Blau et al v. AT&T Mobility et al

Filing 84

ORDER by Judge Charles R. Breyer vacating hearing date and granting 81 Motion to Compel Arbitration (crblc1, COURT STAFF) (Filed on 2/21/2012)

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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 11-00541 CRB

FREDRICK M. BLAU, et al.,

ORDER VACATING HEARING AND
GRANTING MOTION TO COMPEL
ARBITRATION

Plaintiffs,
v.

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AT&T MOBILITY, et al.,

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Defendants.

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Defendants AT&T Mobility LLC and AT&T Inc. have filed a Motion to Compel

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Arbitration of Plaintiff Anthony P. Tran’s claims, and to stay the action pending arbitration.

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See Mot. (dkt. 81). The Court finds this matter suitable for resolution without oral argument

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pursuant to Civil Local Rule 7-1(b), and VACATES the hearing on calendar for February 24,

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2012.

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Tran is one of several AT&T phone users who brought suit against Defendants based

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on allegations that they received poor quality service over AT&T Mobility’s (“ATTM’s”)

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cellular network. See generally FAC (dkt. 34). Defendants moved to compel arbitration as

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to all of Tran’s co-plaintiffs, and, in so moving, noted that they were not moving to compel

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arbitration as to Tran at that time. See First Mot. (dkt. 35) at 1 n.1; Amended Mot. (dkt. 38)

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at 1 n.1. In their motion to dismiss Tran’s claims, which Defendants filed on the same day as

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their motion to compel as to Tran’s co-plaintiffs, Defendants stated that they “reserve[d] the

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right to move to compel arbitration of Tran’s claims at a future date if he is later found to

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have an arbitration agreement.” See MTD (dkt. 37) at 3 n.3.

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On October 28, 2011, the Court granted in part Defendants’ motion to dismiss Tran’s

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claims. See Order re MTD (dkt. 70). Tran filed an amended complaint on December 22,

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2011. See SAC (dkt. 76). On January 3, 2012, the Court granted Defendants’ motion to

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compel arbitration as to Tran’s co-plaintiffs. See Order Compelling Arb. (dkt. 77). The

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Court described the “liberal federal policy favoring arbitration agreements,” and then

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considered and rejected each of Tran’s co-plaintiffs’ objections to compelling arbitration in

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this case.1 See id. at 3 (citing Moses H. Cone Mem’l Hosp. v. Mercury Constr. Co., 460 U.S.

United States District Court
For the Northern District of California

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1, 24-25 (1983)).
Defendants now move to compel arbitration as to Tran’s claims, asserting that “on

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October 7, 2011 and October 8, 2011, an authorized user on [the ATTM account that Tran

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uses] twice accepted ATTM’s terms of service in the course of renewing service contracts on

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two wireless phone lines associated on the account.” Mot. at 2 (citing Plourde Decl. ¶ 4 &

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Exs. 1-2). The user was required to accept the terms of service on ATTM’s web site by

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clicking a check box labeled “I have read and agree to the Service Agreement under the

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terms and conditions listed above.” Id. The check box was below a scrolling text box

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displaying ATTM’s terms of service, which require “all authorized or unauthorized users or

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beneficiaries of services” to “arbitrate all disputes and claims between us” on an individual

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basis, including “claims that arose before this . . . Agreement” and “claims that are currently

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the subject of a purported class action litigation in which you are not a member of a certified

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class.” Id. (citing Lutner Decl. ¶¶ 3-4 & Ex. 1, Ex. 2 at 6-7). It is on the basis of this

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agreement that Defendants now move to compel arbitration. See generally Mot.

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Tran does not dispute Defendants’ account of the facts, but nonetheless opposes
Defendants’ Motion. He argues both that Defendants waived their right to arbitrate because

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Such objections included assertions that: (1) the arbitration agreement did not apply to AT&T
Inc.; (2) plaintiffs did not agree to arbitrate their disputes; (3) the arbitration agreement at issue violates
California and federal law; and (4) the arbitration agreement at issue cannot be enforced because it
eliminates any meaningful relief on plaintiffs’ individual claims. See generally id.
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they “long knew of their existing right to arbitrate Tran’s claims but chose to engage in

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extensive and costly litigation of Tran’s claims on their merits,” see Opp’n (dkt. 82) at 2-3,

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and that the arbitration agreement does not apply to AT&T Inc., see id. at 5-8.2 The Court

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has already rejected Tran’s second argument in connection with the Order Compelling

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Arbitration as to his co-plaintiffs, see Order Compelling Arb. at 4-5, and will not revisit that

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decision here. The Court also now rejects Tran’s first argument, that Defendants waived

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their right to arbitrate.

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“[A] party arguing waiver of an arbitration provision bears a heavy burden of proof,

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since waiver is not favored and any examination of whether the right to compel arbitration

United States District Court
For the Northern District of California

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has been waived must be conducted in light of the strong federal policy favoring enforcement

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of arbitration agreements.” Samson v. NAMA Holdings, LLC, 637 F.3d 915, 934 (9th Cir.

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2011) (citing Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir. 1986) (internal

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quotation marks omitted)). To establish waiver, Tran must demonstrate “(1) knowledge of

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an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3)

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prejudice to the party opposing arbitration from such inconsistent acts.” Id. He has not

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demonstrated any of the three elements.

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First, Defendants did not have knowledge of an existing right to compel arbitration,

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because they did not have evidence of an agreement between Tran and Defendants until Tran

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accepted ATTM’s terms of service in the course of renewing service contracts on October 7,

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2011 and October 8, 2011. This case is thus distinguishable from Van Ness Townhouses v.

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Mar Indus. Corp., 862 F.2d 754, 758-59 (9th Cir. 1988), in which there was no issue of

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whether the defendant could prove the existence of an arbitration agreement (defendant there

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argued that it had believed that an SEC rule prevented it from arbitrating).

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Second, Tran’s claims that Defendants acted inconsistently with that existing right by

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deliberately “wait[ing] over a year since the inception of this litigation” to seek arbitration

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and making a “conscious decision to continue to seek judicial judgment on the merits of the

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In a footnote, Tran notes that he also asserts “all of the generally applicable defenses previously
asserted by his co-Plaintiffs.” Id. at 1 n.1. The Court rejects these arguments for the same reasons
stated in the Order Compelling Arbitration as to Tran’s co-plaintiffs.
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arbitrable claims,” Opp’n at 3 (citing Van Ness Townhouses, 862 F.2d at 759), are simply

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inconsistent with the record. Defendants were clear from the outset that they might move to

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compel arbitration as to Tran “if he is later found to have an arbitration agreement.” See

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First Mot. at 1 n.1; Amended Mot. at 1 n.1; MTD at 3 n.3. It is also inconsistent with

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common sense that Defendants knew they could move to compel arbitration but instead

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chose to pursue a thorny and complicated motion to dismiss. Moreover, “it is well-

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established that a party does not waive its right to arbitrate merely by filing a motion to

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dismiss.” Sharif v. Wellness Int’l Network, Ltd., 376 F.3d 720, 726 (7th Cir. 2004); see

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also In re TFT-LCD (Flat Panel) Antitrust Litig., No. M 07-1827, C 11-58, 2011 WL

United States District Court
For the Northern District of California

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4017961, at *5 (N.D. Cal. Sept. 9, 2011) (“Nor is the fact that defendants filed motions to

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dismiss inconsistent with their right to arbitrate.”).

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Third, although Tran participated in this litigation for “nearly a year” before

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Defendants moved to arbitrate, see Opp’n at 4, the Court concludes that he has not been

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prejudiced by the delay. See Brown v. Dillard’s, Inc., 430 F.3d 1004, 1012 (9th Cir. 2005)

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(“Unsurprisingly, courts are reluctant to find prejudice to the plaintiff who has chosen to

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litigate, simply because the defendant litigated briefly (e.g., by filing a motion to dismiss or

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requesting limited discovery) before moving to compel arbitration).”); United Computer

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Sys., Inc. v. AT&T Corp., 298 F.3d 756, 765 (9th Cir. 2002) (having “incurred substantial

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costs” litigating matter in state and federal court was nonetheless insufficient to demonstrate

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prejudice where case “never got past the pleading stage.”).

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Accordingly, for the foregoing reasons, the Court GRANTS Defendants’ Motion to
Compel.
IT IS SO ORDERED.

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CHARLES R. BREYER
UNITED STATES DISTRICT JUDGE

Dated: February 21, 2012

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