Alvarez v. T-Mobile USA, Inc

Filing 67

MEMORANDUM and ORDER signed by Judge William B. Shubb on 12/20/11 ORDERING that an evidentiary hearing shall be held on the sole issue of whether an arbitration agreement existed. The parties shall attend a Status Conference on January 23, 2012, at 2 :00 p.m. in Courtroom No. 5. On or before January 17, 2012, the parties shall file a Joint Status Report, containing, inter alia, a suggested date for the hearing; an estimate of the length of the hearing; a list the witnesses each side intends to call, with a summary of such witnesses' testimony; a description of each document or exhibit the parties intend to offer; and a discussion of any legal or evidentiary issues the parties anticipate may arise. (Becknal, R)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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TRENT ALVAREZ, on behalf of
himself and all others
similarly situated,

NO. CIV. 2:10-2373 WBS GGH

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MEMORANDUM AND ORDER RE:
MOTION TO COMPEL ARBITRATION
AND STAY CLAIMS

Plaintiff,
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v.
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T-MOBILE USA, INC., and DOES
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Defendant,
/

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----oo0oo---Plaintiff Trent Alvarez brought this putative class

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action against defendant T-Mobile USA, Inc. (“T-Mobile”) arising

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out of plaintiff’s mobile phone contract with T-Mobile.

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Complaint alleges violation of the California Consumer Legal

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Remedies Act (“CLRA”), the California Unfair Competition Law

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(“UCL”), and the California False Advertising Law (“FAL”).

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Presently before the court is T-Mobile’s motion to compel binding

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arbitration pursuant to the Federal Arbitration Act (“FAA”).
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The

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I.

Factual and Procedural Background

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In August of 2009, Alvarez visited a T-Mobile store

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where he activated a cell phone plan with two phone lines.

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(Compl. ¶ 38.)

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myFave FamilyTime plan that was advertised as offering unlimited

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web access and text messaging and required him to agree to a

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twenty-four month contract.

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Alvarez purchased two cell phones for use on the plan.

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The plan that he signed up for was a T-Mobile

(Id. ¶¶ 38, 59.)

At the same time,
(Id.)

When the T-Mobile sales representative was finished

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obtaining the information necessary to activate Alvarez’s

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account, he calculated the total amount due and asked Alvarez to

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sign an electronic signature pad.

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9 (Docket No. 54).)

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pad, the screen displayed little to no words and he believed that

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in signing the pad he was merely authorizing the store to charge

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his credit card.

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(Id. ¶ 60; Alvarez Decl. ¶¶ 8,

According to Alvarez, when he signed the

(Alvarez Dep. at 23:17-24:20.)

T-Mobile claims that the electronic pad was programmed

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in such a way that before the signature pad displayed the

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signature screen, it displayed several screens that required the

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customer to accept or agree to a “bulleted version of the

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contract” that included the arbitration provision and the opt-out

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provision.

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Without indicating agreement or acceptance, a customer could not

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access the signature screen and complete their transaction.

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(Id.; Smith Decl. ¶ 6 (Docket No. 60).)

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claims that the signature screen displayed the following words

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above the signature line: “I have had the opportunity to review

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my Agreement and I agree to the current version of T-Mobile’s

(Brown Decl. ¶¶ 1-5, Tab 1 (Docket No. 60-3).)

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T-Mobile additionally

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Terms and Conditions.”

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(Brown Decl. ¶ 6, Tab 1.)1

The sales representative did not provide Alvarez with a

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copy of the Terms and Conditions.

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the Terms and Conditions were not included in the packaging of

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his phones.

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(Docket No. 57).)

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is its regular business practice to insert copies of the Terms

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and Conditions into the packaging of cell phones sold to

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customers.

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(Id.)

According to Alvarez,

(Alvarez Decl. ¶ 22; Alvarez Dep. at 21:16-22
T-Mobile, on the other hand, maintains that it

(Smith Decl. ¶ 19, Tab 2.)
According to the Complaint, after Alvarez signed this

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pad, the sales representative “printed out a contract with

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Plaintiff’s electronic signature applied to the contract.

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service agreement describes the plans’ prices, 24-month

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commitments, and other terms.”

(Compl. ¶ 60.)

This

The contract

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The court notes that the Brown and Smith declarations
are attached to T-Mobile's Reply and that, generally, a court
should not consider new evidence offered in reply without giving
the non-moving party an opportunity to respond to the new
evidence. Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir. 1996).
T-Mobile contends that the affidavits are offered in response to
arguments that Alvarez raised for the first time in his
Complaint, and that in such circumstances it is entitled to
submit affidavits that controvert these newly asserted statements
of fact. See Pestube Sys., Inc. v. Hometeam Pest Defense, LLC,
No. CV 05-2832, 2007 WL 973964, at *5 (D. Ariz. Mar. 30, 2007)
(“Although these affidavits were not disclosed in Plaintiff's
opening Motion to the Court, it appears that the affidavits are
not being offered as new evidence, but rather to controvert
certain statements of fact submitted by Defendant.”); E.E.O.C. v.
Creative Networks, LLC, No. CV-05-3032, 2008 WL 5225807, at *2
(D. Ariz. Dec. 15, 2008) (holding that a moving party's evidence
submitted in reply is properly considered when the evidence
“rebut[s] arguments first raised by [the non-moving party] in its
opposition”); Mintun v. Peterson, NO. CV06-447-S, 2010 WL
1338148, at *27 (D. Idaho Mar. 30, 2010).
As will be shown below, the court does not rely on the
this declaration in its holding and discusses the claims
contained in these declaration here only in order to present a
fuller picture of the conflicting stories offered by the parties.
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“refers to T-Mobile’s Terms and Conditions and provides that the

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Terms and Conditions are available in T-Mobile stores.”

(Id.)

T-Mobile has submitted a copy of the signed contract

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referred to by Alvarez along with its motion to compel

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arbitration.

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claims that he was not provided with the contract in the T-Mobile

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store at the time he activated his phones.

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52:3-53:8.)

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purchased his phone and activated his phone plan, it was the

(Baca Decl. Tab 1 (Docket No. 7-2).)

Alvarez

(Alvarez Dep. at

T-Mobile claims that at the store at which Alvarez

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regular practice to provide customers with a copy of their

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Service Agreements.

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(Smith Decl. ¶ 7 (Docket No. 60-1).)

In addition to summarizing the price and length terms

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of the cellular service plan, the one-page Service Agreement

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lists six terms to which the customer agrees “by signing [the]

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form or activating or using T-Mobile service.”

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1.)

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Conditions and the third states that the customer agrees that “T-

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Mobile requires ARBITRATION of disputes UNLESS I OPT-OUT WITHIN

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30 DAYS OF ACTIVATION.

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details . . . .”

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additionally states that the signer can “obtain copies of T-

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Mobile’s Terms and Conditions . . . plan at T-Mobile retail

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stores, at www.T-Mobile.com . . ., or by calling Customer Care at

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[phone] or 611 from any T-Mobile phone.

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and read my Agreement.”

(Baca Decl. Tab

The second of these terms incorporates the Terms and

See T-Mobile’s Terms and Conditions for

(Id. (emphasis in original).)

The agreement

I have received

(Id.)

The Terms and Conditions, in turn, contain an

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arbitration clause in the second numbered paragraph that states

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that
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WE EACH AGREE THAT EXCEPT AS PROVIDED BELOW (AND EXCEPT
AS TO PUERTO RICO CUSTOMERS), ANY AND ALL CLAIMS OR
DISPUTES BETWEEN YOU AND US IN ANY WAY RELATED TO OR
CONCERNING THE AGREEMENT, OUR SERVICES, DEVICES OR
PRODUCTS, INCLUDING ANY BILLING DISPUTES, WILL BE
RESOLVED BY BINDING ARBITRATION, RATHER THAN IN COURT.

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(Id. Tab 3, at 32 (emphasis in original).)

They also

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contain a class action waiver, (id. at 33), and an opt-out
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provision providing that
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Notwithstanding the above, YOU MAY CHOOSE TO PURSUE YOUR
CLAIM IN COURT AND NOT BY ARBITRATION if: (a) your claim
qualifies, you may initiate proceedings in small claims
court; or (b) YOU OPT OUT OF THESE ARBITRATION PROCEDURES
WITHIN 30 DAYS FROM THE DATE YOU ACTIVATED THAT
PARTICULAR LINE OF SERVICE (the "Opt Out Deadline"). You
may opt out of these arbitration procedures by calling
1-866-323-4405 or via the Internet by completing the
opt-out form located at www.tmobiledisputeresolution.com.
Any opt-out received after the Opt Out Deadline will not
be valid and you must pursue your claim in arbitration or
small claims court.

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(Id. at 32 (emphasis in original).)

Alvarez admits that he never

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opted out of the arbitration provision.

(Alvarez Dep. at 58:10-

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12 (Docket No. 60-6).)
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Alvarez activated a third cell phone line with T-Mobile
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in 2010, at which time his electronic signature was similarly
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appended to a Service Agreement.

(Opp’n at 4.)

He states,

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however, that this suit is confined to claims arising out of the
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initial cell phone contract and two lines of service that he set
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up in 2009.

(Alvarez Dep. at 44:12-45:10 (Docket No. 60-6); see

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Compl. at 19-21.)
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T-Mobile filed a motion to compel arbitration, (Docket
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No. 7), and then requested a stay pending the Supreme Court’s
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decision in AT & T Mobility LLC v. Concepcion, --- U.S. ----, 130
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S. Ct. 1740 (2010), (Docket No. 8).
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The court granted the stay

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on December 6, 2010.

(Docket No. 21.)

The decision in

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Concepcion was handed down on April 27, 2011, and the court

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lifted the stay as to this action on June 21, 2011.

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29.)

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II.

(Docket No.

Evidentiary Objections

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On a motion to compel arbitration, the court applies a

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standard similar to the summary judgment standard applied under

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Rule 56 of the Federal Rules of Civil Procedure.

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Unilever, PLC, 350 F. Supp. 2d 796, 804 (N.D. Cal. 2004) (citing

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McCarthy v. Providential Corp., No. C 94–0627, 1994 WL 387852, at

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*2 (N.D. Cal. July 19, 1994)).

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object that the material cited to support or dispute a fact

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cannot be presented in a form that would be admissible in

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evidence.”

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judgment, a party does not necessarily have to produce evidence

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in a form that would be admissible at trial, as long as the party

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satisfies the requirements of Federal Rules of Civil Procedure

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56.”

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(quoting Block v. City of Los Angeles, 253 F.3d 410, 418-19 (9th

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Cir. 2001)) (internal quotation marks omitted).

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moving party’s evidence is presented in a form that is currently

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inadmissible, such evidence may be evaluated on a motion for

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summary judgment so long as the moving party’s objections could

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be cured at trial.

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433 F. Supp. 2d 1110, 1119-20 (E.D. Cal. 2006).

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Concat LP v.

Under Rule 56, “[a] party may

Fed. R. Civ. P. 56(c)(2).

“[T]o survive summary

Fraser v. Goodale, 342 F.3d 1032, 1036-37 (9th Cir. 2003)

Even if the non-

See Burch v. Regents of the Univ. of Cal.,

Alvarez has raised multiple (unnumbered) objections,

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(Docket Nos. 51, 52), to portions of the declarations of Rebekah

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Casner and Andrea Baca on grounds of lack of relevance, lack of
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personal knowledge, improper authentication, hearsay, the best

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evidence rule, and improper expert testimony.

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declarations attached to T-Mobile’s Response, Alvarez raised

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additional objections on the grounds that those declarations

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improperly raised new facts, and also that the declaration of

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Steve Brown lacks foundation and is based on improperly

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authenticated documents.

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In response to the

(Docket No. 64.)

Objections to evidence on the ground that the evidence

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is irrelevant, speculative, argumentative, vague and ambiguous,

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or constitutes an improper legal conclusion are all duplicative

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of the summary judgment standard itself.

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2d at 1119-20.

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there is no genuine dispute of material fact.

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on improper legal conclusions or without personal knowledge are

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not facts and can only be considered as arguments, not as facts,

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on a motion for summary judgment.

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admissibility of this evidence, lawyers should challenge its

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sufficiency.

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and the court will overrule them.

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See Burch, 433 F. Supp.

A court can award summary judgment only when
Statements based

Instead of challenging the

Objections on any of these grounds are superfluous,

Similarly, at the summary judgment stage the court does

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not “focus on the admissibility of the evidence's form,” but

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rather “focus[es] on the admissibility of its contents.”

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v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003).

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the basis of a failure to comply with the technicalities of

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authentication requirements or the best evidence rule are,

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therefore, inappropriate.

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----, ----, 2011 WL 5079528, at *25 n.5 (N.D. Cal. Oct. 25, 2011)

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(“On summary judgment, unauthenticated documents may be

Fraser

Objections on

See Adams v. Kraft, --- F. Supp. 2d

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considered where it is apparent that they are capable of being

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reduced to admissible evidence at trial.”); Hughes v. United

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States, 953 F.2d 531, 543 (9th Cir. 1992) (holding that even if

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declaration violated best evidence rule, court was not precluded

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from considering declaration in awarding summary judgment).

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plaintiff has not shown and the court does not see why the

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contents of the documents at issue could not be properly

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presented at trial, the court overrules Alvarez’s objections on

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these grounds.

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As

In the interest of brevity, as the parties are aware of

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the substance of their objections and the grounds asserted in

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support of each objection, the court will not review the

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substance or grounds of the remaining individual objections here.

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As the court does not rely on any remaining evidence objected to

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in these declarations, Alvarez’s remaining objections are

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overruled as moot.

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III. Discussion

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The FAA provides that a party may seek an order to

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compel arbitration from a district court where another party

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fails, neglects, or refuses to arbitrate.

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Section 4 “leaves no place for the exercise of discretion by a

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district court, but instead mandates that district courts shall

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direct the parties to proceed to arbitration on issues as to

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which an arbitration agreement has been signed.”

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Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (emphasis in

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original).

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with a valid arbitration agreement, the district court must issue

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an order compelling arbitration.

9 U.S.C. §§ 1, 4.

Dean Witter

Upon a showing that a party has failed to comply

See Cohen v. Wedbush, Noble
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Cooke, Inc., 841 F.2d 282, 285 (9th Cir. 1988).

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“The court’s role under the Act is therefore limited to

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determining (1) whether a valid agreement to arbitrate exists

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and, if it does, (2) whether the agreement encompasses the

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dispute at issue.”

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207 F.3d 1126, 1130 (9th Cir. 2000).

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discussed below, the court concludes as a matter of law that the

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arbitration provision as worded covers Alvarez’s claims.

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Further, for the following reasons, the court is not persuaded by

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Chiron Corp. v. Ortho Diagnostic Sys., Inc.,
Here, for the reasons

Alvarez’s argument that the provision is unconscionable.

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A.

Scope of the Arbitration Agreement

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The Supreme Court has held that because the FAA

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reflects a “liberal federal policy favoring arbitration

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agreements,” “any doubts concerning the scope of arbitrable

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issues should be resolved in favor of arbitration.”

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Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25

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(1983).

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“in any way related to or concerning the agreement, our services,

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devices or products . . . will be resolved by binding

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arbitration, rather than in court.”

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Moses H.

Here, the arbitration provision provides that all claims

(Baca Decl. Tab 3, at 32.)

It is clear from the plain language of the agreement

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that Alvarez’s false advertising claims fall within the scope of

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the arbitration provision.

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that he purchased a phone plan that was advertised as an

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“unlimited data” plan, but that T-Mobile placed a data cap on his

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phone that resulted in slower data speeds and impaired function.

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In other words, Alvarez claims that he has been damaged because

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the services that were advertised were not equal to the services

The gravamen of Alvarez’s claim is

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he received.

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attention on the advertisement part of this equation, his claims

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necessarily involve the service that he received.

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Although Alvarez tries to focus the court’s

In Arellano v. T-Mobile USA, Inc., No. C 10–05663, 2011

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WL 1362165 (N.D. Cal. Apr. 11, 2011), the plaintiffs brought

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false advertising claims related to T-Mobile’s cell phone

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service, and T-Mobile moved to compel arbitration under an

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arbitration provision covering disputes “related to or concerning

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the agreement, our services, devices or products,” language
Id. at *1.

Although

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identical to the language at issue here.

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the court did not explicitly state that the arbitration provision

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encompassed the plaintiffs’ false advertising claims, that

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appears to be the case because neither the plaintiffs nor the

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court thought it worthwhile to contest that the arbitration

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provision covered the kinds of claims at issue.

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2011 WL 1362165, at * 2 (noting that “[i]f the district court

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determines that a valid arbitration agreement encompasses the

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dispute, then the FAA requires the court to enforce the

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arbitration agreement in accordance with its terms,” but not

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specifically addressing whether the agreement at issue

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encompassed plaintffs’ claims).

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this point in Arellano supports the court’s conclusion that the

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arbitration provision language used should be interpreted to

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cover the false advertising claims at issue here.

See Arellano,

The absence of any argument on

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B.

Unconscionability

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The final phrase of § 2 of the FAA limits the

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arbitration agreements that a court may enforce, providing that

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courts may declare such agreements unenforceable “upon such
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grounds as exist at law or in equity for the revocation of the

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contract.”

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stayed pending the decision in AT & T v. Concepcion, --- U.S. ---

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-, 131 S. Ct. 1740 (2011), which clarified the meaning of this

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language.

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9 U.S.C. § 2.

As noted above, this proceeding was

In that decision, the Supreme Court overruled a line of

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decisions in the Ninth Circuit that had applied state

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unconscionability law to invalidate arbitration clauses’ class

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action waivers, a rule referred to as the “Discover Bank rule,”

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after Discover Bank v. Superior Court, 36 Cal. 4th 148 (2005).

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Concepcion, 131 S. Ct. at 1753.

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against class action waivers, the court explained, was that

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although the unconscionability doctrine was applied in a facially

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neutral manner as between arbitration contracts and other

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contracts, it had a “disproportionate impact on arbitration

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agreements.”

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interfered with the goals of the FAA because it sacrificed the

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efficiency of arbitration, increased procedural formality, and

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increased risks to defendants.

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clarified that while § 2 of the FAA “preserves generally

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applicable contract defenses, nothing in it suggests an intent to

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preserve state-law rules that stand as an obstacle to the

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accomplishment of the FAA’s objectives.”

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Id. at 1747.

The problem with such a rule

Specifically, the Discover Bank rule

Id. at 1751-52.

The Court

Id. at 1748.

In the wake of Concepcion, the decision has been

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interpreted to bar challenges to arbitration agreements on the

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grounds that they contain class action waivers, but not to

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prevent courts from considering other unconscionability arguments

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that do not “interfere[] with fundamental attributes of
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arbitration and thus create[] a scheme inconsistent with the

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FAA.”

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F. Supp. 2d ––––, ––––, No C–11–0892, 2011 WL 2940690, at *6

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(N.D. Cal. July 21, 2011); In re DirectTV Early Cancellation Fee

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Mktg. & Sales Practice Litig., --- F. Supp. 2d ----, ----, 2011

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WL 4090774, at *5 (C.D. Cal. Sept. 6, 2011) (“As Concepcion made

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clear, the savings clause of the FAA still permits agreements to

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arbitrate to be invalidated by generally applicable contract

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defenses, such as fraud, duress, or unconscionability.”); Hamby

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v. Power Toyota Irvine, ––– F. Supp. 2d ––––, ––––, No. 11cv544,

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2011 WL 2852279, at *1 (S.D. Cal. July 18, 2011) (concluding that

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the decision in Concepcion “does not stand for the proposition

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that a party can never oppose arbitration on the ground that the

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arbitration clause is unconscionable”); Mission Viejo Emergency

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Med. Assocs. v. Beta Healthcare Grp., 197 Cal. App. 4th 1146,

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1158 (4th Dist. 2011) (noting that under the holding in

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Concepcion the “[g]eneral state law doctrine pertaining to

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unconscionability is preserved unless it involves a defense that

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applies ‘only to arbitration or that derive[s][its] meaning from

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the fact that an agreement to arbitrate is at issue’”) (quoting

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Concepcion, 131 S. Ct. at 1746)).

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Id. at 1748; see, e.g., Kanbar v. O'Melveny & Myers, –––

Unconscionability has both a procedural and a

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substantive element, the former focusing on oppression or

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surprise due to unequal bargaining power, the latter on overly

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harsh or one-sided results.

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Psychcare Servs., Inc., 24 Cal. 4th 83, 114 (2000) (citing A & M

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Produce Co. v. FMC Corp., 135 Cal. App. 3d 473, 486-87 (1982)).

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Both elements must be present, although not necessarily to the

Armendariz v. Found. Health

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same degree.

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scale where “the more substantively oppressive the contract term,

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the less evidence of procedural unconscionability is required . .

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. and vice versa”).

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Id. at 114 (noting that courts apply a sliding

“Procedural unconscionability addresses the manner in

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which agreement to the disputed term was sought or obtained, such

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as unequal bargaining power between the parties and hidden terms

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included in contracts of adhesion.”

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Cal. App. 4th 1094, 1099 (4th Dist. 2002). A contract of

Szetela v. Discover Bank, 97

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adhesion, in turn, is defined as “a standardized contract, which,

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imposed and drafted by the party of superior bargaining strength,

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relegates to the subscribing party only the opportunity to adhere

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to the contract or reject it” and without affording the

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subscribing party an opportunity to negotiate.

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Cal. 4th at 113–15.

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that a contract is adhesive is sufficient to support a finding of

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procedural unconscionability, Parada v. Superior Court, 176 Cal.

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App. 4th 1554, 1571-72 (4th Dist. 2009) (citing cases), there is

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no contract of adhesion if the contract provides the party with

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less bargaining power a meaningful opportunity to opt-out of

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arbitration.

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procedural unconscionability where plaintiff was given thirty

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days to decide whether to participate in the arbitration program

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and mail a simple form to opt-out, and the arbitration agreement

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did not contain any other indicia of procedural

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unconscionability).

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Armendariz, 24

While some courts have held that the finding

Circuit City Stores, 283 F.3d at 1199 (finding no

Although the Service Agreement and incorporated Terms
and Conditions have some adhesive characteristics--they are
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standardized agreements drafted by T-Mobile, the party with

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superior bargaining power--Alvarez did not face a take-it-or-

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leave-it choice.

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opportunity to opt-out of the arbitration clause without

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suffering any adverse consequences, and allowed him thirty days

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to consider whether he wanted to take advantage of that

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opportunity.

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provision were hidden terms; rather they were noted in bold,

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capitalized words on the one-page Service Agreement and in the

Instead, the contract afforded him the

Neither the arbitration provision nor the opt-out

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second numbered paragraph of the Terms and Conditions.

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to Alvarez’s contentions, the court does not find the terms

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confusing.

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termed procedurally unconscionable.

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at *5 (finding no procedural unconscionability in T-Mobile

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arbitration agreements very similar to the one in this case);

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Arellano, 2011 WL 1842712, at *1-2 (same).

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Contrary

The arbitration provision, therefore, cannot be
See Meyer, 2011 WL 4434810,

As the court in Meyer held, if “there is no procedural

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unconscionability, the arbitration agreement is not

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unconscionable on the whole.”

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(citing Gatton v. T–Mobile, USA, Inc., 152 Cal. App. 4th 571, 599

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(1st Dist. 2007) (“Because there is an absence on this record of

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both the surprise and oppression factors of procedural

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unconscionability, the service agreement is not unconscionable,

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and T–Mobile's motion to compel arbitration should be

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granted.”)).

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Meyer, 2011 WL 4434810, at *6

Because the court finds that the contract in this case

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is not procedurally unconscionable, it need not address Alvarez’s

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arguments regarding substantive unconscionability except to note
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that, to the extent that he relies on the argument that the

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prohibitions on public injunctive and declaratory relief and on

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punitive damages are unconscionable because they undermine pro-

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consumer policies, those arguments are not viable post-Concepcion

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because state laws advancing those policies are preempted by the

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FAA.

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----, 2011 WL 5104421, at *7 (N.D. Cal. Oct. 26, 2011) (rejecting

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argument that arbitrator must be able to enjoin unlawful conduct

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as to all consumers because Concepcion rejected such an argument

See, e.g., Hendricks v. AT & T Mobility, --- F. Supp. ----,

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in holding that “states cannot require a procedure that is

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inconsistent with the FAA, even if it desirable for unrelated

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reasons”) (quoting Concepcion, 131 S. Ct. at 1753); Meyer v. T-

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Mobile USA Inc., No. C 10-5858, 2011 WL 4434810, at *7-8 (N.D.

14

Cal. Sept. 23, 2011) (holding that while public policy supporting

15

a prohibition on arbitration of public injunctive relief claims

16

may be compelling, “such a prohibition does not survive

17

Concepcion”); Kaltwasser v. AT & T Mobility LLC, --- F. Supp. 2d

18

----, ----, 2011 WL 4381748, at *6-7 (N.D. Cal. Sept. 20, 2011).

19

But see In re DirectTV Early Cancellation Fee Mktg. & Sales

20

Practice Litig., 2011 WL 4090774, at *10 (holding that California

21

law creating private right to bring injunctive relief claims on

22

behalf of the public is not pre-empted by the FAA, even after

23

Concepcion); Ferguson v. Corinthian Colleges, Nos. SACV 11–0127,

24

SACV 11–0259, 2011 WL 4852339, at *8 (C.D. Cal. Oct. 6, 2011)

25

(same).2

26
27
28

2

The court also notes that the Terms and Conditions
expressly state that “[a]n arbitrator may award on an individual
basis any relief that would be available in a court, including
injunctive or declaratory relief and attorneys' fees,” and that
15

1
2

C.

Agreement to Arbitrate

3

The court having determined that Alvarez’s claims would

4

be covered by the arbitration provision at issue and that the

5

arbitration provision is not unconscionable, the only remaining

6

issue is whether the parties in fact entered into an arbitration

7

agreement.

8

“arbitration is a matter of consent.”

9

AnimalFeeds Int’l Corp., 130 S. Ct. 1758, 1775 (2010).

One of the foundational principles of the FAA is that
Stolt-Nielsen S.A. v.
Although

10

the FAA sets forth a policy favoring arbitration, “a party cannot

11

be required to submit to arbitration in any dispute which he has

12

not agreed so to submit.”

13

& Gulf Navigation Co., 363 U.S. 574, 582 (1960); see also Three

14

Valleys Mun. Water Dist. v. E.F. Hutton & Co., Inc., 925 F.2d

15

1136, 1139 (9th Cir. 1991).

16

to arbitration is first and foremost a matter of contractual

17

interpretation that must hinge on the intent of the parties.

18

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473

19

U.S. 614, 626 (1985); United Steelworkers, 393 U.S. at 582.

20

deciding whether a party agreed to arbitrate a particular issue,

21

courts should apply state-law principles that govern contract

22

formation.

23

United Steelworkers of Am. v. Warrior

Thus, whether a party has submitted

In

United Steelworkers, 393 U.S. at 582.
The party seeking to enforce an arbitration agreement

24
25
26
27
28

the limitation on punitive damages is only valid “unless
prohibited by law.” (Baca Decl. Tab 3, at 33, 37 (emphasis
omitted).) See Lozano v. AT & T Wireless, No. CV02-00090, 2003
WL 25548566, at *5 (C.D. Cal. Aug. 18, 2003) (no substantive
unconscionability where provision limiting punitive damages
“provide[d] that punitive damages apply only to the extent
allowed by law”).
16

1

bears the burden of showing that the agreement exists and that

2

its terms bind the other party.

3

Memberworks, Inc., 483 F.3d 956, 962 (9th Cir. 2007).

4

there is no genuine issue of material fact as to whether the

5

parties formed an agreement to arbitrate should the court rule

6

that, as a matter of law, the parties should or should not be

7

compelled to submit their dispute to arbitration.

8

925 F.2d at 1141.

9

to arbitrate exist, the matter should be resolved through an

See, e.g., Sanford v.
Only when

Three Valleys,

If doubts as to the formation of an agreement

10

evidentiary hearing or mini-trial.

11

Corp., 220 F.3d 99, 104-07 (3d Cir. 2000); McCarthy, 1994 WL

12

387852, at *2.

13

the ground that no binding agreement to arbitrate exists, the

14

district court should give the opposing party the benefit of all

15

reasonable doubts and inferences that may arise.

16

F. Supp. 2d at 804.

17

Sandvik v. Advent Int'l

When the party opposed to arbitration does so on

Concat LP, 350

An arbitration agreement “need not expressly provide

18

for arbitration but may instead incorporate by reference another

19

document containing an arbitration clause.”

20

Inc., 160 Cal. App. 4th 563, 569 (4th Dist. 2008).

21

terms of another document to be incorporated into the document

22

executed by the parties the reference must be clear and

23

unequivocal, the reference must be called to the attention of the

24

other party and he must consent thereto, and the terms of the

25

incorporated document must be known or easily available to the

26

contracting parties.”

27

Lambert, Inc., 178 Cal. App. 3d 632, 641 (2d. Dist. 1986)).

28

Adajar v. RWR Homes,
“For the

Id. at 571 (quoting Chan v. Drexel Burnham

Although both parties’ versions of events suffer from
17

1

lack of clarity and self-contradiction, what is clear is that

2

there is a dispute as to whether or not Alvarez can be said to

3

have entered into an agreement to arbitrate when he activated his

4

cellular phones.

5

signed by Alvarez that incorporates the Terms and Conditions,

6

gives him instructions on how to obtain a copy of the Terms and

7

Conditions, and expressly advises him of the arbitration

8

provision contained in those Terms and Conditions and of the

9

opportunity to opt out of that provision.

T-Mobile has submitted a Service Agreement

Alvarez, however,

10

claims that he has never seen this agreement.3

11

Alvarez, nothing that he saw ever alerted him to the existence of

12

an arbitration agreement or to the incorporation of T-Mobile’s

13

Terms and Conditions.

14

the parties formed an agreement to arbitrate.

15

of Mr. Smith and Mr. Brown, to which Alvarez objects as

16

improperly submitted with T-Mobile’s Reply, further demonstrate

17

the wide gulf between the two parties’ accounts.

18

According to

There is clearly a dispute as to whether
The declarations

Pursuant to 9 U.S.C. § 4, “[i]f the making of the

19

arbitration agreement or the failure, neglect, or refusal to

20

perform the same be in issue, the court shall proceed summarily

21
22
23
24
25
26
27
28

3

The court notes T-Mobile’s contention that because the
Complaint alleges that Alvarez’s signature was appended to the
Service Agreement and further alleges what the contents of that
Service Agreement were, the Complaint suggests that Alvarez did
receive a copy of his Service Agreement and Alvarez should be
held to have admitted as such. (Reply at 2:4-2:16 (Docket No.
60).) It is possible, however, to read the Complaint in a manner
consistent with Alvarez’s statements that he did not receive a
copy of his service agreement at the time of his purchase and
only later obtained a copy of that document, as indeed was
represented to be the case by Alvarez’s attorney during oral
arguments. Given that the court must give the opposing party the
benefit of all reasonable inferences, the court will not read the
Complaint in the manner urged by T-Mobile.
18

1

to the trial thereof.”

2

further provides that “[w]here such an issue is raised, the party

3

alleged to be in default may, except in cases of admiralty, on or

4

before the return day of the notice of application, demand a jury

5

trial of such issue” and that “[i]f no jury trial be demanded by

6

the party alleged to be in default, or if the matter in dispute

7

is within admiralty jurisdiction, the court shall hear and

8

determine such issue.”

9

U.S.C. § 4.

That same section of the FAA

Id.

Since Alvarez did not demand a jury trial on or before

10

the return day for T-Mobile’s motion to compel arbitration, he no

11

longer has the right to demand a jury trial on the issue of

12

whether he entered into an agreement to arbitrate with T-Mobile

13

when he activated his phone service.

14

v. Basic Constr. Co., 586 F. Supp 964 (M.D.N.C. 1982) (holding

15

that plaintiff who failed to request a jury trial on or before

16

the return date of an arbitration petition is not entitled to a

17

jury trial under the FAA); Blatt v. Shearson Lehman/American

18

Express, Inc., No. 84-7715, 1985 WL 2029, at *2 (S.D.N.Y. July

19

16, 1985) (“Plaintiff has not made a timely demand for jury trial

20

under section 4 of the Act, which required such a demand on or

21

before the return day of defendants' notice of application to

22

compel arbitration, which was May 17, 1985.

23

issue will be resolved by summary trial to the Court . . . .”);

24

Hamilton Life Ins. Co. v. Republic Nat'l Life Ins. Co., 408 F.2d

25

606, 609 (2d Cir. 1969) (finding “there was no right to jury

26

trial had these issues existed, since Republic did not make a

27

request for jury trial as required by the statute, 9 U.S.C. § 4,

28

on or before the return day of the notice of application”).
19

See, e.g., Starr Elec. Co.

Accordingly the

1

This court must therefore hold a non-jury evidentiary

2

hearing on the limited issue of whether T-Mobile and Alvarez

3

formed an agreement to arbitrate.

4

No. C 05-05404, 2006 WL 870690, at *2 (N.D. Cal. Apr. 4, 2006)

5

(noting that as neither party requested a jury, “the Court may

6

hold a bench trial or evidentiary hearing to resolve whether an

7

agreement to arbitrate exists”).

8
9

Garbacz v. A.T. Kearny, Inc.,

IT IS THEREFORE ORDERED that an evidentiary hearing
shall be held on the sole issue of whether an arbitration

10

agreement existed.

The parties shall attend a Status Conference

11

on January 23, 2012, at 2:00 p.m. in Courtroom No. 5.

12

before January 17, 2012, the parties shall file a Joint Status

13

Report, containing, inter alia, a suggested date for the hearing;

14

an estimate of the length of the hearing; a list the witnesses

15

each side intends to call, with a summary of such witnesses’

16

testimony; a description of each document or exhibit the parties

17

intend to offer; and a discussion of any legal or evidentiary

18

issues the parties anticipate may arise.

19

DATED:

December 20, 2011

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22
23
24
25
26
27
28
20

On or