Vernon v. Qwest Communications International, Inc.

Internet provider Qwest Communications International, Inc. (Qwest) (defendant) offered subscribers a discounted rate if they signed a two-year contract. If they canceled service within two years, they were subject to a $200 cancellation fee. The terms of service were stated in a subscriber agreement that (1) relegated disputes to arbitration or small-claims court, (2) waived the right to pursue any claims as a class, and (3) required subscribers to pay up to $125 in arbitrator fees. Subscribers were notified about the agreement multiple times while subscribing. First, if subscribing by phone, a voice recording referenced the agreement and provided the web address to access it. Alternatively, if subscribing online, subscribers were notified of the agreement and clicked a box indicating assent. Second, all subscribers received an installation disc that again referenced the agreement and where to find it. It also expressly warned that the agreement contained an arbitration clause and limited Qwest’s liability. Third, subscribers received a welcome letter that referenced the agreement and warned of the arbitration and liability limitations. Robin Vernon and three other subscribers (the subscribers) (plaintiffs) canceled their plans within two years and were charged the cancellation fee. They filed a class-action suit against Qwest in federal court alleging that the fee was invalid. Qwest moved to compel arbitration. A magistrate judge granted Qwest’s motion. The subscribers objected, arguing, among other things, that the arbitration agreement was unconscionable and therefore unenforceable.