(4-4-18)

CenturyLink operates via subsidiaries that enforce mandatory arbitration clauses.

CenturyLink is trying to force customers into arbitration in order to avoid a class-action lawsuit from subscribers who say they've been charged for services they didn't order. To do so, CenturyLink has come up with a surprising argument—the company says it doesn't have any customers.

While the customers sued CenturyLink itself, the company says the customers weren't actually customers of CenturyLink. Instead, CenturyLink says they were customers of 10 subsidiaries spread through the country.

CenturyLink basically doesn't exist as a service provider—according to a brief CenturyLink filed Monday.

"That sole defendant, CenturyLink, Inc., is a parent holding company that has no customers, provides no services, and engaged in none of the acts or transactions about which Plaintiffs complain," CenturyLink wrote. "There is no valid basis for Defendant to be a party in this Proceeding: Plaintiffs contracted with the Operating Companies to purchase, use, and pay for the services at issue, not with CenturyLink, Inc."

CenturyLink says those operating companies should be able to intervene in the case and "enforce class-action waivers," which would force the customers to pursue their claims via arbitration instead of in a class-action lawsuit. By suing CenturyLink instead of the subsidiaries, "it may be that Plaintiffs are hoping to avoid the arbitration and class-action waiver provisions," CenturyLink wrote.

Like other traditional phone companies, such as AT&T, CenturyLink does business through numerous local entities. In this case, the CenturyLink subsidiaries are Qwest Corporation; Embarq Florida, Inc.; Embarq Missouri, Inc.; Carolina Telephone and Telegraph Company LLC; Central Telephone Company; CenturyTel of Idaho, Inc.; CenturyTel of Larsen-Readfield, LLC; CenturyTel of Washington, Inc.; CenturyTel Broadband Services, LLC; and Qwest Broadband Services, Inc.

Internet, phone, and TV customers deal with CenturyLink, though—the old URLs for Qwest and Embarq simply redirect to CenturyLink.com, for example.

“Shell entities” are “a fiction”

CenturyLink also filed a motion to halt discovery in the case until after the arbitration question is decided by the court. CenturyLink wants to "stop the case and let us bring in these entities no one's ever heard of," plaintiffs' attorney Benjamin Meiselas told Ars today. Meiselas said it is "a fiction" that CenturyLink is merely a collection of subsidiaries "that consumers don't even know exist."

"We reject these heavy-handed, anti-consumer tactics and the absurdity of these shell entities that CenturyLink claims to operate under," Meiselas said.

Customers from 14 US states are involved in the putative class action against CenturyLink in US District Court in Minnesota. Nine lawsuits filed last year were consolidated into one, and the consolidated complaint says:

[C]ustomers have routinely reported: (1) being promised one rate during the sales process but being charged a higher rate when actually billed; and (2) being charged unauthorized fees, including billing for services not ordered, for fake or duplicate accounts, for services ordered but never delivered, for services that were canceled, for equipment that was properly returned, and for early termination fees.

When customers complained—and many thousands have—CenturyLink not only encouraged but rewarded its agents to deny remedying the wrongful charges and keep as much of the overcharges in the Company as possible.

The customers suing CenturyLink are from Arizona, Colorado, Florida, Idaho, Iowa, Minnesota, Missouri, Nevada, New Mexico, North Carolina, Oregon, Utah, Washington State, and Wisconsin.

Mandatory arbitration

The plaintiffs haven't filed a response yet, but they will argue that CenturyLink is the proper defendant and that the company is trying to enforce arbitration clauses that customers never agreed to or that didn't exist until after the lawsuit began.

CenturyLink has recently been including arbitration clauses in monthly bills, Meiselas told Ars.

"The arbitration clauses they're trying to enforce post-date the litigation," he said. CenturyLink frequently offered service to customers without contracts, often via door-to-door salespeople who signed up elderly customers, he said. If the customers didn't have a contract, they couldn't have agreed to an arbitration clause, he said.

The case also includes allegations that CenturyLink created fake accounts in order to overcharge customers. Since customers never signed contracts for those fake accounts, they couldn't have agreed to arbitration in those instances, Meiselas said. "It logically follows that you didn't sign a contract for something you didn't contract for in the first place," he said.

CenturyLink says that the arbitration clauses are not new. "The operating companies have a longstanding policy of requiring customers to agree to arbitration and class-action waivers," CenturyLink said in another brief.

CenturyLink says that 37 of the 38 named plaintiffs "agreed to broad, all-compassing arbitration, and class-action waiver clauses in their service contracts with the Operating Companies" and that the 38th agreed to a class-action waiver.

CenturyLink said that its subsidiaries will provide evidence that the plaintiffs agreed to arbitration in a future motion to compel arbitration. So far, the operating companies have filed a "motion to intervene for the limited purposes of moving to compel arbitration." If that motion is granted, the companies intend to follow it up with the motion to compel arbitration.

Meiselas said there are "millions of victims" in the potential class, including the named plaintiffs who "never signed arbitration clauses and certainly never agreed to any contracts on fake and fraudulent accounts. Also, CenturyLink's recent attempts at sticking in arbitration clauses that post-date the lawsuit to deprive victims of their day in court are also unenforceable and a disgrace to consumers."

CenturyLink has faced multiple lawsuits over its billing practices. One such lawsuit was filed by Minnesota Attorney General Lori Swanson, who obtained a court order in October 2017 that forced the company to better disclose its prices and fees at the time of sale.

Mandatory arbitration clauses are controversial; some Democratic lawmakers and consumer advocates say the clauses deprive customers of their rights to seek justice in courts. AT&T hasaggressively pushed customers into arbitration clauses, but it lost a recent ruling on the issue. In a case involving AT&T's throttling of unlimited mobile data plans, a US District Court judge in California ruled that AT&T could not force customers into arbitration because California law makes certain forced arbitration clauses unenforceable.

https://arstechnica.com/tech-policy/2018/04/centurylink-fights-billing-fraud-lawsuit-by-claiming-that-it-has-no-customers/?comments=1