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Johansen v. National Gas & Electric, LLC

United States District Court, S.D. Ohio, Eastern Division

December 20, 2017

KEN JOHANSEN, on behalf of himself and others similarly situated, Plaintiff,



         Plaintiff Ken Johansen brings this putative class action under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. Johansen alleges that his residential telephone number is on the national Do Not Call Registry and that defendant National Gas & Electric LLC (“NG&E”) violated the Act by calling him on June 13, 14 and 15, 2017.

         This matter is before the court on NG&E's motion to compel arbitration. “In evaluating motions or petitions to compel arbitration, courts treat the facts as they would in ruling on a summary judgment motion, construing all facts and reasonable inferences that can be drawn therefrom in a light most favorable to the non-moving party.” Raasch v. NCR Corp., 254 F.Supp.2d 847, 851 (S.D. Ohio 2003).


         NG&E contends that on Tuesday, June 13, 2017, Johansen initiated a telephone call to NG&E's call center and enrolled in NG&E's fixed-rate electricity plan. Attached to NG&E's motion is an authenticated call log and transcript of the telephone call. (Docs. 21-3, 21-4). During the call, Johansen verified his service and billing address and responded “Yes” when asked if he understood that he was enrolling in NG&E's fixed-rate plan of 7.49¢ per kilowatt hour and a monthly fee of $5.95. He also authorized NG&E to perform the tasks necessary to switch over his electricity supplier. At the end of the call, he received a confirmation number for his enrollment.

         Johansen was told that he would be receiving NG&E's “terms and conditions within the next few days confirming the information we discussed here today.” (Doc. 21-4 at PAGEID#93). The Terms of Service were sent by first-class mail on Friday, June 16 from NG&E's office in Houston, Texas.

         Paragraph 11 of the Terms of Service contains a mandatory arbitration clause, which provides, “Any claim, dispute or controversy, regarding any contract, tort, statute, or otherwise (“Claim”), arising out of or relating to this agreement or the relationships among the parties hereto shall be resolved by one arbitrator through binding arbitration administered by the American Arbitration Association . . . .” (Doc. 21-5 at ¶ 11).

         The Federal Arbitration Act (“FAA”) provides that arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. “The [FAA] establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself, or an allegation of waiver, delay, or a like defense to arbitrability.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).

         NG&E moves to compel arbitration and dismiss this litigation. In evaluating a motion to compel arbitration under the FAA, “a court has four tasks: first, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration.” Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000).

         The first inquiry - whether the parties agreed to arbitrate - is at issue here. State contract law governs issues of formation, such as validity, revocability, and enforceability, with respect to arbitration clauses. See Perry v. Thomas, 482 U.S. 483, 492 n. 9 (1987).

         Johansen contends that arbitration was not among the terms or conditions discussed during the June 13, 2017 phone call. The Terms of Service document containing the arbitration provision was not mailed to him until June 16, after NG&E allegedly committed violations of the TCPA on June 13, 14 and 15. The document was never received by Johansen (because he provided NG&E with an incorrect mailing address - more on that later), but on June 27 Johansen emailed a NG&E representative requesting that NG&E “cancel any service enrollments I may have with your company.” (Doc. 21-6). It is undisputed that NG&E honored his request.

         The court agrees with Johansen that arbitration was not a term discussed during the June 13 phone call. The transcript of the call shows that the parties simply agreed that NG&E would supply electricity to Johansen at a particular rate and monthly fee. To this point, NG&E responds that the Terms of Service document was an “accept-or-reject” contract that Johansen accepted by failing to timely give NG&E notice of rejection.

         An accept-or-reject type of agreement is typical in situations, like the one here, where a consumer purchases a good or service over the phone, knowing the price point and nature of the good or service he is purchasing, but with the seller stating that the rest of the terms and conditions will follow. Accept-or-reject agreements have “been enforced by courts, including in contexts involving the sale of products and services by mail and telephone, . . . credit card agreements, and bank account agreements.” Higgs v. Auto. Warranty Corp. of Am., 134 Fed.App'x 828, 831 (6th Cir. 2005) (citing cases and applying Ohio law). This type of agreement “‘relies on the proposition that a contract is formed not at the time of purchase or earlier but rather when the purchaser either rejects by seeking a refund or assents by not doing so within a specified time, providing the purchaser with an opportunity to review the proposed terms.'” Id. (quoting Register.Com, Inc. v. Verio, Inc., 356 F.3d 393, 431 n.43 (2d Cir. 2004)).

         NG&E's Terms of Service provided that the customer could cancel the agreement without penalty any time before midnight of the third business day after the document was received. (Doc. 21-5 at ¶ 5). NG&E argues that the document should have reached the address provided by Johansen on Wednesday, June 21, based on the time estimate (for first class mail from Houston to central Ohio) provided by the United States Postal Service's online “service standards map” tool. NG&E contends that, per the Terms of ...

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