Court Rejects Comcast Bid To Shuttle High-Speed Antitrust Claims Into Arbitration

Judge Stefan Underhill of the U.S. District Court for the District of Connecticut has rejected Comcast Corp.’s bid to force antitrust claims in a putative class action into arbitration, despite the plaintiff’s signing of an arbitration clause in a subscriber agreement.

In denying Comcast’s motion to compel arbitration in Fromer v. Comcast Corp., the court found the class action waiver clause in Comcast’s contract void because it made the costs of individual antitrust claims prohibitive.

Plaintiff Robert Fromer, a subscriber to Comcast’s cable television and high speed internet services, filed a class action lawsuit in December 2009, accusing Comcast of illegally tying the sale of its digital voice service to modem rentals.  The complaint alleges that this bundling violates the Sherman Act and Connecticut’s Unfair Trade Practices law because customers are forced to pay a modem rental fee even if they do not want or need a modem.

In October 2011, Comcast sought to enforce the class action waiver in the subscriber agreement signed by Fromer.  In its motion to compel arbitration, Comcast argued that the court should follow the Supreme Court’s April 2011 upholding of a class action waiver in AT&T Mobility LLC v. Concepcion.

However, two days before argument on Comcast’s motion, the U.S. Court of Appeals for the Second Circuit addressed class action waivers in American Express III, and reinforced the Second Circuit’s doctrine of class arbitration.  In that decision, the Second Circuit found that American Express could not use arbitration clauses to avoid antitrust lawsuits by customers.  Under American Express III, if Fromer could show that the class action waiver here prevents him from pursing statutory remedies, the waiver is void.

Comcast unsuccessfully attempted to distinguish American Express III.  Judge Underhill reasoned that the pursuit of an individual claim would be too costly for Fromer and “[t]herefore, because the class action waiver in this case effectively precludes Fromer from pursuing federal statutory remedies, the class arbitration waiver is void.”