Herron v. Best Buy Co. Inc. et al

Filing 86

ORDER signed by Judge Garland E. Burrell, Jr. on 5/30/2014 ORDERING that Toshiba's 74 Motion to Compel Arbitration. The action against Toshiba is STAYED under 9 U.S.C. § 3 pending arbitration. A status conference is scheduled to commence at 9:00 a.m. on July 20, 2015 in Courtroom 10. A joint status report shall be filed fourteen (14) days prior to the status conference. (Zignago, K.)

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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 EASTERN DISTRICT OF CALIFORNIA 7 8 9 CHAD HERRON, individually, on behalf of himself and all others similarly situated, 10 11 12 13 14 No. Plaintiff, 12-cv-02103-GEB-JFM ORDER GRANTING DEFENDANT TOSHIBA AMERICA INFORMATION SYSTEMS’ MOTION TO COMPEL ARBITRATION v. BEST BUY STORES, L.P., a Virginia limited partnership; TOSHIBA AMERICA INFORMATION SYSTEMS, INC., a California corporation, inclusive, 15 Defendants. 16 Defendant 17 Toshiba America Information Systems, Inc. 18 (“Toshiba”) moves in this putative class action for an order 19 compelling 20 T[oshiba].” (Mem. P. & A. in Supp. Mot. to Compel Arbitration 21 (“Toshiba’s Mot.”) 1:3-4, ECF No. 74-1.) Plaintiff opposes the 22 motion. “[P]laintiff to arbitrate his claim against I. FACTUAL BACKGROUND 23 24 The following uncontroverted facts are germane to the 25 motion. Contained within the box for the Toshiba laptop Plaintiff 26 purchased at a Best Buy store was an arbitration provision, which 27 prescribes: 28 Customer and Toshiba acknowledge 1 and agree 1 4 that any claim, dispute, or controversy . . . between Customer and Toshiba arising from or relating to (i) . . . the validity of this binding arbitration provision, or (ii) the use of the Product shall be resolved EXCLUSIVELY AND FINALLY BY BINDING ARBITRATION . . . . 5 . . . . 6 The binding arbitration provision shall be governed by the United States Federal Arbitration Act [(“FAA”)]. 2 3 7 8 (Decl. 9 Warranty for Computers (“Arbitration Provision”) A7, A9, ECF No. 10 of Don Hanson Ex. A, One (1) Year Standard Limited 74-3.) 11 Additionally, “[i]nside the box . . . the actual . . . 12 laptop would have been completely enclosed in a plastic bag . . . 13 sealed with a 14 informing Plaintiff of the referenced arbitration provision and 15 prescribing: 16 17 18 19 20 sticker,” (Decl. of Don Hanson ¶ 4, ECF No. 74-2), IF YOU DO NOT ACCEPT THESE CONDITIONS, RETURN THE UNOPENED PACKAGE AND ALL OTHER ITEMS INCLUDED WITH THE [LAPTOP] TO THE PLACE OF PURCHASE AND YOUR MONEY WILL BE REFUNDED IN ACCORDANCE WITH THE APPLICABLE RETURN POLICY OF THE PLACE OF PURCHASE. (Decl. of Don Hanson Ex. B, ECF No. 74-4.) II. DISCUSSION 21 22 Toshiba argues: “Plaintiff should be compelled to 23 arbitrate his claim against [it since] Plaintiff accepted the 24 terms of . . . a prominently disclosed arbitration provision.” 25 (Toshiba’s Mot. 1:2-4.) Toshiba contends: “That provision binds 26 the parties to arbitrate on an individual basis any disputes 27 relating to the use of [P]laintiff’s laptop.” (Id. 1:4-5.) 28 Plaintiff counters with arguments: 1) “no agreement to 2 1 arbitrate was formed between Plaintiff and T[oshiba]”; 2) “the 2 arbitration 3 unenforceable”; and 3) “T[oshiba] has waived its right to compel 4 arbitration.” (Pl.’s Opp’n 9:9-11, ECF No. 78.) 5 A. Acceptance of Arbitration Provision 6 Plaintiff argues: “T[oshiba] has failed to show that the [provision] arbitration is unconscionable, [provision],” which and Plaintiff thus 7 . . . did not 8 encounter until after purchase, “w[as] accepted and assented to 9 by Plaintiff.” (Pl.’s Opp’n 19:22-23.) 10 “[C]ontracts contained in [] boxes . . . are no less 11 enforceable than any other type of contract.” Novell, Inc. v. 12 Unicom Sales, Inc., No. 03-cv-2785 MMC, 2004 WL 1839117, at *11 13 (N.D. Cal. Aug. 17, 2004) (citing ProCD, Inc. v. Zeidenberg, 86 14 F.3d 1447, 1449 (7th Cir. 1996); see also Murphy v. DirecTV, 15 Inc., 724 F.3d 1218, 1225 n.4 (9th Cir. 2013) (approving, in 16 dictum, 17 accept [defendant]’s services . . . bound [p]laintiffs to the 18 terms of the contract”); Datel Holdings Ltd. v. Microsoft Corp., 19 712 F. Supp. 2d 974, 989 (N.D. Cal. 2010) (“Plaintiff argues that 20 the Warranty could not have been discovered by consumers until 21 the box was opened, and that therefore, a consumer could not have 22 knowingly 23 weight of authority, however, . . . is that shrinkwrap licenses 24 are enforceable.” (citation omitted)). Therefore, Plaintiff has 25 not 26 provision 27 terms. 28 a district and shown court’s voluntarily that before since the Plaintiff accepted he was laptop also determination it not 3 prior that he did case “continuing to provided purchase, argues that purchase. the not law to The arbitration accept its supporting 1 acceptance of contracts within the boxes of consumer products via 2 product use is inapposite since “in order to avoid being bound by 3 the terms of the [arbitration provision], Plaintiff was required 4 to return the [l]aptop to Best Buy pursuant to Best Buy’s return 5 policy as it then existed,” which would have subjected Plaintiff 6 to a “restocking fee of fifteen percent,” i.e. “a monetary loss 7 of 8 $559.74. 9 argument with a document, of which he has requested judicial approximately (Id. that $84” based 24:1-3, he on 24:5, contends Plaintiff’s 24:10.) Plaintiff effect at the time of his laptop purchase. (See Pl.’s Req. for 12 Judicial Notice Ex. A, ECF No. 78-13.) However, the document does 13 not state the dates for which its provisions are in effect. 14 Therefore, 15 restocking fee was in effect when he purchased the laptop. been shown return this 11 not Buy’s supports of notice, has Best price 10 Plaintiff states purchase that 16 Plaintiff in referenced B. Validity of Arbitration Provision 17 the policy argues the arbitration provision is 18 “unconscionable and unenforceable as a matter of law.” (Pl.’s 19 Opp’n 20 arbitration 21 [clause] that requires” this unconscionability challenge “to be 22 decided by the arbitrator, not the Court.” (Toshiba’s Reply 2:10- 23 11, ECF No. 82 (quoting Arbitration Provision A7).) 35:14.) Toshiba [provision] counters, at issue inter here alia, contains that a delegation 24 The referenced arbitration provision states: 25 Customer and Toshiba acknowledge and agree that any claim, dispute, or controversy . . . between Customer and Toshiba arising from or relating to . . . the validity of this binding arbitration provision . . . shall be resolved EXCLUSIVELY AND FINALLY BY BINDING ARBITRATION . . . . 4 26 27 28 “[t]he 1 (Arbitration Provision A7 (underlined emphasis added).) 2 “Parties can agree to arbitrate ‘gateway’ questions of 3 ‘arbitrability,’” such as whether an arbitration provision is 4 unconscionable. Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 5 63, 68-69 (2010) (holding since “dispute[s] relating to the [] 6 enforceability” 7 “delegate[d] 8 unconscionability challenge to the delegation clause itself, but 9 not an unconscionability challenge to the arbitration provision). 10 Since the arbitration provision at issue delegates challenges to 11 “the 12 arbitrator, Plaintiff’s 13 arbitration provision 14 (Arbitration Provision A7.) of to validity the of the arbitration arbitrator,” th[e] binding a agreement court could arbitration unconscionability must be had only hear provision” challenge decided in been to to an the the arbitration. 15 C. Waiver of Right to Compel Arbitration 16 However, Plaintiff contends “T[oshiba] has waived its 17 right to compel arbitration.” (Pl.’s Opp’n 9:9.) 18 “Any examination of whether the right to compel 19 arbitration has been waived must be conducted in light of the 20 strong 21 agreements.” Fisher v. A.G. Becker Paribas, Inc., 791 F.2d 691, 22 694 (9th Cir. 1986). Under the FAA, “[a] party seeking to prove 23 waiver of a right to arbitration must demonstrate . . . prejudice 24 to 25 inconsistent acts.” Id. “[W]aiver of the right to arbitration is 26 disfavored because it is a contractual right, and thus any party 27 arguing waiver of arbitration bears a heavy burden of proof.” 28 United States v. Park Place Assocs., Ltd., 563 F.3d 907, 921 (9th the federal party policy favoring opposing enforcement arbitration 5 of resulting arbitration from such 1 Cir. 2009) (internal quotation marks omitted) (quoting 2 Townhouses v. Mar Indus. Corp., 862 F.2d 754, 758 (9th Cir. 3 1988). Van Ness 4 Plaintiff argues compelling arbitration would prejudice 5 him since he “expended substantial resources, time, and effort 6 litigating 7 strategy had he known that the case would or might proceed to 8 arbitration”; and, in arbitration, “T[oshiba] [would] now [be] 9 allowed to this action”; evade the he “would Court’s have decisions utilized a [rejecting different Toshiba’s 10 motions to dismiss Plaintiff’s claims as a matter of law] and 11 seek a ‘second bite at the apple.’” (Pl.’s Opp’n 16:17-18, 16:14- 12 15, 17:9-11.) 13 Plaintiff’s prejudice strategy 15 relitigate issues 16 attempt to forum shop are conclusory and therefore unpersuasive. 17 Here, Plaintiff has not shown that “the possibility that there 18 may be some duplication from [an arbitration] proceeding[] is 19 prejudicial 20 Plaintiff has not sustained his burden of showing prejudice, and 21 has not shown Toshiba waived its right to compel arbitration. [him].” 22 in potential previous Fisher, 791 for from litigation addressed the stemming 14 to choices, arguments dismissal F.2d at Toshiba to orders, or 698. Therefore, III. CONCLUSION 23 For is the stated GRANTED. reasons, The Toshiba’s action motion to compel against Toshiba is stayed 24 arbitration 25 under 9 U.S.C. § 3 pending arbitration. 26 A status conference is scheduled to commence at 9:00 27 a.m. on July 20, 2015. A joint status report shall be filed 28 fourteen (14) days prior to the 6 status conference, in which 1 Plaintiff and Toshiba shall explain the status of the arbitration 2 proceeding if arbitration is ongoing. Further, if arbitration is 3 completed before the status report is due, a notice of completion 4 shall be filed immediately upon determination that arbitration 5 has been completed. 6 Dated: May 30, 2014 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7

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