Hendricks v. AT&T Mobility LLC

Filing 35

MOTION to Compel Arbitration and To Stay Case filed by AT&T Mobility LLC. Motion Hearing set for 9/23/2011 10:00 AM in Courtroom 8, 19th Floor, San Francisco before Hon. Charles R. Breyer. Responses due by 7/21/2011. Replies due by 7/28/2011. (Attachments: # 1 Affidavit Lilian L. Chan, # 2 Affidavit Chenell Cummings (Part 1 of 2), # 3 Affidavit Chenell Cummings (Part 2 of 2), # 4 Affidavit Adam Gill, # 5 Affidavit Senthil Kumar, # 6 Affidavit Romi Manchanda, # 7 Affidavit Theodore Weiman, # 8 Proposed Order)(Nadolenco, John) (Filed on 7/7/2011)

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Donald M. Falk (CA Bar No. 150256)
[e-mail]
MAYER BROWN LLP
Two Palo Alto Square, Suite 300
3000 El Camino Real
Palo Alto, CA 94306-2112
Telephone: [phone]
Facsimile: [phone]
John Nadolenco (CA Bar No. 181128)
[e-mail]
Lisa W. Cornehl (State Bar No. 232733)
[e-mail]
MAYER BROWN LLP
350 South Grand Avenue, 25th Floor
Los Angeles, CA 90071-1503
Telephone:
[phone]
Facsimile:
[phone]
Attorneys for Defendant
AT&T Mobility LLC

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN FRANCISCO DIVISION
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Case No. CV 11-00409-CRB
PATRICK HENDRICKS, on behalf of himself
and all others similarly situated,
Plaintiff,

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vs.

DEFENDANT AT&T MOBILITY LLC’S
NOTICE OF MOTION AND MOTION
TO COMPEL ARBITRATION AND TO
STAY CASE

AT&T MOBILITY, LLC,

Date: September 23, 2011
Time: 10:00 a.m.
Courtroom 8

Defendant.

Honorable Charles R. Breyer

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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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TABLE OF CONTENTS

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Page

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NOTICE OF MOTION AND MOTION ....................................................................................... 1
STATEMENT OF ISSUE TO BE DECIDED............................................................................... 1
MEMORANDUM OF POINTS AND AUTHORITIES ............................................................... 2
BACKGROUND ........................................................................................................................... 3
A.
Hendricks Agrees To Arbitrate His Disputes With ATTM ................................... 3
B.
The Consumer-Friendly Features Of ATTM’s Arbitration Provision................... 3
C.
Dispute Resolution Under ATTM’s Arbitration Provision ................................... 5
D.
Hendricks Files Suit Against ATTM Despite Agreeing To Arbitrate ................... 6
ARGUMENT................................................................................................................................. 6
I.
THE FAA MANDATES ENFORCING HENDRICKS’ ARBITRATION
AGREEMENT................................................................................................................... 6
II.
IN LIGHT OF CONCEPCION, HENDRICKS CANNOT AVOID HIS
ARBITRATION AGREEMENT....................................................................................... 7
A.
Hendricks Cannot Avoid His Arbitration Agreement On State-Law
Grounds.................................................................................................................. 7
B.
The FCA Cannot Be Used To Resurrect California’s Discover Bank Rule. ......... 9
CONCLUSION............................................................................................................................ 11

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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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TABLE OF AUTHORITIES

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Page(s)
CASES
Arellano v. T-Mobile USA, Inc.,
2011 WL 1842712 (N.D. Cal. May 16, 2011) ...........................................................................9
AT&T Mobility LLC v. Concepcion,
131 S. Ct. 1740 (2011)..................................................................................................... passim
Bellows v. Midland Credit Mgmt., Inc.,
2011 WL 1691323 (S.D. Cal. May 4, 2011)..............................................................................9
Bernal v. Burnett,
2011 WL 2182903 (D. Colo. June 6, 2011)...............................................................................9
In re Cal. Title Ins. Antitrust Litig.,
2011 WL 2566449 (N.D. Cal. June 27, 2011) ....................................................................... 8-9
D’Antuono v. Serv. Rd. Corp.,
2011 WL 2175932 (D. Conn. May 25, 2011)............................................................................9
Day v. Persels & Assocs.,
2011 WL 1770300 (M.D. Fla. May 9, 2011).............................................................................9
Dean Witter Reynolds Inc. v. Byrd,
470 U.S. 213 (1985).................................................................................................................11

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Discover Bank v. Superior Court,
113 P.3d 1100 (Cal. 2005) ............................................................................................... passim
Epstein v. AT&T Commc’ns of Cal., Inc.,
2010 WL 3000202 (S.D. Cal. July 30, 2010) ..........................................................................10
Estrella v. Freedom Fin.,
2011 U.S. Dist. LEXIS 71606 (N.D. Cal. July 5, 2011)............................................................8

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Fensterstock v. Educ. Fin. Partners,
2011 WL 2580166 (2d Cir. June 30, 2011) ...............................................................................9
Global Crossing Telecomms., Inc. v. Metrophones Telecomm’ns, Inc.,
550 U.S. 45 (2007)...................................................................................................................10
In re Halprin, Temple, Goodman, & Sugrue,
13 F.C.C.R. 22568 (1998)........................................................................................................10

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Higdon v. Pac. Bell Tel. Co.,
2010 WL 1337712 (N.D. Cal. Apr. 2, 2010) ....................................................................... 9-10
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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

TABLE OF AUTHORITIES
(continued)
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Page(s)
Laster v. AT&T Mobility LLC,
584 F.3d 849 (9th Cir. 2009) .......................................................................................2, 4, 8, 11
In re Long Distance Telecomms. Litig.,
831 F.2d 627 (6th Cir. 1987) ...................................................................................................10
Lozano v. AT&T Wireless Servs., Inc.,
504 F.3d 718 (9th Cir. 2007) ...................................................................................................10
Metro East Ctr. for Conditioning & Health v. Qwest Commc’ns Int’l, Inc.,
294 F.3d 924 (7th Cir.2002) ....................................................................................................10
Metrophones Telecomms., Inc. v. Global Crossing Telecomms., Inc.,
423 F.3d 1056 (9th Cir. 2005) .................................................................................................10
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1 (1983).................................................................................................................7, 11
N. County Commc’ns Corp. v. Cal. Catalog & Tech.,
594 F.3d 1149 (9th Cir. 2010) ...................................................................................................9
United States v. Marek,
238 F.3d 310 (5th Cir. 2001) .....................................................................................................7
Wallace v. Ganley Auto Group,
2011 WL 2434093 (Ohio Ct. App. June 16, 2011)....................................................................9
Wolf v. Nissan Motor Acceptance Corp.,
2011 WL 2490939 (D.N.J. Jun 22, 2011)..................................................................................9
Zarandi v. Alliance Data Sys. Corp.,
2011 WL 1827288 (C.D. Cal. May 9, 2011) .............................................................................9

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STATUTES AND RULES
9 U.S.C. §§ 1-16 ..........................................................................................................................1, 2

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9 U.S.C. §§ 2-4 ............................................................................................................................6, 7

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47 U.S.C. § 201(b) .............................................................................................................2, 6, 9, 10

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47 U.S.C. §§ 206-207 ....................................................................................................................10

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Fed. R. Civ. P. 11(b) ........................................................................................................................4

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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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NOTICE OF MOTION AND MOTION

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PLEASE TAKE NOTICE that on September 23, 2011, at 10:00 a.m., pursuant to the

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Federal Arbitration Act, 9 U.S.C. §§ 1-16 (“FAA”), defendant AT&T Mobility LLC (“ATTM”)

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will move and hereby does move this Court for an order compelling plaintiff Patrick Hendricks

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to arbitrate his claims on an individual basis and to stay this action.

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ATTM brings this motion on the ground that the FAA requires Hendricks to pursue his

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claims in accordance with his arbitration agreement.

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Memorandum of Points and Authorities, the Declarations of Lilian L. Chan, Chenell Cummings,

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Adam Gill, Senthil Kumar, Romi Manchanda, and Theodore Weiman and all exhibits thereto,

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any reply memorandum that ATTM may file, and oral argument that ATTM may present at the

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hearing.

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The motion is supported by the

STATEMENT OF ISSUE TO BE DECIDED
Whether the FAA requires Hendricks to pursue his claims against ATTM in accordance
with his arbitration agreement.

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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

MEMORANDUM OF POINTS AND AUTHORITIES

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When plaintiff Patrick Hendricks signed up for wireless service from ATTM, he agreed to

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resolve his disputes with ATTM in arbitration. The Federal Arbitration Act (“FAA”), 9 U.S.C.

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§§ 1-16, requires him to honor his agreement and arbitrate the claims raised in this lawsuit.

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Accordingly, ATTM respectfully moves this Court for an order that (i) compels Hendricks to

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arbitrate his claims in accordance with his agreement and (ii) stays these proceedings pending

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arbitration.

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On March 25, 2011, pursuant to the parties’ stipulation, the Court stayed this action

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pending the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion. See Dkt. No. 18.

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The Supreme Court has now spoken, holding that “[r]equiring the availability of classwide

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arbitration interferes with fundamental attributes of arbitration and thus creates a scheme

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inconsistent with the FAA.” AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1748 (2011).

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Because the FAA preempts state-law rules “conditioning the enforceability of certain arbitration

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agreements on the availability of classwide arbitration procedures” (id. at 1744), the Court reversed

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Laster v. AT&T Mobility LLC, 584 F.3d 849 (9th Cir. 2009), which had held the December 2006

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version of ATTM’s arbitration provision unenforceable under California law.

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Hendricks’ arbitration provision is even more consumer-friendly than the one involved in

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Concepcion. Despite the Supreme Court’s clear holding in Concepcion, Hendricks persists in

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asserting that he is not obligated to arbitrate in accordance with his agreement. In an effort to evade

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the Supreme Court’s decision, he has amended his complaint to assert that ATTM’s arbitration

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provision is an “unjust” and “unreasonable” practice under Section 201(b) of the Federal

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Communications Act (“FCA”). Hendricks’ invocation of the FCA does not excuse him from his

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obligation to arbitrate. To begin with, Hendricks lacks capacity to pursue his claim in court: the

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Ninth Circuit has held that a private party may not challenge a carrier’s practices as “unreasonable”

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or “unjust” unless the Federal Communications Commission (“FCC”) already has declared them so

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itself—which is certainly not the case here. Moreover, the Ninth Circuit has held that claims under

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the FCA are fully arbitrable; Hendricks cannot avoid that holding by suggesting that the FCA

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somehow mandates the availability of class procedures when the statute says nothing of the sort.
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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

BACKGROUND

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A.

Hendricks Agrees To Arbitrate His Disputes With ATTM.

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Patrick Hendricks is an ATTM customer who resides in California. First Am. Compl.

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¶ 5. Hendricks agreed to resolve his disputes with ATTM through arbitration on a number of

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occasions. On June 3, 2005, Hendricks used ATTM’s web site to activate a cellular phone he

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had purchased for use with ATTM’s wireless network. Decl. of Chenell Cummings ¶ 4 & Ex. 1;

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Decl. of Adam Gill ¶ 5. To complete that transaction, he was required to click both a box and a

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button labeled “I Accept” appearing next to the statement, “I have read and agree to the Wireless

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Service Agreement,” including the “Terms of Service,” which was accessible through a

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hyperlink on that screen. Decl. of Senthil Kumar ¶ 3. ATTM’s Terms of Service required both

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ATTM and Hendricks to “arbitrate all disputes and claims * * * arising out of or relating to this

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Agreement” on an individual basis. Gill Decl. Ex. 1 at 18; Decl. of Lilian L. Chan ¶¶ 3-4.

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ATTM revised its arbitration provision in early 2009. Pursuant to the change-in-terms

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provisions of ATTM’s Terms of Service, ATTM provided notice of the revised 2009 arbitration

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provision to Hendricks with his March and May 2009 monthly bills. Cummings Decl. Exs. 4-5.

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Like the arbitration provision that Hendricks accepted in 2005, the 2009 revised version requires

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both ATTM and Hendricks to “arbitrate all disputes and claims between us” on an individual

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basis. Decl. of Theodore Weiman Ex. 4 at 2. (emphasis in original).

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Most recently, on July 9, 2010, Hendricks purchased an Apple iPhone from a Parrot

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Cellular store in Berkeley, California and activated the phone for use with ATTM wireless

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service using an Interactive Voice Response (“IVR”) system. Cummings Decl. ¶ 5 & Exs. 2-3.

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The IVR system required Hendricks to indicate that he accepted his ATTM wireless service

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agreement—including ATTM’s Terms of Service—by pressing a button on the phone’s keypad.

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Id. ¶ 6. The Terms of Service included the 2009 version of ATTM’s arbitration provision (Decl.

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of Romi Manchanda Exs. 1-2), which is identical to the one Hendricks received notice of in 2009.

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B.

The Consumer-Friendly Features Of ATTM’s Arbitration Provision.

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The U.S. Supreme Court has expressly recognized that ATTM’s arbitration provision

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includes several features that ensure that its customers have “sufficient * * * incentive for the
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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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individual prosecution of meritorious claims that are not immediately settled” and “‘essentially

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guarantee[]’” that aggrieved customers will “be made whole.” Concepcion, 131 S. Ct. at 1753

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(quoting Laster, 584 F.3d at 856 n.9). Those features include:

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Cost-free arbitration: For consumer claims of $75,000 or less, “[ATTM] will pay all

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[American Arbitration Association (“AAA”)] filing, administration, and arbitrator fees”

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unless the arbitrator determines that the claim is “frivolous or brought for an improper

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purpose (as measured by the standards set forth in Federal Rule of Civil Procedure 11(b))”; 1

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$10,000 minimum award if arbitral award exceeds ATTM’s settlement offer: If the

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arbitrator awards a customer an amount that is greater than ATTM’s last “written settlement

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offer made before an arbitrator was selected,” ATTM will pay the customer the greater of

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$10,000 or the arbitral award.

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Double attorneys’ fees available: If the arbitrator awards the customer more than ATTM’s

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last settlement offer, then “[ATTM] will * * * pay [the customer’s] attorney, if any, twice the

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amount of attorneys’ fees, and reimburse any expenses, * * * that [the] attorney reasonably

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accrues for investigating, preparing, and pursuing [the] claim in arbitration”;2

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ATTM disclaims right to seek attorneys’ fees: “Although under some laws [ATTM] may

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have a right to an award of attorneys’ fees and expenses if it prevails in arbitration, [ATTM]

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agrees that it will not seek such an award [from the customer]”;

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Small claims court option: Either party may bring a claim in small claims court;

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No confidentiality requirement: The parties need not keep the arbitration confidential;

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Full remedies available: The arbitrator may award the consumer any form of individual

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relief (including punitive damages, statutory damages, attorneys’ fees, and injunctions) that a

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court could award;

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In the event that an arbitrator concludes that a customer’s claim is frivolous, the AAA’s
consumer arbitration rules would cap the customer’s arbitration costs at $125 for claims of
$10,000 or less. See Weiman Decl. Ex. 1 (AAA, Supplementary Procedures for ConsumerRelated Disputes § C-8).
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The attorney premium “supplements any right to attorneys’ fees and expenses [that the
customer] may have under applicable law.” Manchanda Decl. Ex. 1 at 18. Thus, even if an
arbitrator were to award a customer less than ATTM’s last settlement offer, the customer would
be entitled to an attorneys’ fee award to the same extent as if the claim had been brought in court.
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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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

Flexible consumer procedures:

Arbitration will be conducted under the AAA’s

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Commercial Dispute Resolution Procedures and the Supplementary Procedures for

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Consumer-Related Disputes, which the AAA designed with consumers in mind;

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customer’s] billing address”;

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Conveniently located hearing: Arbitration will take place “in the county * * * of [the

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Choice of in-person, telephonic, or no hearing: For claims of $10,000 or less, customers

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have the exclusive right to choose whether the arbitrator will conduct an in-person hearing, a

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hearing by telephone, or a “desk” arbitration in which “the arbitration will be conducted

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solely on the basis of documents submitted to the arbitrator”; and

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Right to a written decision:

“Regardless of the manner in which the arbitration is

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conducted, the arbitrator shall issue a reasoned written decision sufficient to explain the

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essential findings and conclusions on which the award is based.”

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Manchanda Decl. Ex. 1 at 15-18.

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C.

Dispute Resolution Under ATTM’s Arbitration Provision.

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ATTM has tailored the dispute-resolution process to the needs of its customers. The

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procedures create powerful incentives for ATTM to resolve the vast majority of disputes to

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customers’ satisfaction without the need to invoke the formal arbitration process.

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It is only if a customer cannot resolve his or her dispute informally through ATTM’s

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customer-service department that the arbitration provision comes directly into play. The first

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step is for the customer to notify ATTM of the dispute in writing. Weiman Decl Ex. 6 at 2. That

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is as simple as mailing a letter to ATTM or submitting a one-page Notice of Dispute form that

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ATTM has posted on its web site (at http://www.att.com/arbitration-forms). Id. Ex. 7. If the

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dispute is not resolved within 30 days, the customer may commence the arbitration. To do so,

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the customer need only fill out a two-page Demand for Arbitration form and send copies to the

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AAA and to ATTM. Customers may either obtain a copy of the demand form from the AAA’s

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web site (at http://www.adr.org) or use the simplified form that ATTM has posted on its web site

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(at http://www.att.com/arbitration-forms). Id. Exs. 3, 8. To further assist its customers, ATTM

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has posted on its web site a layperson’s guide on how to arbitrate a claim.

Id. Ex. 6

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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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(http://www.att.com/arbitration-information).

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D.

Hendricks Files Suit Against ATTM Despite Agreeing To Arbitrate.

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Despite agreeing to arbitrate all disputes against ATTM, Hendricks filed this suit on

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January 27, 2011. Hendricks contends that ATTM “systematically overbill[s] for every data

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transaction” as well as for “phantom data traffic when there is no actual data usage initiated by

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the customer.” First Am. Compl. ¶ 2. Hendricks, who seeks to represent a putative nationwide

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class of customers with a usage-based data plan on an Apple iPhone or iPad (id. ¶ 13), asserts

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causes of action under state common law, California’s Unfair Competition Law (“UCL”), and

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the FCA, 47 U.S.C. § 201(b) (id. ¶¶ 21-70). He requests compensatory and punitive damages,

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declaratory and injunctive relief, restitution, pre- and post-judgment interest, and attorneys’ fees

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and costs (id. at 8-12).

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On March 25, 2011, pursuant to the parties’ stipulation, this action was stayed pending

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the Supreme Court’s decision in Concepcion. See Dkt. No. 18. After the Supreme Court

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decided Concepcion, Hendricks amended his complaint to add a new claim that his arbitration

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agreement with ATTM violates the FCA’s prohibition on “unjust” and “unreasonable”

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“charge[s], practice[s], classification[s], or regulation[s].” First Am. Compl. ¶¶ 21-40.

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ARGUMENT
I.

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THE FAA MANDATES
AGREEMENT.

ENFORCING

HENDRICKS’

ARBITRATION

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The FAA requires that Hendricks’ arbitration agreement be enforced. It is “beyond

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dispute that the FAA was designed to promote arbitration.” Concepcion, 131 S. Ct. at 1749. The

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centerpiece of the FAA is Section 2, which mandates that written agreements to arbitrate

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disputes “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or

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in equity for the revocation of any contract.” 9 U.S.C. § 2. Sections 3 and 4 also emphasize the

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duty of courts to compel arbitration “in accordance with the terms of the [arbitration]

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agreement.” Id. §§ 3-4. As the Supreme Court has explained, “[t]he overarching purpose of the

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FAA, evident in the text of §§ 2, 3, and 4, is to ensure the enforcement of arbitration agreements

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according to their terms so as to facilitate streamlined proceedings.” Concepcion, 131 S. Ct. at
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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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1748. And this “liberal federal policy favoring arbitration agreements” applies “notwithstanding

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any state substantive or procedural policies to the contrary.” Id. at 1749 (internal quotation

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marks omitted). Accordingly, “questions of arbitrability must be addressed with a healthy regard

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for the federal policy favoring arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr.

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Corp., 460 U.S. 1, 24 (1983).

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In view of these principles, the FAA requires enforcement of Hendricks’ arbitration

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agreement with ATTM. The FAA applies if the arbitration agreement is “written” and in a

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contract “evidencing a transaction involving commerce.” 9 U.S.C. § 2. Both criteria are met

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here: (i) ATTM’s arbitration provision is in writing (see page 3, supra); and (ii) contracts for

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wireless service involve interstate commerce, because wireless devices, even “during intrastate

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use,” are “[i]nterstate commerce facilities.” United States v. Marek, 238 F.3d 310, 318 (5th Cir.

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2001).

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“evidences a transaction in interstate commerce, and thus the Federal Arbitration Act governs the

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interpretation and enforcement of this provision.” Manchanda Decl. Ex. 1 at 15. Moreover,

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there can be no denying that Hendricks’ claims fall within the broad scope of his agreement to

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arbitrate “all disputes and claims between” himself and ATTM. Id. The plain language of

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ATTM’s arbitration provision is all-encompassing and “intended to be broadly interpreted.” Id.

Indeed, the arbitration provision itself specifies that the ATTM service agreement

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When, as here, the FAA governs arbitration provisions that cover the plaintiff’s claims,

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the Court should compel arbitration and stay litigation. See 9 U.S.C. § 3 (providing for a stay of

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court proceedings pending the resolution of arbitration).

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II.

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IN LIGHT OF CONCEPCION,
ARBITRATION AGREEMENT.

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Under Concepcion, Hendricks is unable to rely on California law as a basis for avoiding

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arbitration on an individual basis. His attempt to resurrect California’s Discover Bank rule by

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invoking the FCA is meritless.

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A.

HENDRICKS

CANNOT

AVOID

HIS

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Hendricks Cannot Avoid His Arbitration Agreement On State-Law
Grounds.

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Concepcion makes clear that Hendricks’ agreement to arbitrate on an individual (as
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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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opposed to a class-wide) basis is fully enforceable under the FAA. Accordingly, Hendricks

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cannot successfully rely upon state law to avoid his obligation to arbitrate under the terms of his

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arbitration agreement with ATTM.

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At issue in Concepcion was whether the FAA “preempts California’s rule classifying

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most collective-arbitration waivers in consumer contracts as unconscionable,” which the Court

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described as “the Discover Bank rule”—referring to the California Supreme Court decision on

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which the Ninth Circuit relied in Laster. Concepcion, 131 S. Ct. at 1746. Answering that

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question in the affirmative, the Court explained that state laws “[r]equiring the availability of

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classwide arbitration interfere[] with fundamental attributes of arbitration and thus create[] a

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scheme inconsistent with the FAA.” Id. at 1748. “Because it stands as an obstacle to the

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accomplishment and execution of the full purposes and objectives of Congress,” the Court held,

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“California’s Discover Bank rule is preempted by the FAA.” Id. at 1753 (internal quotation

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marks omitted).

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The Court also held that the policy concerns underlying the Discover Bank rule are beside

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the point, because “States cannot require a procedure that is inconsistent with the FAA, even if it

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is desirable for unrelated reasons.” Concepcion, 131 S. Ct. at 1753. Moreover, the Court

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endorsed the observations of the district court and Ninth Circuit that “aggrieved customers who

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filed claims would be ‘essentially guarantee[d]’ to be made whole” under ATTM’s arbitration

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provision and that plaintiffs are “better off under their arbitration agreement with [ATTM] than

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they would have been as participants in a class action.’” Id. (citations omitted; emphasis and

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first alteration in original).

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In short, Concepcion establishes that “the FAA prohibits States from conditioning the

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enforceability of certain arbitration agreements on the availability of classwide arbitration

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procedures.” 131 S. Ct. at 1744. Accordingly, in the weeks since Concepcion was decided,

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courts both in California—including three other judges of this Court—and elsewhere have relied

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on Concepcion in enforcing arbitration agreements that are less consumer-friendly than the one

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into which Hendricks entered. See, e.g., Estrella v. Freedom Fin., 2011 U.S. Dist. LEXIS 71606

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(N.D. Cal. July 5, 2011) (Illston, J.); In re Cal. Title Ins. Antitrust Litig., 2011 WL 2566449
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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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(N.D. Cal. June 27, 2011) (White, J.); Arellano v. T-Mobile USA, Inc., 2011 WL 1842712 (N.D.

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Cal. May 16, 2011) (Alsup, J.); Zarandi v. Alliance Data Sys. Corp., 2011 WL 1827228 (C.D.

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Cal. May 9, 2011) (Fischer, J.); Bellows v. Midland Credit Mgmt., Inc., 2011 WL 1691323 (S.D.

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Cal. May 4, 2011) (Burns, J.); accord, e.g., Wolf v. Nissan Motor Acceptance Corp., 2011 WL

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2490939 (D.N.J. Jun 22, 2011); Bernal v. Burnett, 2011 WL 2182903 (D. Colo. June 6, 2011);

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D’Antuono v. Serv. Rd. Corp., 2011 WL 2175932 (D. Conn. May 25, 2011); Day v. Persels &

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Assocs., 2011 WL 1770300 (M.D. Fla. May 9, 2011); Wallace v. Ganley Auto Group, 2011 WL

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2434093 (Ohio Ct. App. June 16, 2011); see also Fensterstock v. Educ. Fin. Partners, 2011 WL

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2580166 (2d Cir. June 30, 2011) (treating Concepcion as dispositive of plaintiff’s argument that

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the requirement that he arbitrate on an individual basis is unconscionable under California law

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and remanding for consideration of other issues).

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B.

The FCA Cannot Be Used To Resurrect California’s Discover Bank Rule.

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Hendricks no doubt recognizes—as the many cases we have cited underscore—that

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Concepcion prevents him from avoiding his arbitration agreement on state-law grounds. In an

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effort to get around that decision, however, he has amended his complaint to assert that his

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arbitration agreement is unenforceable under Section 201(b) of the FCA. Specifically, he claims

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that his arbitration agreement is “unjust and unreasonable under 47 U.S.C. § 201(b)” because it

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(1) acts “as an exculpatory clause,” in that consumer claims “will not be litigated if they cannot

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be pursued on a class basis”; (2) “violate[s] the public policy of the State of California, and

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numerous other states,” and (3) is “unconscionable under the law of California, and numerous

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other states.” First Am. Compl. ¶¶ 30, 39. If these arguments sound familiar, it is because they

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are identical to the Discover Bank rule that is preempted by the FAA.

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Hendricks’ attempt to evade Concepcion by repackaging the same arguments within a

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federal statute unrelated to arbitration borders on frivolous. First, his FCA allegations are not

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properly before this Court. The Ninth Circuit has held that a private litigant “cannot demonstrate

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a violation of § 201(b) in the absence of an FCC determination” that a particular practice is

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“unreasonable” or “unjust” under the statute. N. County Commc’ns Corp. v. Cal. Catalog &

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Tech., 594 F.3d 1149, 1160 (9th Cir. 2010); see also, e.g., Higdon v. Pac. Bell Tel. Co., 2010 WL
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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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1337712, at *4 (N.D. Cal. Apr. 2, 2010) (claims under Section 201(b) are unavailable in court

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absent “a threshold FCC determination regarding the challenged practice”); Epstein v. AT&T

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Commc’ns of Cal., Inc., 2010 WL 3000202, at *2 (S.D. Cal. July 30, 2010) (“Plaintiff, however,

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overlooks a prerequisite to filing suit for a violation of § 201(b)—i.e., a determination by the

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FCC that the practice in question is unjust or unreasonable.”).3 As the Ninth Circuit explained, it

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is improper for “federal courts [to] fill in the analytical gap stemming from the absence of a

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Commission determination regarding § 201(b)” because such a result would “put interpretation

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of a finely-tuned regulatory scheme squarely in the hands of private parties and some 700 federal

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district judges, instead of in the hands of the Commission.” N. County Commc’ns, 594 F.3d at

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1158 (internal quotation marks omitted); cf. Global Crossing Telecomms., Inc. v. Metrophones

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Telecomms., Inc., 550 U.S. 45, 58 (2007) (“Congress, in § 201(b), delegated to the [FCC]

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authority to “fill” a “gap,” i.e., to apply § 201 through regulations and orders with the force of

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law.”).

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Even if that were not the case, Hendricks’ suggestion that the FCA disfavors agreements

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to arbitrate on an individual basis is demonstrably wrong. In rejecting the proposition that FCA

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claims are non-arbitrable, the Ninth Circuit has already concluded that no “congressional intent

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to bar arbitration exists in the FCA.” Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718, 726

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(9th Cir. 2007). Moreover, the FCC has routinely approved carrier tariffs containing arbitration

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provisions. See Metro East Ctr. for Conditioning & Health v. Qwest Commc’ns Int’l, Inc., 294

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F.3d 924, 926-27 (7th Cir.2002). Relatedly, the FCC has made clear that “class action lawsuits

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are neither contemplated by, nor consistent with, the private remedies created under sections 206

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through 209 of the Act.” In re Halprin, Temple, Goodman, & Sugrue, 13 F.C.C.R. 22568, 22581

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(1998).4

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Hendricks’ attempt to concoct an implication to the contrary from the FCA’s

See also, e.g., Metrophones Telecomms., Inc. v. Global Crossing Telecomms., Inc., 423
F.3d 1056, 1071 (9th Cir. 2005) (“under § 201(b), the Commission must conclude that a practice
is reasonably related to rates and services and is substantively ‘unjust or unreasonable’ before a
private action can exist”), aff’d, Global Crossing, 550 U.S. at 58; In re Long Distance
Telecomms. Litig., 831 F.2d 627, 631 (6th Cir. 1987) (“claims based on section 201(b) of the
Communications Act are within the primary jurisdiction of the FCC”).
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Hendricks invokes Sections 206 and 207 as the basis for his private right of action for
alleged violations of Section 201(b). See First Am. Compl. ¶¶ 64-65.
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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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prohibition on “unjust” or “unreasonable” practices is irreconcilable with this authority. It also

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runs headlong into the FAA, which establishes “a liberal federal policy favoring arbitration

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agreements” (Moses H. Cone, 460 U.S. at 24) and “requires that [courts] rigorously enforce

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agreements to arbitrate.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221 (1985).

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Hendricks’ assertion even fails on its own terms. Concepcion makes clear that there is

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nothing unjust or unreasonable about arbitration under ATTM’s arbitration provision, which

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makes arbitration cost-free for consumers with non-frivolous claims and entitles consumers to a

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minimum recovery of $10,000 and double attorneys’ fees if the arbitrator’s award exceeds

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ATTM’s last settlement offer. See pages 3-5, supra. As the Supreme Court recognized in

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Concepcion, these pro-consumer terms are “sufficient to provide incentive for the individual

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prosecution of meritorious claims that are not immediately settled” and “‘essentially

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guarantee[]’” that aggrieved customers are made whole. 131 S. Ct. at 1753 (quoting Laster, 584

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F.3d at 856 n.9). Such a provision cannot be deemed “unjust” or “unreasonable.”

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In short, Hendricks cannot legitimately invoke the FCA to avoid the import of
Concepcion.
CONCLUSION

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The Court should issue an order (i) compelling Hendricks to arbitrate his claims on an

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individual basis and (ii) staying this action.

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Dated: July 7, 2011

MAYER BROWN LLP

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By: /s/ John Nadolenco____________

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John Nadolenco (CA Bar No. 181128)
[e-mail]
MAYER BROWN LLP
350 South Grand Avenue, 25th Floor
Los Angeles, CA 90071-1503
Telephone:
[phone]
Facsimile:
[phone]

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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)

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Donald M. Falk (CA Bar No. 150256)
[e-mail]
MAYER BROWN LLP
Two Palo Alto Square, Suite 300
3000 El Camino Real
Palo Alto, CA 94306-2112
Telephone: [phone]
Facsimile: [phone]

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Attorneys for Defendant
AT&T Mobility LLC

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Of counsel:
Evan M. Tager
Archis A. Parasharami
Theodore J. Weiman
MAYER BROWN LLP
1999 K Street, N.W.
Washington, DC 20006
Tel: [phone]
Fax: [phone]

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DEFENDANT ATTM’S NOTICE OF MOTION AND MOTION TO COMPEL
ARBITRATION AND TO STAY CASE, CASE NO. CV 11-00409 (CRB)