Lenfest v. Verizon Enterprise Solutions, LLC
52 F. Supp. 3d 259
D. Mass.2014Background
- Plaintiff Brian Lenfest assumed an existing Verizon business account (originally for Nunotte Zama) in 2008 and continued service through 2011–2013.
- Since June 2011 Lenfest was charged minimum monthly fees and shortfall charges under a Verizon FirmRate Advantage long-distance plan with a $10 Minimum Spend Level.
- Verizon sent fulfillment letters and service agreements in 2005 (to Zama) and June 24, 2011 (to Lenfest) that referenced an online Product Guide and tariffs at verizonld.com.
- The online Product Guide (available on Verizon’s site) contained an Alternative Dispute Resolution (ADR) clause requiring individual arbitration and waiving class actions.
- Lenfest sued in federal court alleging Massachusetts Chapter 93A claims and unjust enrichment for undisclosed minimum charges; Verizon moved to compel arbitration and to dismiss.
- The court concluded Lenfest was bound to the ADR clause by assumption of the account and receipt of the 2011 fulfillment letter, compelled arbitration, stayed the case, and denied the motion to dismiss as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether there was a written agreement to arbitrate | Lenfest never signed or received terms containing the ADR clause and did not agree to arbitration | Assumption of Zama's account in 2008 and receipt of the 2011 fulfillment letter/service agreement incorporated the online Product Guide and ADR clause | Court: Assent found — assumption + notice via 2011 letter/service agreement bound Lenfest to arbitration |
| Whether dispute falls within arbitration scope | Claims under Mass. c.93A for undisclosed fees not covered by ADR | ADR broadly covers "any controversy or claim arising out of or relating to the Service Agreement" including fee disclosure disputes | Court: ADR clause is broad and covers Lenfest’s claims |
| Whether defendant waived its right to arbitrate | (implicit) Lenfest argued arbitration should not be compelled given litigation activity | Verizon filed limited litigation filings (motion to dismiss, initial disclosures) and promptly moved to compel arbitration | Court: No waiver — Verizon did not substantially invoke litigation machinery |
| Relief from court | Plaintiff sought to litigate class claims in court | Verizon sought arbitration and stay | Court: Granted motion to compel arbitration and stayed proceedings; motion to dismiss denied as moot |
Key Cases Cited
- AT & T Techs., Inc. v. Communications Workers of America, 475 U.S. 643 (1986) (presumption of arbitrability for broad arbitration clauses)
- Zurich American Insurance Co. v. Watts Industries, 417 F.3d 682 (7th Cir. 2005) (non-signatory bound by arbitration agreement through assumption of contract)
- Lousararian v. Royal Caribbean Corp., 951 F.2d 7 (1st Cir. 1991) (notice of contract terms turns on opportunity to know, not actual knowledge)
- Awuah v. Coverall North America, Inc., 703 F.3d 36 (1st Cir. 2012) (incorporation by reference can bind parties to arbitration clauses)
- Combined Energies v. CCI, Inc., 514 F.3d 168 (1st Cir. 2008) (elements for compelling arbitration)
- Creative Solutions Group, Inc. v. Pentzer Corp., 252 F.3d 28 (1st Cir. 2001) (factors for finding waiver of arbitration)
- Jones Motor Co., Inc. v. Chauffeurs, Teamsters & Helpers Local Union No. 633, 671 F.2d 38 (1st Cir. 1982) (delimiting when litigation conduct constitutes waiver of arbitration)