Arbitration: Customers’ disputes must be arbitrated

Where three unhappy customers sued their cable/internet provider, the district court erred when it denied the provider’s motions to compel arbitration.

Background

Three West Virginia residents who were unhappy with their cable and internet service, provided under the brand name “Suddenlink,” filed suit. Suddenlink moved to compel arbitration in each case, relying on the arbitration agreement in its 2021 residential services agreement, or RSA. The district court denied Suddenlink’s motions, concluding that a 2017 arbitration agreement controlled, was unconscionable and could not be enforced.

Version

Plaintiffs attempt to escape the 2021 arbitration agreement by averring they are “simultaneously” parties to all earlier and later versions of the RSA in place while they were Suddenlink customers, each of which “claims to reach into the past and into perpetuity,” creating conflicting obligations. Not so.

First, concerning the earlier RSAs, when plaintiffs assented to the October 2021 RSA and arbitration agreement therein, that version necessarily superseded any preceding version of the agreement. As plaintiffs themselves argue, the various arbitration agreements “contain differing and mutually incompatible provisions.” Because multiple versions cannot apply, the later-in-time version controls. And the July 2022 RSA cannot apply because it became effective only after plaintiffs sued.

The 2021 arbitration agreement, which was the governing version when plaintiffs sued, specifically provides that the parties “agree that if we make any amendment to this arbitration provision . . . in the future, that amendment shall not apply to any claim that was filed in a legal proceeding against Suddenlink prior to the effective date of the amendment.”

And while the July 2022 RSA states that amendments “shall apply to . . . disputes or claims that arose prior to the effective date of the amendment,” that clause applies only to “amendment[s] to this arbitration provision . . . in the future”; it does not purport to apply retroactively.

Consideration

Plaintiffs contend that the consideration is illusory because Suddenlink retained the ability to unilaterally modify the agreement. However, the unilateral right to modify a contract does not render an underlying promise illusory if the modifying party must give reasonable notice of modification.

Here, Suddenlink must “notify [customers] of amendments” to the arbitration agreement, at which point customers who “do not agree to the revisions” can cancel their RSAs. In view of these notice requirements, the mutual promise to arbitrate is not illusory under West Virginia law.

Enforceability

Many of plaintiffs’ complaints about the RSA concern terms and conditions outside the arbitration agreement. But this court’s review is cabined to the enforceability of the arbitration agreement itself. It may not determine the enforceability of other contractual provisions within the RSA, which the contract reserves for the arbitrator to decide.

Plaintiffs argues that Suddenlink endeavors to evade judicial review of unconscionable arbitration terms by moving them outside the arbitration agreement into the main body of the RSA. Regardless of the contractual location of the contested term, however, “[a] party challenging the enforceability of an arbitration clause under Section 2 of the FAA must rely on grounds that ‘relate specifically to the arbitration clause and not just to the contract as a whole.’”

Plaintiffs next contend the arbitration agreement cannot be enforced because it is unconscionable in various respects. Their laundry list of alleged procedural inadequacies in the 2021 arbitration agreement lacks merit. Plaintiffs also allege that the pre-arbtiration notice requirement and appeals process in the 2021 arbitration agreement are substantively unconscionable. Neither is.

Waiver

Plaintiffs finally claim that Suddenlink has waived its right to compel arbitration of these disputes by entering into a class settlement to resolve different claims about fees and surcharges in New Jersey state court. Plaintiffs’ position is untenable. Litigation surrounding factually and legally distinct claims “cannot support a finding that [a party] waived its right to arbitrate . . . unrelated claims” brought by a different counterparty.

Reversed and remanded.

Concurring opinion

Wynn, J., concurring in part and concurring in the judgment:

The 2021 RSA requires Suddenlink to “notify [customers] of amendments to th[e] arbitration provision in the manner described in” the modification clause. But “sufficient notice” can include “posting notice of [the] changes on Suddenlink’s website,” without any effort to contact the customer. That does not satisfy West Virginia’s reasonable-notice standard. Nevertheless, this infirmity does not afflict the formation of the arbitration agreement.

Meadows v. Cebridge Acquisition LLC, Case Nos. 23-1142, 23-1145, 23-1146, March 27, 2025. 4th Cir. (Rushing), from SDWVA at Charleston (Johnston). Archis Ashok Parasharami for Appellants. Jonathan Franklin Mitchell for Appellees. VLW 025-2-108. 28 pp.