Meyer v. T-Mobile USA, Inc

Filing 33

ORDER by Judge Charles R. Breyer denying 32 Motion for Reconsideration. (crblc2, COURT STAFF) (Filed on 7/13/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

United States District Court
For the Northern District of California

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No. C 10-05858 CRB

GENEVIEVE MEYER,

ORDER DENYING LEAVE TO FILE
MOTION FOR RECONSIDERATION

Plaintiff,
v.
T-MOBILE USA INC.,

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Defendant.

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Plaintiff Genevieve Meyer (“Plaintiff”) brought a putative class action against T-

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Mobile USA, Inc. (“T-Mobile”), alleging four causes of action relating to T-Mobile’s

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assessment of state and federal surcharges on its bills to subscribers for mobile telephone

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services. See generally Rivas Decl. (dkt. 20-1) Ex. A (“Compl.”). T-Mobile filed a Motion

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to Compel Arbitration and Stay the Case, and argued that Plaintiff was bound to an

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arbitration agreement, including a class action waiver, included in the Terms and Conditions

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(“T&C”) of the Service Agreement that Plaintiff signed when she purchased and renewed her

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T-Mobile phone service. See Motion to Compel Arbitration (“MTC”) (dkt. 16) at 2. In

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granting T-Mobile’s Motion, this Court held that Plaintiff’s claims were covered by the

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arbitration agreement, and that the arbitration agreement was valid and enforceable. Order

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(dkt. 31) at 1.

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Now pending is a Motion for leave to file a Motion for Reconsideration. Plaintiff
contends that the Court failed to consider material facts and/or dispositive legal arguments in

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the following respects: (1) in finding no degree of procedural unconscionability, (2) in

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finding no substantive unconscionability by holding that Plaintiff’s Request for Judicial

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Notice (“RJN”) (dkt. 25) was improperly filed, and (3) in failing to consider that Plaintiff’s

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proposed discovery requests were highly relevant and critical.
As this Court did consider the relevant material facts that Plaintiff cites, Plaintiff’s

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Motion for leave to file a Motion for Reconsideration is DENIED.

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I.

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BACKGROUND
In 1996, Congress passed the Telecommunications Act, requiring telecommunications

companies such as T-Mobile to contribute to a federal Universal Service Fund (“Fed-USF”)

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United States District Court
For the Northern District of California

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to facilitate universal telecommunications service. Rivas Compl. ¶ 3. A company’s required

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contribution to Fed-USF is calculated according to the company’s interstate and international

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telecommunications revenues, and the company may lawfully pass along to its subscribers

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the costs of fulfilling its required contribution. Id.

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California also has a Universal Service program (“Cal-USF”) to which

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telecommunications companies must contribute. Id. ¶ 5. A company’s required contribution

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to Cal-USF is calculated according to the company’s intrastate revenues. Id. A company

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may lawfully pass along to its subscribers the costs of fulfilling its required contribution, but

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the company’s calculation of its state contribution cannot be based on its interstate or

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international telecommunications revenues. Id.

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Plaintiff purchased two lines of service and phones from T-Mobile on June 27, 2004.

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See generally Baca Decl. (dkt. 17) Ex. A (“2004 Service Agreement”). Thereafter, Plaintiff

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renewed and extended her T-Mobile service three times: on June 28, 2007, January 5, 2008,

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and, most recently, August 1, 2008. Baca Decl. (dkt. 17) ¶ 5.

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Plaintiff claims that, during her service contract, T-Mobile assessed “Cal-USF fees

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based on the aggregate calculation of intrastate, interstate, and international

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telecommunications services, rather than on intrastate services alone. T-Mobile’s practice of

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including interstate and international revenues in the calculation of Cal-USF fees artificially

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and unlawfully inflates the five Cal-USF charges on its subscribers’ phone bills.” Compl. ¶
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6. Based on T-Mobile’s alleged misconduct, Plaintiff brought a putative class action on

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behalf of herself and those similarly situated. Id. ¶ 1. Plaintiff alleges four causes of action:

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(1) violation of the Federal Communications Act (“FCA”); (2) violation of California’s

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Unfair Competition Law (“UCL”); (3) fraudulent concealment; and (4) violation of the

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Consumers Legal Remedies Act (“CLRA”). See generally id.
T-Mobile argued that Plaintiff is bound to the arbitration agreement, including a class

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action waiver, contained in the T&C of the Service Agreement Plaintiff signed when she

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purchased and renewed her T-Mobile phone service. See MTC at 2. Plaintiff argued that the

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arbitration agreement is unenforceable for the following reasons: 1) T-Mobile agreed that

United States District Court
For the Northern District of California

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any provision in the Service Agreement rendered invalid under California law would be

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unenforceable, and the class action waiver was invalid under California law at the time

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Plaintiff entered the agreement in August 2008; 2) the arbitration agreement is

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unconscionable; and 3) the arbitration agreement would prevent Plaintiff from vindicating

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her statutory rights. See generally Opp’n (dkt. 20).
Plaintiff requested that if the Court does not find the arbitration agreement

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unenforceable based on Plaintiff’s arguments and available evidence, she be able to conduct

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limited discovery on the issue of whether the arbitration agreement is valid. Id. at 17.
This Court held that Plaintiff’s claims are covered by the arbitration agreement and

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that the arbitration agreement is valid and enforceable. Order at 1. Thus, the Court granted

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T-Mobile’s Motion to Compel Arbitration. Id. Plaintiff now requests leave to file a Motion

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for Reconsideration. See generally Motion for Leave to File Motion for Reconsideration

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(“MFR”) (dkt. 32).

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II.

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LEGAL STANDARD
To be granted leave to file a motion for reconsideration, a party must demonstrate one

of the following:

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(1) That at the time of the motion for leave, a material difference in fact or law exists

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from that which was presented to the court before entry of the interlocutory order for

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which reconsideration is sought. The party shall also show that in the exercise of
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reasonable diligence the party applying for reconsideration did not know such fact or

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law at the time of the interlocutory order; or

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(2) The emergence of new material facts or a change of law occurring after the time of

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such order; or

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(3) A manifest failure by the court to consider material facts which were presented to

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the court before such interlocutory order.

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Civil L.R. 7-9(b). Plaintiff contends that she should be permitted to file a motion for

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reconsideration because the Court failed to consider certain material facts and/or dispositive

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legal arguments that were presented to the Court. MFR at i.

United States District Court
For the Northern District of California

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III.

DISCUSSION
Plaintiff contends that the Court failed to consider material facts and/or dispositive

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legal arguments in the following respects: (1) in finding no degree of procedural

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unconscionability, (2) in finding no substantive unconscionability by holding that Plaintiff’s

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Request for Judicial Notice was improperly filed, and (3) in failing to consider that Plaintiff’s

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proposed discovery requests were highly relevant and critical. As this Court did consider the

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relevant material facts that Plaintiff cites, the Court DENIES Plaintiff leave to file a Motion

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for Reconsideration.

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A.

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Plaintiff submits that the Court failed to consider the California Supreme Court’s

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instruction in Gentry v. Superior Court, 42 Cal. 4th 443 (2008), by finding no degree of

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procedural unconscionability. In Gentry, the California Supreme Court held that the

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existence of an opt-out provision does not necessarily mean that a contract is free of

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procedural unconscionability; the opt-out provision must provide an “authentic informed

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choice.” Id. at 470. In analyzing whether the opt-out provision was meaningful, the Gentry

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Court considered many factors, including the clarity and accessability of the provision. Id. at

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470-72.

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Procedural Unconscionability

In the Order, this Court acknowledged that “There is no contract of adhesion,
however, if the contract provides a meaningful opportunity to opt-out of arbitration.” (Citing
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Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198-99 (9th Cir. 2002)). Although this Court

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cited to Circuit City rather than Gentry, this Court both acknowledged the meaningfulness

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standard, and actually considered whether the opt-out provision was meaningful. In

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determining whether the provision was meaningful, this Court described that “Plaintiff . . .

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had thirty days to decide whether to opt out . . . and had the option to do so either by phone

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or internet.” Order at 9. This Court further stated that “the opt-out provision does not

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describe any adverse consequences of opting out of arbitration, . . . and that Plaintiff was

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informed of the legal consequences of failing to opt out.” Id. In addition, this Court

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recognized that the opt-out provision was not a hidden term, but was written in capitalized

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United States District Court
For the Northern District of California

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and bolded letters immediately following the arbitration agreement in the second numbered

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paragraph of the T&C. Id. Thus, this Court considered whether the opt-out clause was

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meaningful, and held that “Because the arbitration agreement contains an opt-out provision

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and is presented in a clear format, the arbitration agreement is not procedurally

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unconscionable.” Order at 9. Therefore, the Court DENIES Plaintiff leave to file a Motion

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for Reconsideration as to procedural unconscionability.

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B.

Substantive Unconscionability

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Plaintiff next contends that the Court failed to consider that the Federal Rules of

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Evidence provide that a request for judicial notice may be filed at any stage of the

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proceedings. MFR at 4. In the Order, this Court looked to Local Civil Procedure Rule 7-

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3(d) and held that Plaintiff’s RJN was improperly filed, as it was submitted after the date of

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the Reply. Order at 3, n.1. Although the local rule has a clear time limit on when a request

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for judicial notice must be filed, the Federal Rule allows such requests to be filed at any time.

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Compare Civil L.R. 7-3(d) (“Once a reply is filed, no additional memoranda, papers or letters

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may be filed without prior Court approval,” with the exception of new evidence or a relevant

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judicial opinion published after the date the reply was filed); with Fed. R. Evid. 201(f) (“The

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court may take judicial notice at any stage of the proceeding”). The Ninth Circuit has held

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that a court is “under an obligation to construe local rules so that they do not conflict with the

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federal rules.” Marshall v. Gates, 44 F.3d 722, 725 (9th Cir. 1995); c.f. Liebb v. Brown, No.
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04-4213, 2007 WL 2778820 at *6 (N.D. Cal. Sept. 21, 2007) (applying Federal Rule of

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Evidence 201(f) to a Request for Judicial Notice). Thus, this Court failed to consider that the

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Federal Rules allow requests for judicial notice to be filed at any stage.

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Plaintiff intended that the RJN demonstrate the lack of mutuality in the arbitration

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provision, since T-Mobile can sue consumers, but consumers cannot sue T-Mobile, and must

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submit to arbitration. MFR at 5. The RJN detailed cases where T-Mobile sued its

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consumers, evidencing non-mutuality, and thus substantive unconscionability. RJN ¶ 5. In

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the Order, this Court acknowledged that customers are not provided with the same

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“unequivocal power” as T-Mobile in challenging the contract, and thus held that the contract

United States District Court
For the Northern District of California

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was substantively unconscionable. Order at 11. Therefore, although the Court failed to

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consider the RJN, the notice would not have affected this Court’s holding, as this Court

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already recognized the contract’s lack of mutuality. Taking judicial notice of the cases

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would not push the sliding scale any further towards substantive unconscionability.

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Therefore, the Court DENIES Plaintiff leave to file a motion for reconsideration as to

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substantive unconscionability.

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C.

Arbitration-Related Discovery

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Finally, Plaintiff contends that the Court failed to consider certain of Plaintiff’s

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proposed discovery requests. MFR at 6. Plaintiff points specifically to Exh. G, Document

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Requests 1-14, and Exh. H, Interrogatories 1-9. In the Order, this Court held that all

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discovery requests were beyond the scope allowed by the Federal Arbitration Act (“FAA”) as

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they were overly broad or irrelevant to the disposition of the pending Motion. Id. Plaintiff

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contends that the Court failed to consider the relevancy of discovery information as to: 1) the

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contract formation, and 2) the opt-out provision.

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Discovery into Contract Formation

Plaintiff states that the Court failed to consider the relevancy of discovery requests

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into the formation of her contract with T-Mobile. MFR at 7. Plaintiff contends that

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Interrogatory Request Number 8, and Document Requests Number 1 and 4 are highly

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relevant to this issue, and that without this discovery she was unable to make an argument as
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to whether an arbitration agreement actually existed. Id. at 7 n.2. In the Order, this Court

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recognized that the FAA provides for discovery considering “issues relating to the making

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and performance of the agreement to arbitrate.” Order at 15 (quoting Simula, Inc. v. Autoliv,

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Inc., 175 F.3d 716, 726 (9th Cir. 1999)). In considering Plaintiff’s discovery requests

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relating to these issues, this Court held that “Most of Plaintiff’s discovery requests do not

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relate to the validity of Plaintiff’s arbitration agreement with T-Mobile. Instead, they

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concern all agreements, disputes, arbitrations and lawsuits relating to T-Mobile customers in

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California other than Plaintiff for the entire seven-year ‘relevant time period.’” Order at 16

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(emphasis added). Although the Order did not specifically cite to the discovery requests

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United States District Court
For the Northern District of California

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Plaintiff mentions, the Court considered the material facts surrounding all of the requests,

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and denied them, finding that the requests were too broad and irrelevant. Therefore, the

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Court DENIES Plaintiff leave to file a Motion for Reconsideration as to the discovery

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requests concerning contract formation.
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Discovery into T-Mobile’s “Opt-Out” Procedures

In addition, Plaintiff contends that Document Requests Number 5 and Number 6, and

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Interrogatory Number 9 are highly relevant to evaluating the contract’s procedural

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unconscionability. Plaintiff states that discovery into other customers’ experiences with T-

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Mobile’s agreement is necessary to determine whether the opt-out provision was meaningful,

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and thus the degree of procedural unconscionability. MFR at 8. In the Order, this Court

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considered whether the opt-out provision was meaningful, and held that there was no

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procedural unconscionability. See supra at 6. Thus, the additional discovery into whether

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the provision was meaningful was unnecessary. This Court did not fail to consider the

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relevance of these discovery requests. Therefore, the Court DENIES Plaintiff leave to file a

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Motion for Reconsideration as to the discovery requests.

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IV.

CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for Leave to file a Motion for

Reconsideration is DENIED.
IT IS SO ORDERED.

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CHARLES R. BREYER
UNITED STATES DISTRICT JUDGE

Dated: July 13, 2012

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United States District Court
For the Northern District of California

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G:\CRBALL\2010\5858\Order Denying Motion for Leave.wpd

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