the Original Agreement by stating that "I do not agree with the Terms of Service and do not wish to subscribe to Verizon Online DSL Service." (Id. at ¶ 9.)
Verizon's records show that Sacchi completed the registration process on September 24, 2005, which included accepting the Original Agreement. (Lamison Cert. at ¶ 4.) As part of the registration process, a Verizon email address was generated for Sacchi with the user identification code "firstname.lastname@example.org." (Id. at ¶ 5.) Sacchi selected as a user name for that identification code, "email@example.com." (Id.) Sacchi was given the opportunity to provide an alternative email address but did not do so at that time. He later provided the alternative email address "StephenSimoni@yahoo.com, " which is the email address of Plaintiffs counsel in this action. (Id. at ¶ 6.)
The Original Agreement did not contain an arbitration clause, but did include a clause entitled "Revisions" (the "Revisions Clause"), which stated in relevant part:
"We may revise the terms and conditions of this Agreement from time to time (including any of the policies which may be applicable to usage of the Service) by posting such revisions to the Website at the Resource Center under Announcements. You agree to visit these pages periodically to be aware of and review any such revisions.... [R]evisions to... terms and conditions shall be effective upon posting. By continuing to use the Service after revisions are in effect, you accept and agree to the revisions and to abide by them. If you do not agree to the revision(s), you must terminate your Service immediately."
(Original Agreement§ 6.) The Original Agreement also provided that "Notices by Verizon to you shall be deemed given: (a) when sent to your Verizon email address, or (b) when deposited in the United States mail addressed to you at last-known address.... Notice of changes to this Agreement and these Terms of Service will be deemed given upon posting to the pages on the Website as set forth in Paragraph 6, Revisions, above." (Original Agreement§ 18.1.)
In December 2011, Verizon amended the Original Agreement (as amended since 2005) to include an arbitration provision and class action waiver (the "Arbitration Clause"). (Opie Cert. at if 5; Opie Cert. Ex. B. Verizon Internet Terms of Service (the "Amended Agreement")§ 18.) The Arbitration Clause provides:
WE HOPE TO MAKE YOU A HAPPY CUSTOMER, BUT IF THERE'S AN ISSUE THAT NEEDS TO BE RESOLVED, THIS SECTION OUTLINES WHAT'S EXPECTED OF BOTH OF US. YOU AND VERIZON BOTH AGREE TO RESOLVE DISPUTES ONLY BY ARBITRATION OR IN SMALL CLAIMS COURT.... WE ALSO BOTH AGREE THAT: THE FEDERAL AR-BITRATION ACT APPLIES TO THIS AGREEMENT. EXCEPT FOR SMALL CLAIMS COURT CASES THAT QUALIFY, ANY DISPUTE THAT IN ANY WAY RELATES TO OR ARISES OUT OF THIS AGREEMENT OR FROM ANY EQUIPMENT, PRODUCTS AND SERVICES YOU RECEIVE FROM U.S. (OR FROM ANY ADVERTISING FOR ANY SUCH PRODUCTS OR SER-VICES) WILL BE RESOLVED BY ONE OR MORE NEUTRAL ARBITRATORS BEFORE THE AMERICAN ARBITRATION ASSOCIATION ("AAA") OR BETTER BUSINESS BUREAU ("BBB"). YOU CAN ALSO BRING ANY ISSUES YOU MAY HAVE TO THE ATTENTION OF FEDERAL, STATE OR LOCAL GOVERNMENT AGENCIES, AND IF THE LAW AL-LOWS, THEY CAN SEEK RELIEF AGAINST U.S. FOR YOU.
(Amended Agreement§§ 18, 18.1.)
The provision goes on ...