In 2009, Cox Communications (Cox) subscribers sued Cox in district court for allegedly tying their cable service to the rental of a set-top box. Cox answered this class-action lawsuit (not nationwide class-action but geographically limited class-action) by trying to have it dismissed due to the inclusion of mandatory arbitration clauses found in customer contracts.
The only problem with Cox’s argument was that they began to put those mandatory arbitration clauses into customers contracts WHILE Cox was asking the court to dismiss this case due to the arbitration clauses. In fact, Cox didn’t even tell the court that they were doing this until much later when Cox filed motions for summary judgement (therefore forcing arbitration).
This means that Cox submitted multiple filings to the court that did not tell them of their recent inclusion of mandatory arbitration clauses. The district court slammed Cox for hiding the arbitration clause information and therefore found that Cox’s actions constituted them waiving arbitration.
Cox appealed this decision to the Court of Appeals for the Tenth Circuit. Now, the Tenth Circuit has agreed with the district court and found that Cox did in fact waive its right to arbitration while defending the class action lawsuit.
There is no record evidence that Cox notified the district court about its insertion of these clauses. Cox also added arbitration clauses to contracts for high-speed Internet service. These clauses purported to cover all Cox services, including the cable service involved in the tying dispute, and read: “You and Cox agree that all claims or disputes between you and Cox will be arbitrated individually, and that there will be no class, representative, or consolidated actions in arbitration.” – Healy v. Cox Commc’ns., Inc., No. 14-6158 (10th Cir. June 24, 2015
The Tenth Circuit also decided to give Cox a little jab in the way that they went about their court filings.
Importantly, it is well settled that a party “may not play fast and loose with the judicial machinery and deceive the courts,” Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir.1974), and “[a]n important consideration in assessing waiver is whether the party now seeking arbitration is improperly manipulating the judicial process,” Hill, 603F.3d at 773.
Ouch. But they weren’t done.
Cox’s complete failure to mention the presence of its arbitration contracts, despite the obvious impact that they would have on the court’s Rule 23 analysis, is clearly inconsistent with an intent to arbitrate … This was only one of Cox’s many attempts, detailed by the district court, to “clearly play heads I win, tails you lose” by manipulating the litigation machinery and admitting known material facts about the absent class members from its briefing … Cox is essentially asking for a redo of the Rule 23 analysis based upon information it knowingly withheld from the district court, and such a redo would surely impose costs on Healy—costs that would have been entirely preventable had Cox informed the court about the presence of the agreements in the first instance. – Healy v. Cox Commc’ns., Inc., No. 14-6158 (10th Cir. June 24, 2015)
Well then…Cox, want to take this to the Supreme Court?
Decision can be found here