Supersession and Severability in Consumer Arbitration: The Fourth Circuit Confirms Later-in-Time Arbitration Clauses Govern and Limits Courts to Clause-Specific Challenges

Case: Richard Chaty v. Cebridge Acquisition, LLC (consolidated with Meadows and Gooch) | Court: U.S. Court of Appeals for the Fourth Circuit | Date: March 27, 2025 | Opinion by: Judge Rushing (joined by Judge Lewis); Judge Wynn concurring in part and in the judgment

Introduction

In these consolidated appeals, three West Virginia consumers—Suddenlink (Altice) customers dissatisfied with internet and television services—challenged the enforceability of Suddenlink’s arbitration clause. The district court denied motions to compel arbitration, sua sponte selecting a 2017 arbitration provision, finding it unconscionable, and refusing to sever any terms. The Fourth Circuit reversed. It held that:

The October 2021 arbitration agreement governs because it is the later-in-time contract that supersedes earlier inconsistent versions, and later amendments (July 2022) could not apply to preexisting lawsuits under the agreement’s own anti-retroactivity rule.
The 2021 arbitration clause is validly formed under West Virginia law and not illusory; Suddenlink’s unilateral modification right is cabined by notice and customer cancellation rights.
Under the FAA’s severability doctrine, courts may only adjudicate challenges directed specifically at the arbitration clause; challenges to non-arbitration terms (e.g., punitive-damages limitations, general statute of limitations) must be resolved by the arbitrator.
The clause’s class/representative waiver and individualized-relief limitation are enforceable under the FAA and West Virginia law.
A pre-arbitration notice-and-wait provision, and a limited arbitral appeal procedure, are not substantively unconscionable.
Suddenlink did not waive arbitration by settling unrelated claims in other litigation.

Judge Wynn concurred, cautioning that a “website-only” modification notice may fail West Virginia’s “reasonable notice” standard, but agreeing this did not defeat formation or consideration for the arbitration agreement in this case.

Summary of the Opinion

Holding: The October 2021 Residential Services Agreement’s arbitration provision controls, is valid, and is enforceable. The district court’s denial of arbitration is reversed; the cases are remanded to compel arbitration.
Key Rulings:
- Which agreement applies: Later-in-time arbitration clauses supersede earlier incompatible versions; the July 2022 revision cannot retroactively govern claims filed in April 2022.
- Formation and consideration: Mutual promises to arbitrate supply consideration; Suddenlink’s unilateral modification authority does not render the promise illusory where reasonable notice and cancellation are available.
- Severability and scope of review: Courts may only decide challenges directed at the arbitration clause itself; attacks on general contract terms must go to the arbitrator.
- Unconscionability: Plaintiffs failed to show both procedural and substantive unconscionability. Adhesion, absence of opt-out for existing customers, incorporation of AAA rules, and signature on a technician’s device do not make the clause unenforceable.
- Class/representative waivers: The clause’s ban on class or non-individualized relief is enforceable and consistent with controlling West Virginia precedents and the FAA.
- Waiver-by-litigation theory: Settling unrelated claims in different litigation does not waive a right to arbitrate here.

Background and Procedural History

Plaintiffs (Chaty, Meadows, and Gooch) each received services under successive versions of Suddenlink’s Residential Services Agreement (RSA). By 2021, the RSA’s paragraph 24 contained a broad, conspicuous consumer arbitration clause governed by the FAA. In April 2022, the plaintiffs sued in West Virginia state court alleging poor service quality and related state-law claims (negligence, unjust enrichment, breach of contract) and sought a declaration invalidating the arbitration clause.

Suddenlink removed and moved to compel arbitration under the October 2021 RSA. The district court, sua sponte, applied a 2017 arbitration clause, found it procedurally and substantively unconscionable, refused to sever, and denied arbitration. The Fourth Circuit consolidated the appeals and reversed.

Issues Presented

Which arbitration agreement governs—the 2017 clause relied upon by the district court, the 2021 clause invoked by Suddenlink, or the July 2022 clause invoked by plaintiffs?
Is the governing arbitration clause validly formed and supported by consideration under West Virginia law?
Are plaintiffs’ unconscionability challenges to the 2021 clause (procedural and substantive) sufficient to defeat enforcement?
Do plaintiffs’ challenges to RSA terms outside the arbitration clause fall within a court’s purview on a motion to compel?
Did Suddenlink waive arbitration by settling different claims elsewhere?

Detailed Analysis

1) Which Agreement Governs: Supersession of Earlier Clauses; No Retroactive Application of Later Amendments

The court accepted the parties’ shared position that the October 2021 RSA applies and rejected the district court’s sua sponte reliance on a 2017 clause. Under West Virginia law, later-in-time agreements that conflict with earlier ones displace the earlier contract without needing an explicit supersession statement. When multiple arbitration clauses contain “differing and mutually incompatible provisions,” only one can control; the later inconsistent clause governs.

The July 2022 RSA could not apply because plaintiffs had already sued in April 2022, and the 2021 arbitration clause expressly bars retroactive application of later amendments to claims already “filed in a legal proceeding.” Thus, neither the 2017 nor the 2022 arbitration provision displaces the 2021 clause that was in force when plaintiffs sued.

2) Formation and Consideration: Unilateral Modification Does Not Render Promise Illusory

The court reaffirmed that mutual promises to arbitrate supply adequate consideration. Plaintiffs’ “illusory promise” argument failed because West Virginia recognizes unilateral modification provisions where the drafter provides reasonable notice and the counterparty can reject the changes (e.g., by cancellation). Here, the 2021 RSA requires notice of amendments and allows customers to terminate if they disagree; continued use after notice signifies assent.

Judge Wynn concurred but flagged a caveat: the 2021 RSA’s allowance for “posting notice” of changes solely on a website, without contacting customers, may not satisfy West Virginia’s “reasonable notice” requirement for unilateral modification. Still, because West Virginia permits the arbitration clause to draw consideration from the overall contract, any notice deficiency in hypothetical future modifications does not defeat formation in this case. The concurrence also pointed to the implied covenant of good faith as a backstop against surreptitious revocation.

3) Severability and the FAA’s Limits on Judicial Review: Clause-Specific Challenges Only

Applying the severability doctrine, the Fourth Circuit emphasized that only challenges aimed specifically at the arbitration clause are cognizable on a motion to compel. Attacks on unrelated RSA provisions—including punitive-damages limitations, general liability caps, or a contract-wide one-year limitations term—must be resolved by the arbitrator. The court rejected plaintiffs’ argument that Suddenlink “moved” harsh arbitration terms into the RSA body to evade review; the challenged provisions do not single out arbitration and would apply in any forum, keeping them outside the scope of the court’s inquiry at this stage.

Notably, the 2021 clause assigns to courts the gateway questions of arbitrability, scope, enforceability, and interpretation of the class/representative-action prohibitions, while the arbitrator decides the merits and general RSA validity issues. That allocation dovetails with the FAA’s severability framework.

4) Unconscionability: Plaintiffs Failed to Establish Both Procedural and Substantive Components

Procedural unconscionability. The court rejected several asserted formation defects:

Generalized literacy statistics and broad statements about “monopoly power” or unequal bargaining power do not show procedural unconscionability absent plaintiff-specific evidence.
Adhesion is commonplace and not presumptively unconscionable; absence of an opt-out for existing customers, standing alone, is insufficient.
Incorporation of AAA Consumer Arbitration Rules is permissible and was hyperlinked. The court noted West Virginia authority repeatedly approving such incorporation.
Presentation on a technician’s handheld device did not deny a reasonable opportunity to understand the terms, particularly where the arbitration clause was conspicuous and acknowledged. Plaintiffs also later assented via bill-payment notices incorporating hyperlinked terms.

Substantive unconscionability. Plaintiffs’ substantive challenges also failed:

Pre-arbitration notice and 60-day negotiation: This bilateral, commercially reasonable step reduces costs and is not one-sided.
Arbitral appeal: Either party may appeal to a three-arbitrator panel when claims exceed $75,000 or seek injunctive relief. Although the clause references AAA’s Optional Appellate Arbitration Rules (OAAR), those rules themselves do not apply to this consumer context; at most, incorporation is ineffective, but the clause’s appeal architecture is not unconscionable.
Class/representative waiver and individualized relief: Enforceable under the FAA and West Virginia precedents. The arbitrator may award any relief available in court that is individualized to the claimant, which includes individualized injunctions.

Given weak procedural showing and the absence of one-sided, overly harsh terms, the clause was neither procedurally nor substantively unconscionable under West Virginia’s sliding-scale test.

5) Waiver-by-Litigation Conduct: Settlement in Unrelated Case Is Not Waiver

The court rejected the argument that Suddenlink waived arbitration here by participating in (and settling) a different class action over fees in New Jersey. Waiver requires conduct inconsistent with arbitration in the same dispute; litigation of legally and factually distinct claims with different parties does not waive arbitration rights in this case. Courts avoid a rule that would punish settlements in one case by impairing arbitration rights in another.

Precedents and Authorities Considered

FAA and severability: Buckeye Check Cashing v. Cardegna; Prima Paint v. Flood & Conklin; Coinbase v. Suski. These cases confine courts to deciding challenges to the arbitration clause itself and send general contract validity questions to the arbitrator once formation is established.
Formation and state law: First Options v. Kaplan; Kindred Nursing Centers v. Clark (no arbitration-specific hostility). West Virginia law on contract elements: State ex rel. AMFM v. King.
Supersession under West Virginia law: Myers v. Carnahan; Consolidation Coal v. Mineral Coal; Thornsbury v. Cabot Oil & Gas; AT&T Mobility v. Wilson. Later inconsistent contracts displace earlier ones without needing express abrogation.
Consideration and unilateral modification: Hampden Coal v. Varney; Adkins v. Labor Ready (4th Cir.). West Virginia’s Sheridan decision confirms unilateral modification is not illusory if reasonable notice and cancellation exist.
Unconscionability in West Virginia: Brown v. Genesis Healthcare (Brown I & II); Nationstar Mortgage v. West; Ocwen Loan Servicing v. Webster; McFarland v. Wells Fargo (4th Cir.); Troy Mining v. Itmann Coal. Adhesion and lack of opt-out are factors but not dispositive; a sliding scale applies; terms must be both one-sided and overly harsh.
Class waivers: AT&T Mobility v. Concepcion; American Express v. Italian Colors; West Virginia’s Sheridan and Wilson enforcing bans on class-wide relief and non-individualized injunctions.
Scope of appeal and fees: AAA Consumer Arbitration Rules; AAA Optional Appellate Arbitration Rules (not applicable to this class of consumer agreements by their own terms).
Waiver: MicroStrategy v. Lauricia (4th Cir.) (no waiver based on different dispute); Leeper v. Altice (W.D. Ark.) and other district court decisions rejecting waiver premised on conduct in separate cases.

Legal Reasoning: How the Court Reached Its Decision

Contract formation under West Virginia law: The court found mutual assent (plaintiffs conceded applicability of the 2021 RSA), and adequate consideration (mutual promise to arbitrate). Unilateral modification remained bounded by notice and cancellation, consistent with Sheridan.
Supersession principle: Because the 2021 clause conflicted with earlier clauses, West Virginia law deemed it controlling; the 2022 clause could not apply retroactively to claims already filed.
FAA severability and narrowed judicial inquiry: The court adhered to the FAA’s severability doctrine, refusing to examine RSA provisions that were not specific to arbitration.
Unconscionability analysis: Applying West Virginia’s sliding-scale test, the court found no gross procedural unfairness or one-sided oppressive terms in the 2021 clause. The clause’s core features—AAA incorporation, pre-dispute notice requirement, individualized relief-only, and limited appeal—were commercially reasonable and bilateral.
Class waiver enforceability: The clause’s bar on class/representative and non-individualized relief was squarely consistent with the FAA and West Virginia precedents that had already upheld such waivers.
Rejection of waiver-by-litigation conduct: The court maintained a clear boundary: conduct in unrelated litigation does not waive arbitration rights in a different case.

Impact and Practical Implications

For courts and litigants

Which clause governs: Where a service provider updates its arbitration clause, the latest inconsistent version controls unless a later amendment lacks retroactive effect under its own terms. District courts should avoid sua sponte reliance on outdated clauses when the parties agree on a later one.
Severability respected: On motions to compel, courts should police the FAA’s limit: decide only clause-specific validity challenges; general RSA attacks go to the arbitrator.
Unconscionability bar remains high: Adhesion, lack of an opt-out for existing customers, mobile signature capture, and incorporation of AAA rules typically will not suffice to invalidate a consumer arbitration clause without further indicia of unfair surprise or one-sidedness.
Class waivers are stable: Individualized-relief-only clauses remain enforceable in the Fourth Circuit under both federal and West Virginia law.

For businesses (ISPs, telecoms, and other consumer-facing entities)

Provide robust notice for modifications: Although the majority accepted the clause’s structure, the concurrence questions whether website-only posting is “reasonable notice” under West Virginia law. Best practice: provide direct notice (email or mail) plus website posting, and keep clear records.
Anti-retroactivity language matters: Explicitly protect against retroactive application to claims already filed to preserve reliance interests and avoid disputes about which clause governs.
Make arbitration conspicuous and accessible: Use plain language, bold headings, and hyperlinks to governing rules (AAA Consumer Rules). Ensure confirmation of assent (e-signatures, billing statements referencing terms).
Structure fair pre-arbitration procedures: Bilateral notice-and-cure periods (e.g., 30–60 days) are likely enforceable and may reduce arbitration costs.
Be cautious with appellate arbitration rules: If referencing the AAA OAAR, recognize those rules typically exclude consumer-standardized agreements; clarify any intended appeal mechanism to deter challenges.

For consumers and counsel

Clause-specific challenges are essential: To resist a motion to compel, focus on terms embedded within the arbitration clause itself (e.g., fees, venue, confidentiality, discovery limits) rather than general RSA provisions.
Individualized injunctive relief remains available: While class-wide relief is waived, arbitrators may grant individualized injunctions where permitted by law.
Pay attention to notices: Continued use or payment after receiving notice can constitute acceptance of amended terms; preserve any lack-of-notice arguments with evidence.

Complex Concepts Simplified

FAA severability doctrine: An arbitration clause is treated as a separate mini-contract. Courts can only consider challenges directed at that clause; challenges to the overall agreement go to the arbitrator.
Unconscionability (WV’s sliding scale): Requires both procedural (unfair formation) and substantive (overly harsh, one-sided terms) unconscionability. Strong proof of one can offset weaker proof of the other, but both must be present.
Illusory promise: A promise is “illusory” if it binds one side to nothing. West Virginia allows unilateral modifications if there is reasonable notice and the other side can reject (e.g., cancel service), so the promise is not illusory.
Supersession: A later contract that conflicts with an earlier one between the same parties normally displaces the earlier without needing a special supersession clause.
Class/representative waiver: A clause requiring disputes to be brought individually (not as class actions or private attorney general actions) is valid under the FAA.
Waiver of arbitration by litigation conduct: A party may waive arbitration by substantially litigating the same dispute. Conduct in unrelated cases with different parties or claims ordinarily does not waive arbitration here.

Conclusion

The Fourth Circuit’s decision establishes a clear framework for consumer arbitration disputes governed by West Virginia law within the Fourth Circuit:

Later-in-time arbitration clauses supersede earlier inconsistent versions; anti-retroactivity language prevents later amendments from applying to already-filed claims.
Mutual promises to arbitrate suffice for consideration; unilateral modification provisions do not render the promise illusory where notice and cancellation are available (with a concurrence cautioning that website-only notice may be inadequate).
Under the FAA’s severability doctrine, courts may only adjudicate attacks directed at the arbitration clause itself; challenges to non-arbitration terms are for arbitrators.
Class action waivers and individualized-relief limitations remain enforceable; bilateral pre-arbitration notice and limited arbitral appeals are commercially reasonable.
Participation or settlement in other litigation does not waive arbitration rights in this case.

By reversing and remanding with instructions to compel arbitration, the Fourth Circuit reinforces both the primacy of the parties’ most recent agreement and the FAA’s command that courts enforce arbitration clauses as written, while carefully cabining judicial review to clause-specific challenges. The opinion provides practical guidance to drafters and litigants alike on notice, modification, and the proper allocation of disputes between courts and arbitrators.