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From Antitrust Law Daily, December 29, 2014

Antitrust claim over cable box tie-in was subject to arbitration

By Greg Hammond, J.D.

Cable service provider Cox Enterprises, Inc. could enforce an arbitration agreement against a consumer in a local class action, alleging that the company violated the Sherman Act by requiring customers to rent a Cox set-top box in order to obtain full access to its premium cable services. In granting Cox’s motion to compel arbitration, the federal district court in Oklahoma City determined that the consumer failed to raise any objection sufficient to overcome the “national policy favoring arbitration” (In re Cox Enterprises, Inc. Set-Top Cable Television Box Antitrust Litigation, December 22, 2014, Cauthron, R.).

Background. Various Cox customers filed class action suits against the company, alleging that it illegally required customers to rent a Cox set-top box to gain full access to Cox’s premium cable services, in violation of the Sherman Act. Set-top boxes offer customers and cable providers the ability to communicate, allowing consumers to utilize certain features, such as the interactive programming guide, pay-per view, and video on demand.

After the local class actions were transferred to the district court, the court allowed Healy v. Cox Communications to proceed as a bellwether case, and the instant case—Alwert v. Cox Communications, Inc.—was selected to proceed as a secondary case. In Healy, the court determined that Cox waived its right to compel arbitration, based on unreasonable delay. Cox has now moved to compel arbitration in the Healy case.

Arbitration. In opposition to Cox’s motion, Plaintiff Andrew Alwert made three arguments: (1) for the same reasons set forth in Healy, Cox has waived its right to compel arbitration; (2) Alwert is not subject to the arbitration clause because the clause was inserted into the service contract after the 2009 nationwide class was pending; and (3) the clause cannot be enforced because it is illusory, giving Cox the sole right to modify the terms.

The court disagreed with all three arguments, finding first that Alwert was not a party in the Healy case, and—unlike Healy—little work has been conducted in this case. Consequently, Alwert failed to meet his heavy burden of proof in demonstrating waiver. Second, the instant case was not pending when the arbitration clause was inserted into the service contract, and Alwert was not a named plaintiff in the nationwide class action. Finally, Alwert failed to demonstrate the arbitration clause was illusory or unenforceable, as he had the right to avoid the arbitration clause at the time it was created by terminating service, or by opting out of it within 30 days of its initiation. The motion to compel arbitration and stay proceedings was therefore granted.

The case number is 12-ML-2048-C.

Attorneys: Allan Kanner (Kanner & Whiteley LLC) for Andrew Alwert. Bruce D. Sokler (Mintz Levin Cohn Ferris Glovsky & Popeo), D. Kent Meyers (Crowe & Dunlevy), and Ewell E. Eagan, Jr. (Gordon Arata McCollam Duplantis & Eagan) for Cox Communications, Inc.

Companies: Cox Communications, Inc.

MainStory: TopStory Antitrust OklahomaNews

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