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.)

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