CA1: More on Comcast arbitration – everything to arbitrator, but SOL

Anderson v. Comcast Corporation, Nos. 06-2165, 06-2203.  Remember Kristian v. Comcast, Corp., 446 F.3d 25 (1st Cir. 2006) (our coverage here), which held that although Comcast could bring disputes to arbitration, various parts of their Comcast-customer agreement were severed (including the one prohibiting class actions) because they violated public policy?  Well, the issue comes up again.  This time, a plaintiff came to the state court and the action was removed to District Court, and the District court only compelled arbitration after “severing provisions in the arbitration agreement prohibiting attorney's fees, double or treble damages and a class action remedy in the arbitral forum. It also specified that ‘the arbitrator will have the power to determine the validity and applicability of the agreement's one-year statute of limitations.’” The First decides, however, that it is the court that will decide the statute of limitations period, and those statutes of limitations periods are invalid as to Massachusetts’ unfair trade statute.

Turn off the TV and keep reading.

Explaining how the question of arbitrability is really one for the court, the First goes to the question of whether the “class action bar” is valid.  But, applying PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401, 406-07 (2003), the First finds that there really isn’t a conflict between the Massachusetts statute and the agreement, because the agreement has an “out” for specific actions contemplated by statute.  Now (and I hope this is clear), because there is no real conflict, there is nothing as to arbitrability for the court to decide, and therefore the arbitrator gets to decide whether Massachusetts’ unfair trade practices statute that was probably contemplated by the agreement.  But, if I am reading this right, the First is strongly suggesting (by finding no facial conflict) that class actions are contemplated by the agreement, but says that the arbitrator has to make the call.

Then, since the agreement “clearly” says “no multiple damages” but the federal antitrust statute say “yes” to multiple damages, there really is not a conflict, because there are questions of fact – regarding whether a violation of the statue was knowing –  that the arbitrator needs to resolve first.  The court summarizes like this:

In summary, despite the direct conflicts between the multiple damages provision of the statute and the multiple damages prohibition in the arbitration agreement, these conflicts do not pose a question of arbitrability because: (1) the conflict between the mandatory portion of the statute and the agreement will only arise if ths arbitrator makes a factual finding (a willful or knowing violation) that relates to the merits of the dispute; and (2) if the arbitrator finds a violation of the statute that is not willful or knowing, the discretionary award of multiple damages may or may not be waivable under Massachusetts law. In the absence of a question of arbitrability, the district court erred in ordering that the multiple damages provision be severed from the arbitration agreement.

But, the question of whether the agreement’s shortening of the statute of limitations, however, is one for the court, the First concludes that the state legislature was really concerned about this issue, and therefore, it isn’t waiveable.  So, the arbitration can go forward, but without the really short limitations period.  Blawgletter comments here.