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Court Holds That Issue of Arbitrability Is for an Arbitrator to Decide Pursuant to Agreement

A group of customers appealed the denial of a motion to compel arbitration and a declaratory judgment entered in an action brought by three internet providers. The customers subscribed to internet service in Georgia and Alabama through the internet providers, which was governed by a terms of service agreement. The customers claimed that the internet service was slower than promised. At the time the customers asserted this claim, the terms of service contained an arbitration clause providing that “any controversy or claim arising out of or relating to [the Terms of Service] shall be resolved by binding arbitration at the request of either party.” The terms of service also incorporated the rules of the American Arbitration Association. After the internet providers learned of the customers’ intent to initiate arbitration, they updated the terms of service to expressly state that the internet providers do not consent to arbitration with respect to all customers receiving internet service in Alabama or Georgia.

The customers moved to compel arbitration, and the internet providers argued that they were not required to arbitrate the dispute under the updated terms of service. The customers’ motion to compel arbitration was denied, and they appealed. The Alabama Supreme Court reversed the trial court’s decision and compelled arbitration. The court explained that although questions of arbitrability are typically answered by the courts, those questions should be sent to an arbitrator if there is clear and unmistakable evidence that the relevant parties intended an arbitrator to decide the issue of arbitrability. Here, the original terms of service incorporated the rules of the AAA, which evidences an agreement to delegate issues of arbitrability to an arbitrator. Therefore, the court determined that the arbitration clause in the initial terms of service included an agreement between the internet providers and the customers to have an arbitrator decide issues of arbitrability, including whether the updated terms of service effectively excluded the customers’ disputes from arbitration.

Blanks v. TDS Telecomms. LLC, No. CV-18-900097 (Ala. Sept. 6, 2019).

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©2011-2021 Carlton Fields, P.A. National Law Review, Volume IX, Number 275
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About this Author

Rachel Schwartz Insurance Attorney
Associate

Rachel J. Schwartz represents property and casualty insurance industry clients in litigation and counsels them on varied coverage matters, including coverage disputes arising under Commercial General Liability and Directors & Officer policies.

Rachel drafts pleadings, discovery requests and responses, and motions regarding declaratory judgment actions. She reviews insurance policies and conducts legal research on various insurance coverage topics, including late notice, policy exclusions, duty to defend, allocation, and NY Ins. L. 3420(d). She prepares tenders, carrier position...

212.380.9636
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