Johansen v. National Gas & Electric, LLC, 2:17-cv-00587

Background

Plaintiff Ken Johansen sued National Gas & Electric, LLC (NG&E) under the TCPA, alleging calls on June 13, 14, and 15, 2017 to a number on the Do Not Call Registry.
NG&E produced a June 13 call log and transcript showing Johansen enrolled in a fixed-rate plan during a phone enrollment; NG&E mailed Terms of Service (TOS) on June 16 that included a mandatory arbitration clause.
Johansen contends arbitration was not discussed during the June 13 call, never received the mailed TOS (he provided an incorrect address), and canceled service by email on June 27; NG&E honored the cancellation.
NG&E argues the TOS were an accept-or-reject contract and Johansen’s failure to timely reject (within three business days after receipt) bound him to arbitration.
The court found arbitration was not discussed on the call, questioned whether the three-day window was reasonable or proven to have run, and held NG&E waived enforcement by accepting Johansen’s June 27 cancellation and treating the agreement as rejected.
The court also discovered Johansen admitted he posed as a customer, provided false address and account information, and had no intent to obtain service—raising serious concerns about adequacy of class representation and the TCPA claim’s viability; the court stayed class discovery and ordered Johansen to show cause why the complaint should not be dismissed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether parties agreed to arbitrate	Johansen: arbitration was not part of the June 13 call; TOS sent later and never received, so no assent	NG&E: TOS were an accept-or-reject contract; failure to timely reject bound Johansen to arbitration	Court: No agreement to arbitrate; arbitration not discussed on call and NG&E did not prove timely notice/reasonable review period; further, NG&E waived enforcement by honoring cancellation
Enforceability of "accept-or-reject" mailed terms	Johansen: three-day rejection window was not reasonable and he never received the mailing	NG&E: mailing would have arrived June 21; deadline to reject was June 26 per TOS	Court: USPS transit estimates are goals not proof of receipt; three-day window found unproven/unreasonable here; rejects NG&E’s timeliness showing
Waiver by conduct when plaintiff returned repudiation one day late	Johansen: sent cancellation after NG&E’s alleged deadline	NG&E: timely enforcement of TOS terms required	Court: NG&E accepted and honored Johansen’s cancellation (no service, no billing, no penalty), thereby waiving enforcement of terms including arbitration
Impact of plaintiff’s deceptive conduct on class certification and TCPA claim	Johansen: (as pled) alleges repeated calls; claims class treatment	NG&E: deceptive enrollment and false info mean no adequate rep and may establish an established business relationship excluding solicitation	Court: Johansen’s admissions that he posed as a customer, provided false info, and had no intent to obtain service undermine his adequacy as class rep and the merits of TCPA claims; stayed class discovery and ordered plaintiff to show cause why case should not be dismissed

Key Cases Cited

Raasch v. NCR Corp., 254 F. Supp. 2d 847 (S.D. Ohio 2003) (summary-judgment standard applied to motions to compel arbitration)
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (doubts regarding arbitrability resolved in favor of arbitration)
Stout v. J.D. Byrider, 228 F.3d 709 (6th Cir. 2000) (four-step framework for FAA arbitration motions)
Perry v. Thomas, 482 U.S. 483 (1987) (state contract law governs formation and enforceability of arbitration clauses)
Higgs v. Auto. Warranty Corp. of Am., 134 Fed. App’x 828 (6th Cir. 2005) (accept-or-reject agreements enforced where purchaser had reasonable opportunity to review terms)
Hill v. Gateway 2000, 105 F.3d 1147 (7th Cir. 1997) (upholding mailed terms with a 30‑day review/rejection period)
Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d Cir. 2004) (discussion of assent by inaction to posted or mailed terms)
White Co. v. Canton Transp. Co., 131 Ohio St. 190 (Ohio 1936) (party may waive contract terms by conduct)