Meyer v. T-Mobile USA, Inc
Filing
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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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1.
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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