Michael Savetsky v. Pre-Paid Legal Services, Inc.
Filing
48
ORDER denying 34 motion for leave to file a motion for reconsideration. (sclc2, COURT STAFF) (Filed on 4/3/2015)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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MICHAEL SAVETSKY, individually and ) Case No. 14-03514 SC
on behalf of all others similarly )
situated,
) ORDER DENYING MOTION FOR
) LEAVE TO FILE MOTION FOR
Plaintiff,
) RECONSIDERATION
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v.
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PRE-PAID LEGAL SERVICES, INC.
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d/b/a LegalShield,
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Defendant.
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For the Northern District of California
United States District Court
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I.
INTRODUCTION
Now before the Court is Defendant LegalShield's1 motion for
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reconsideration of the Court's order denying Defendant's motion to
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compel arbitration in this putative consumer class action.
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33 ("Order"), 34 ("Mot.").
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under Federal Rule of Civil Procedure 60(b), as discussed below the
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motion is properly considered under Civil Local Rule 7-9, which
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ECF No.
While LegalShield brings its motion
Defendant is actually named Pre-Paid Legal Services, Inc., but
does business as LegalShield. For simplicity the Court will refer
to Defendant as LegalShield.
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requires parties to obtain leave from the Court to file a motion
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for reconsideration.
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leave to file motion for reconsideration.
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further submissions were necessary, and issued a clerk's notice
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vacating the hearing date originally noticed with this motion
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pursuant to Civil Local Rule 7-9(d).
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Notice").
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for reconsideration is DENIED.
Thus the Court construes this as a motion for
The Court found no
ECF No. 36 ("Clerk's
For the reasons set forth below, leave to file a motion
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United States District Court
For the Northern District of California
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II.
BACKGROUND
This is a putative class action alleging that LegalShield, a
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company that provides pre-paid legal services, violated California
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consumer laws by automatically charging recurring payments to
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California consumers without sufficient consent or disclosure.
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Named Plaintiff Michael Savetsky purchased a pre-paid legal
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services plan on LegalShield's website.
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contract it formed with Savetsky requires he arbitrate his disputes
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against LegalShield individually and in arbitration.
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disagrees, arguing he never agreed (or "assented") to arbitration.
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The Court agreed with Savetsky and denied LegalShield's motion
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under the Federal Arbitration Act, 9 U.S.C. Section 4, to compel
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Savetsky to arbitrate.
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because Savetsky never manifested assent to the arbitration
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agreement either online (by simply purchasing the LegalShield
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subscription) or later on (after receiving a mailed copy of
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LegalShield's membership contract), he is not bound to its terms.
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In Defendant's view, the
Savetsky
In doing so, the Court concluded that
Now LegalShield asks the Court to reconsider that decision,
arguing that the Court did not consider relevant contract language
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and, regardless of that language, newly uncovered facts show that
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Savetsky did agree to arbitrate.
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III. LEGAL STANDARD
As a preliminary matter, LegalShield argues that this motion
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is governed by Rule 60(b) because, unlike Civil Local Rule 7-9
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(which only applies to "interlocutory, non-appealable orders") Rule
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60(b) applies to motions seeking "relief from final, appealable
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orders."
Mot. at 1, 7.
Because LegalShield may (and has, ECF No.
United States District Court
For the Northern District of California
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35 ("Notice of Appeal")) appeal as of right from the Court's order
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denying its motion to compel arbitration, LegalShield concludes the
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Court's order cannot have been interlocutory.
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(permitting appeals from orders "denying a petition under section 5
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of this title to order arbitration to proceed . . . .").
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See 9 U.S.C. § 16
This argument rests on the erroneous premise that if an order
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is appealable as of right it cannot be an interlocutory order.
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an interlocutory order is simply any order that does not dispose of
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a case, without regard to whether that order is appealable as of
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right.
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"by . . . statute, most jurisdictions allow some types of
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interlocutory orders . . . to be immediately appealed."
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result, the fact that an order may be appealed is not enough,
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standing alone to render it a final (rather than interlocutory)
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order, outside the scope of Civil Local Rule 7-9.
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v. Cottman Transmission Sys., LLC, No. C 08-03402 SI, 2009 WL
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330353, at *1 n.1 (N.D. Cal. Feb. 10, 2009) (citing Wright &
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Miller, Fed. Prac. & Proc. § 2651 n.6 (listing appealable
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interlocutory orders)) (finding that while an order compelling
See Black's Law Dictionary 1130 (8th ed. 2004).
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Yet
Indeed,
Id.
As a
See Bencharsky
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arbitration is appealable, "[i]t does not necessary follow,
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however, that an order compelling arbitration is not also an
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interlocutory order" covered by Civil Local Rule 7-9).
Moreover, "an order granting or denying a motion to compel
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arbitration is a final decision only if such an order was the full
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relief the parties sought."
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Cir. 1997).
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arbitration is clearly ancillary to Mr. Savetsky's California
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consumer law allegations against LegalShield.
Alcoa v. Beazer, 124 F.3d 551, 562 (3d
Here, the Court's order denying the motion to compel
Because Rule 60(b)
United States District Court
For the Northern District of California
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plainly only applies to final judgments or orders, a Rule 60(b)
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motion is clearly improper.
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the Court to "[o]n motion and just terms," "relieve a party . . .
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from a final judgment, order, or proceeding") (emphasis added); see
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also Santamarina v. Sears, Roebuck & Co., 466 F.3d 570, 571 (7th
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Cir. 2006) (Posner, J.) ("[Rule 60(b)], by its terms limited to
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'final' judgments or orders, is inapplicable to interlocutory
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orders."); Prudential Real Estate Affiliates, Inc. v. PPR Realty,
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Inc., 204 F.3d 867, 880 (9th Cir. 2000).
See Fed. R. Civ. P. 60(b) (allowing a
As a result, LegalShield's motion is DENIED to the extent it
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relies on Rule 60(b).
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or modify its order denying LegalShield's motion to compel
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arbitration rests on its inherent, discretionary power to
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reconsider or modify its interlocutory orders.
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Angeles, Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 885
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(9th Cir. 2001) (quotation omitted) ("As long as a district court
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has jurisdiction2 over the case, then it possesses the inherent
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Instead, the Court's authority to reconsider
See City of Los
Because the appeal of an order denying a motion to compel
arbitration is the appeal of an interlocutory order, the Court
retains jurisdiction to reconsider its previous orders and issue
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procedural power to reconsider, rescind, or modify an interlocutory
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order for cause seen by it to be sufficient.").
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Civil Local Rule 7-9 lays out a procedure by which a party
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may, after obtaining leave of the court, file a motion for
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reconsideration of an interlocutory order.
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moving party must "specifically show reasonable diligence in
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bringing the motion," as well as one of the following:
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United States District Court
For the Northern District of California
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Under that Rule, the
(1) That at the time of the motion for leave, a
material difference in fact or law exists from
that which was presented to the Court before
entry of the interlocutory order for which
reconsideration is sought. The party also must
show that in the exercise of reasonable
diligence
the
party
applying
for
reconsideration did not know such fact or law
at the time of the interlocutory order; or
(2) The emergence of new material facts or a
change of law occurring after the time of such
order; or
(3) A manifest failure by the Court to consider
material facts or dispositive legal arguments
which were presented to the Court before such
interlocutory order.
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Civ. L.R. 7-9(b)(1)-(3).
Furthermore, "[n]o motion for leave to
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file a motion for reconsideration may repeat any oral or written
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argument made by the applying party in support of or in opposition
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to the interlocutory order which the party now seeks to have
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reconsidered."
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reconsideration is committed to the sound discretion of the court."
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Navajo Nation v. Confederated Tribes & Bands of the Yakama Indian
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Nation, 331 F.3d 1041, 1046 (9th Cir. 2003).
Id. at (c).
"Whether or not to grant
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subsequent orders. See Britton v. Co-op Banking Grp., 916 F.2d
1405, 1411-12 (9th Cir. 1990).
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IV.
DISCUSSION
LegalShield's motion presses two points.
First, it argues
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that the Court overlooked certain language in LegalShield's
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membership contract (which was presented to the Court in the prior
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motion), and as a result mistakenly concluded that "a reasonable
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consumer reading the membership contract would have no way of
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knowing that failing to cancel his membership could be construed as
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assent to arbitrate all disputes with LegalShield."
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Second, it contends that newly discovered evidence shows that
Order at 13.
United States District Court
For the Northern District of California
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Savetsky had actual and inquiry notice of the membership contract's
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terms and questions whether Savetsky misled the Court in his
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declaration "in which he implies that he did not know a contract
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existed . . . ."
Mot. at 2.
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The Court will address these points in order.
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A.
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First, LegalShield points out that the membership contract
Assent and Contract Formation
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states in its first line that "[i]n consideration of your payment
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of the membership fee and your abiding by the terms and conditions
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of this contract and any attached endorsements, you will receive
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the herein contained benefits."
ECF No. 18-1 ("Pinson Decl.") Ex.
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C ("Membership Contract") at 2.
LegalShield contends that this
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language, coupled with the right (appearing six pages later in the
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contract) of members to cancel their membership with LegalShield,
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is "analytically indistinguishable from that in Carnival Cruise
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Lines, Inc. v. Shute, 499 U.S. 585, 587 (1991) in which ticket
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purchasers were told that acceptance of the ticket would be
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considered acceptance 'of all of [its] terms and conditions.'"
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Mot. at 10.
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In the prior order, the Court considered and rejected the
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argument that Savetsky's acceptance of the terms in the membership
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contract could be "'inferred from inaction in the face of a duty to
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act . . . and from retention of the benefit offered . . . .'"
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Order at 13 (quoting Golden Eagle Ins. Co. v. Foremost Ins. Co., 20
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Cal. App. 4th 1372, 1385-86 (Cal. Ct. App. 1993) (citations
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omitted).
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membership contract indicated that inaction by Savetsky would
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constitute assent to the terms of the contract."
As the Court previously stated, "nothing in the
Id.
In so doing,
United States District Court
For the Northern District of California
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the Court rejected precisely this argument, albeit without citation
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to the specific contract language to which LegalShield now points.
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Given that LegalShield did not point to this language in its
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earlier motion, and the Court categorically rejected the argument
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that the terms of the membership contract communicated that
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Savetsky could assent to terms by failing to cancel the agreement,
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this does not constitute a "manifest failure by the Court to
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consider material facts or dispositive legal arguments."
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7-9(b)(2).
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motion for reconsideration on this point is DENIED.
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Civ. L.R.
As a result, LegalShield's motion for leave to file a
Moreover, even if the Court were to grant leave to file a
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motion for reconsideration on this issue, LegalShield's arguments
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are unavailing.
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to a reasonable consumer both that terms are being presented and
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that they can be adopted through the conduct that the offeror
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alleges constitutes assent."
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F.3d 110, 123 (2d Cir. 2012) (internal quotation marks and
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alterations omitted); see also DeFontes v. Dell, Inc., 984 A.2d
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1061, 1071 (R.I. 2009) ("This language certainly informed
This contract language simply does not "make clear
Schnabel v. Trilegiant Corp., 697
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plaintiffs that defendants intended to bind them to heretofore
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undisclosed terms and conditions, but it did not advise them of the
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period beyond which they will have indicated their assent to those
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terms.").
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argument it would not change the Court's conclusion.
As a result, even if the Court were to consider this
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Similarly, LegalShield's arguments about actual or inquiry
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notice are simply improper attempts to relitigate the motion to
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compel arbitration.
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had actual or inquiry notice of the membership contract based on
The Court rejected the argument that Savetsky
United States District Court
For the Northern District of California
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LegalShield's contracting process.
LegalShield's new arguments
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were not presented to the Court on the prior motion to compel
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arbitration, and thus the Court could not have "manifest[ly]
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fail[ed] . . . to consider" them.
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(requiring a manifest failure to consider legal arguments "which
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were presented to the Court before" its prior order); see also In
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re Cathode Ray Tube (CRT) Antitrust Litig., No. 07-cv-5944, 2014 WL
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4446294, at *6 (N.D. Cal. Sept. 8, 2014) (declining to consider
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factual arguments not presented at the time of the earlier order).
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Thus, LegalShield's motion for leave to file a motion for
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reconsideration on this point is also DENIED.
See Civ. L.R. 7-9(b)(3)
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B.
New Evidence
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Finally, LegalShield argues that newly-discovered evidence
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shows (1) that Savetsky's declaration was "misleading," and "gave
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the Court a false picture of Plaintiff's actual or inquiry notice
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about his contracts . . . ," and (2) that Savetsky further assented
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to the contract by seeking to maintain his pre-paid legal services
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subscription through LegalShield even after filing suit.
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2.
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Mot. at
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When seeking reconsideration based on newly-discovered facts
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that "material[ly] differ[] . . . from that which was presented to
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the Court before entry of the" prior order, the party seeking
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reconsideration must show that "in the exercise of reasonable
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diligence the party applying for reconsideration did not know such
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fact[s] . . . at the time of the" prior order.
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9(b)(1).
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diligence" in its submissions aside from conclusorily stating the
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standard is satisfied.
Civ. L.R. 7-
LegalShield makes no attempt to show "reasonable
Mot. at 1 ("LegalShield has exercised
United States District Court
For the Northern District of California
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'reasonable diligence' in bringing this Motion . . . .").
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LegalShield has not carried its burden of showing that in the
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exercise of reasonable diligence it did not know of these facts at
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the time of the prior order, the motion is DENIED.
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Because
Nonetheless, the Court pauses to address LegalShield's
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accusation that Savetsky misled or presented a false picture to the
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Court in his prior declaration.
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declaration the Court finds no support for LegalShield's conclusion
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that the declaration was false or misleading.
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Decl.").
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to, paragraphs 11 and 16, are perfectly consistent with
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LegalShield's subsequent discoveries (1) that Savetsky sent
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LegalShield an email months after the subscription process
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described in his declaration asking for "a copy of the contracts I
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signed" or (2) because of the process of entering into a different
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agreement (containing an arbitration clause) with LegalShield,
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Savetsky knew about the membership contract and its terms.
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contrary, paragraph 11 describes Savetsky's enrollment process, and
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paragraph 16 describes his receipt of a membership booklet "the
After reviewing Savetsky's
ECF 24-1 ("Savetsky
On the contrary, the two paragraphs LegalShield points
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On the
that he did not read or retain the documents.
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Neither of these statements appears to be untrue or even misleading
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in light of the other facts LegalShield has discovered, because
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Savetsky's declaration simply describes the process by which
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Savetsky purchased his LegalShield membership without discussing
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the previous contract he signed with LegalShield or his after the
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fact email.
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accusations of fraud or misleading the Court, particularly in
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United States District Court
last 10 pages of which were a legal services contract" and states
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For the Northern District of California
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declarations signed under penalty of perjury, very seriously.
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the future, counsel should refrain from making such insinuations
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when they lack a basis in fact.
Id. at ¶¶ 11, 16.
The Court reminds the parties that it takes
In
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V.
CONCLUSION
For the reasons set forth above, the motion for leave to file
a motion for reconsideration is DENIED.
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IT IS SO ORDERED.
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Dated: April 3, 2015
UNITED STATES DISTRICT JUDGE
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