Bar-Ayal v. Time Warner Cable

Citation: Bar-Ayal v. Time Warner Cable, Inc., 2006 WL 2990032 (S.D.N.Y. Oct. 16, 2006).

Factual Background
Plaintiff, Shlomo Bar-Ayal, brought a class action suit against Time Warner Cable to recover damages Plaintiff, and the class he represents, allegedly suffered as a result of Time Warner’s “unlawful practices.” Plaintiff claims that Time Warner unlawfully collected “franchise fees” in direct violation of a Federal Communications Commission (FCC) ruling, making all revenue from cable modem services exempt from being included in the calculation of gross revenues from which the franchise fee ceiling is determined.

Bar-Ayal alleges that Time Warner calculated its “franchise fee” in violation of the FCC ruling for four months, between March 2002 and June 2002. As a result, plaintiff sought reimbursement for all persons who subscribed to the Road Runner Service or any other Internet access service provided by Time Warner Cable and were assessed “franchise fees” on total amounts billed for cable television and Internet access services combined.

Defendant, Time Warner Inc., a telecommunications service provider, filed a motion to stay the proceedings and compel arbitration in accordance with the Arbitration Clause of its Customer Agreement (the “Agreement”). Time Warner claimed that Plaintiff accepted and was bound by the Agreement since the plaintiff, who used defendant’s self-installation kit when initiating the service, was required to accept the Agreement on multiple occasions during the software’s installation process and was given sufficient notice that he would be bound to the terms of the Agreement.

Trial Court Proceedings
At trial, the district court granted Time Warner’s motion to stay the proceedings and compel arbitration. In arriving at its decision the court discussed two main points.

First, the court addressed who should decide arbitrability issues – the court, or an arbitrator. The district court looked at whether the language of the Agreement constituted clear, unmistakable evidence that the parties intended their questions of arbitrability to be resolved by arbitration. The arbitration provision found in Time Warner’s User Agreement specifically indicated that questions of “arbitrability” were to be resolved by an “arbitrator” and included questions that both arose in connection with the issue of arbitrability and the underlying contract as a whole. Therefore, the district court determined that the arbitration provision at issue, both in its explicit language and its incorporation ofthe American Arbitration Assocciation (AAA) Commercial Arbitration Rules, constitutes sufficiently clear and unmistakable evidence that the parties intended to have issues of arbitrability decided by the [[arbitrator].

Next, the district court determined that the plaintiff was bound by the arbitration provision of Time Warner’s “Customer Agreement.” The court reasoned that in order to be bound by the Arbitration Clause of the Agreement, the terms must be “clear, explicit and unequivocal and must not depend upon implication or subtlety.” When looking at whether the terms of the Arbitration Clause were “clear, explicitly and unequivocal”, the court determined that the “arbitration provision itself was not obscured but rather was the same sizes print as the rest of the agreement and written in all capitalized letters, thus standing out from the rest. . . .” Furthermore, the language of the arbitration agreement was not hard to find, rather it was presented to the plaintiff on the computer screen in the same manner as all other terms of the Agreement. In addition, the court noted that, in order for the plaintiff to complete the installation process, he was required to indicate that he “Accept” the terms of the Agreement on at least eight occasions. Although the court recognized that the plaintiff had to scroll through about 38 screens to read the entire Customer Agreement, it reasoned that it was not significantly more arduous to scroll down to read an agreement on a computer than to turn the pages of printed document. Therefore, simply having to read through multiple computer screens does not in and of itself mean the plaintiff should not be bound by his consent to the agreement as manifested by his clicking of the “Accept” button.