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Vernon v. Qwest Communs. Int'l, Inc. - 925 F. Supp. 2d 1185 (D. Colo. 2013)

Rule:

The fact that an arbitration agreement was a standardized agreement between parties with unequal bargaining power, by itself, is not enough for a finding of procedural unconscionability.

Facts:

Defendants Qwest Communications International, Inc. and affiliated others (collectively, "Quest") offered a "Price for Life" program for its telephone service. The program was a minimum two-year contract under which subscribers were guaranteed a discounted rate for as long as they maintained their service without change. Subscribers who terminated the program within the first two years were charged a $200 early cancellation fee. Customers who elected to take monthly service without a two-year commitment lost their promotional rate after one year and were subject to possible rate increases. Plaintiffs Robin Vernon, Rory Patrick Durkin, Bryan Sandquist, and Ted Moore were former customers of Qwest who signed up for the program but terminated their participation in the program within two years after enrolling in it. Plaintiffs were charged and either paid or protested the payment of the $200 early cancellation fee. Plaintiffs filed a putative class action in federal district court in Washington challenging the early termination fee. The matter was thereafter transferred to the federal district court in Colorado where Qwest filed a motion to dismiss and a motion to compel arbitration. Ultimately, a magistrate judge granted the motion to compel arbitration. Plaintiffs objected to portions of that order.

Issue:

Did plaintiffs agree to arbitrate their disputes with Qwest, and even if they did agree, was the arbitration agreement enforceable?

Answer:

Yes, to both issues presented.

Conclusion:

The court denied plaintiffs' objection to the magistrate judge's order and affirmed Qwest's motion to compel arbitration. The action was stayed pending arbitration or, in the discretion of the court of appeals, pending an immediate interlocutory appeal pursuant to 28 U.S.C.S. § 1292(b). The court ruled that: (1) Plaintiffs had a reasonable opportunity to access the subscriber agreement had they wished to do so and they accepted the benefits of the program. As such, they were bound by the arbitration and class action waiver terms. (2) Plaintiffs' claims that the arbitration agreement was not enforceable were meritless because the agreement, though poorly drafted, was neither: (a) illusory, because the parties' subscriber agreement did not create an unfettered ability to modify the arbitration clause, or; (b) unconscionable, in that it satisfied the five-factor test used to determine procedural unconscionability, and the fact that the terms of the subscriber agreement were not consumer-friendly did not rise to the level of substantive unconscionability.

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