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The Pennsylvania Superior Court affirmed a trial court's ruling that a bar on class-wide proceedings rendered an arbitration agreement unconscionable and unenforceable. According to the Court, it made no difference that the trial court applied Pennsylvania law instead of Massachusetts law.
In Thibodeau v. Comcast Corp., No. 2176 EDA 2005, 2006 WL 3457582 (Pa. Super. Ct. Dec. 1, 2006), Thibodeau was a cable television subscriber, first through AT&T Broadband (AT&T) and later through Comcast. When Comcast acquired AT&T, Comcast sent Thibodeau and other subscribers a customer agreement requiring all disputes to be arbitrated on an individual basis.
Two years later, Thibodeau sued Comcast for improper billing. Comcast filed a motion to compel arbitration based on the arbitration clause in the customer agreement. In opposing the motion, Thibodeau argued that the bar on class-wide proceedings rendered the arbitration agreement unconscionable. The trial court agreed and denied the motion.
On appeal, Comcast argued that the Federal Arbitration Act preempts Pennsylvania from singling out and invalidating agreements to arbitrate on an individual basis. The Court rejected this argument, reasoning that "the trial court applied general principles of Pennsylvania contract law, applicable to all contracts, when it concluded that the arbitration provision at issue was unconscionable and unenforceable."
The Court also affirmed the trial court's ruling that the bar on class-wide proceedings rendered the arbitration agreement unconscionable. In reaching this conclusion, the Court reasoned that the bar on class-wide proceedings was unconscionable because it "effectively immunized" Comcast from liability for minor claims.
Finally, the Court rejected Comcast's argument that the trial court erred by not conducting a choice of law analysis because, in the Court's view, the outcome would have been the same regardless of whether Pennsylvania or Massachusetts law were applied.
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