A federal court in Illinois recently compelled arbitration of claims filed in federal court as part of a class action. Bayer v. Comcast Cable Communications, No. 12 C 8618 (N.D. Ill. May 1, 2013). In this case, you see the effects of recent Supreme Court decisions Concepcion and Rent-A-Center.
Plaintiffs subscribed to Comcast’s internet and video services, and the plaintiffs filed a class action complaint in federal court in Illinois against Comcast for privacy violations. The plaintiffs alleged Comcast kept personal information about customers indefinitely after the termination of services. (I can see concerns with SELLING customer information without the customer’s permission. But is it illegal to simply MAINTAIN customer information? Don’t most companies do this for legitimate business reasons? For example, if a customer decided to re-establish service again, it would be helpful to maintain the customer’s prior file, or perhaps such information could be used for improving services for future customers. I’m not a privacy lawyer, but I don’t see the wrongdoing from the court’s description of the claims. I often wonder how a court’s perception of the merits influences the court’s decision on arbitration issues.)
Arbitration agreements between Comcast and its customers prohibited litigation or arbitration on a class-wide basis, and in response to the class action filed in court, Comcast asked the court to enforce these arbitration agreements. The plaintiffs argued that the claims were not subject to arbitration and that the agreements were unconscionable. However, the court found that the arbitration agreement had a broad delegation clause, delegating gateway issues to the arbitrator. The federal court, relying on the Supreme Court’s separability-doctrine-on-steroids from Rent-A-Center v. Jackson, held that the arbitrator must decide whether the claims were arbitrable AND whether the arbitration agreements were unconscionable.
The court’s order stayed the litigation and directed the parties to arbitrate the arbitrability issue promptly, and the court also asked the parties to provide a status report in July 2013.