Roberts et al v. AT&T Mobility LLC

Filing 50

ORDER by Judge Edward M. Chen Granting 25 Defendant's Motion to Compel Arbitration; and Staying Proceedings. (emcsec, COURT STAFF) (Filed on 2/29/2016)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 MARCUS A. ROBERTS, et al., 7 Plaintiffs, 8 v. 9 10 AT&T MOBILITY LLC, 11 Defendant. ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION; AND STAYING PROCEEDINGS Docket No. 25 12 For the Northern District of California United States District Court Case No. 15-cv-03418-EMC Plaintiffs Marcus A. Roberts, Kenneth A. Chewey, Ashley M. Chewey, and James Krenn 13 14 (collectively, “Plaintiffs”) have filed a class action against Defendant AT&T Mobility LLC 15 (“AT&T”), asserting statutory, tort, and warranty claims based on AT&T‟s “deceptive and unfair 16 trade practice of marketing its wireless service plans as being „unlimited,‟ when in fact those plans 17 are subject to a number of limiting conditions [in particular, throttling1] that either are not 18 disclosed or inadequately disclosed to consumers.” FAC ¶ 1. Currently pending before the Court 19 is AT&T‟s motion to compel arbitration. AT&T‟s motion relies largely on the fact that the 20 Supreme Court upheld AT&T‟s arbitration provision in AT&T Mobility LLC v. Concepcion, 563 21 U.S. 333 (2011) (holding that arbitration agreement should be enforced under the Federal 22 Arbitration Act (“FAA”); California‟s Discover Bank rule – which deemed class waivers in 23 consumer arbitration agreements substantively unconscionable – was preempted by the FAA). In 24 response, Plaintiffs argue that the Concepcion Court never addressed the specific issues now 25 raised – i.e., that enforcement of the arbitration agreements would violate their rights as protected 26 27 28 1 Throttling is the intentional slowing of customers‟ data speed once they reach certain data usage thresholds. See Mot. at 2. 1 by the Petition Clause of the First Amendment. Having considered the parties‟ briefs and accompanying submissions, as well as the oral 2 3 argument of counsel, the Court hereby GRANTS AT&T‟s motion to compel arbitration. The 4 Court further stays this lawsuit pending arbitration. See 9 U.S.C. § 3. I. 5 DISCUSSION The parties do not dispute that Plaintiffs entered into contracts with AT&T in order to 6 7 obtain wireless service. The parties also do not dispute that each of the agreements contained an 8 arbitration provision. In its motion, AT&T contends that the Court should enforce the arbitration agreements and 9 should not be compelled: (1) because, if this Court were to compel arbitration, that would be state 12 For the Northern District of California compel arbitration. In response, Plaintiffs essentially raise three arguments as to why arbitration 11 United States District Court 10 action that would violate their First Amendment rights – more specifically, the right to petition a 13 court for a redress of grievances2; (2) because, even though the arbitration provision allows a 14 claim to be brought in small claims court, that court is not an adequate forum and therefore their 15 First Amendment rights have still been abridged; and (3) because the FAA must be construed as 16 not applying to consumer actions in order to avoid a constitutional problem (i.e., the constitutional 17 avoidance doctrine). Each of the above arguments turns on the applicability of the First Amendment. But, as 18 19 both parties recognize, in order for Plaintiffs to have a First Amendment claim, they must first 20 show state action. See Grogan v. Blooming Grove Volunteer Ambulance Corps, 768 F.3d 259, 21 263 (2d Cir. 2014) (“Because the United States Constitution regulates only the Government, not 22 private parties, a litigant like Grogan who alleges that her constitutional rights have been violated 23 must first establish that the challenged conduct constitutes state action.”) (internal quotation marks 24 2 25 26 27 28 See U.S. Const., amend. 1 (providing that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances”); see also Borough of Duryea v. Guarnieri, 131 S. Ct. 2488, 2494 (2011) (stating that “the Petition Clause protects the right of individuals to appeal to courts and other forums established by the government for resolution of legal disputes[;] „[t]he right of access to courts for redress of wrongs is an aspect of the First Amendment right to petition the government‟”). 2 1 omitted)); cf. Hudgens v. NLRB, 424 U.S. 507, 513 (1976) (“It is, of course, a commonplace that 2 the constitutional guarantee of free speech is a guarantee only against abridgment by government, 3 federal or state.”). Plaintiffs acknowledge that the arbitration agreements are contracts between 4 private actors. Nevertheless, they assert, there would still be state action in the instant case upon 5 this Court‟s enforcement of that private agreement. 6 A. Judicial Enforcement As a starting point, the Court finds no merit to Plaintiffs‟ assertion that the mere fact of 7 position in Ohno v. Yasuma, 723 F.3d 984 (9th Cir. 2013). More specifically, in Ohno, the Ninth 10 Circuit rejected the defendant‟s contention that judicial enforcement of a foreign-country money 11 judgment against it – through application of California‟s Uniform Foreign Country Money 12 For the Northern District of California judicial enforcement automatically establishes state action. The Ninth Circuit rejected that 9 United States District Court 8 Judgments Recognition Act – “constitute[d] domestic state action triggering constitutional 13 scrutiny.”3 Id. at 986. The court stated: 14 [T]here is no doubt that the district court‟s decision in this case applying California‟s Uniform Act – legislation that is itself the result of governmental action – constitutes state action for purposes of constitutional scrutiny. But that truism does not resolve our question, which is: Should the substance of the underlying Japanese monetary damages judgment, resulting from a lawsuit in Japan between two private parties, be ascribed to the district court‟s enforcement of the judgment under the Uniform Act and so subjected to constitutional scrutiny? 15 16 17 18 19 20 Id. at 994 (emphasis in original). The Ohno court further explained: 21 22 25 Recognizing and enforcing a foreign-country judgment is distinct from rendering that judgment in the first place. The district court, in giving effect to the judgment issued in Japan, has not participated in the action the [defendant] claims is unconstitutional – namely, judging the truth or falsity of the [defendant‟s] religious teachings or imposing liability for the consequences of religious expression. 26 Id. at 993 (emphasis in original and added). “[T]he source of the alleged constitutional harm is . . . 23 24 27 3 28 The defendant argued that “the Religion Clauses [of the First Amendment] would bar a court in the United States from rendering the same judgment in the first instance.” Ohno, 723 F.3d at 992. 3 1 Japanese tort law, created and enforced through Japanese governmental entities,” and so “the 2 claimed constitutional deprivation cannot be traced to a right, privilege, or rule of conduct 3 imposed by a domestic governmental entity or individual.” Id. at 994. The act of enforcement of 4 the Japanese judgment by the U.S. court did not constitute state action causing a constitutional 5 deprivation. To the extent Plaintiffs have relied on Shelley v. Kraemer, 334 U.S. 1 (1948),4 see Mot. at 6 3-4, to support the position that judicial enforcement itself provides the requisite state action 8 necessary to establish a constitutional claim, the Court is not persuaded. In Ohno, the Ninth 9 Circuit made clear that “Shelley‟s attribution of state action to judicial enforcement has generally 10 been confined to the context of discrimination claims under the Equal Protection Clause.” Id. at 11 998. Indeed, in discussing the reach of Shelley, the Ohno court pointed out that, “[i]n the 12 For the Northern District of California United States District Court 7 13 context of First Amendment challenges to speech-restrictive provisions in private agreements or 14 contracts, domestic judicial enforcement of terms that could not be enacted by the government has 15 not ordinarily been considered state action.” Id. (emphasis added.) In addition, and more on point 16 to the case at bar, the Ninth Circuit stated that, “in the context of judicial confirmation of arbitral 17 awards, . . . [courts have] held that „mere confirmation of a private arbitration award by a district 18 court is insufficient state action to trigger the application of the Due Process Clause.‟” Id. at 999. 19 While the Ninth Circuit did state that it did “not mean to adopt or sanction any of [these] cases,” 20 id. at 999 n.17, its reference to the cases – particularly the latter group – is still telling. Furthermore, a Ninth Circuit decision that pre-dates Ohno is in strong accord with the 21 22 above cases. More specifically, in Duffield v. Robertson Stephens & Co., 144 F.3d 1182 (9th Cir. 23 1998), overruled on other grounds, EEOC v. Luce, Forward, Hamilton & Scripps, 345 F.3d 742 24 (9th Cir. 2003), the plaintiff – a broker-dealer in the securities industry – sued her employer for 25 4 26 27 28 In Shelley, the Supreme Court noted that racially restrictive covenants applicable to real properties were, in and of themselves, private agreements but that, once the agreements were judicially enforced by state courts, there was the requisite state action to give rise to a constitutional claim. See Shelley, 334 U.S. at 19 (stating that, “but for the active intervention of the state courts, supported by the full panoply of state power, petitioners would have been free to occupy the properties in question without restraint”). 4 1 employment discrimination. The plaintiff had signed a securities industry form that included an 2 arbitration provision. The form also required the plaintiff to abide by the rules of the New York 3 Stock Exchange (“NYSE”) and National Association of Securities Dealers (“NASD”), and each of 4 these organizations had a rule that required arbitration. The plaintiff argued, nevertheless, that she 5 could not be compelled to arbitration because “the arbitration agreement imposes an 6 unconstitutional condition of employment,” requiring her “to forfeit her Fifth Amendment right to 7 due process, her Seventh Amendment right to a jury trial, and her right to an Article III judicial 8 forum.” Id. at 1200. According to the district court, “the essential prerequisite of state action was 9 lacking” for the due process claim, and the Ninth Circuit agreed, stating “no state action is present 10 in simply enforcing that agreement.” Id. at 1201. Plaintiffs have pointed to no authority holding that judicial enforcement, particularly of an 12 For the Northern District of California United States District Court 11 arbitration award, constitutes state action.5 In fact, as the Ohno court noted, the authority is to the 13 contrary. For example, in Davis v. Prudential Securities, Inc., 59 F.3d 1186 (11th Cir. 1995), the 14 defendant appealed to the Eleventh Circuit after the district court confirmed the arbitration panel‟s 15 award of punitive damages. The defendant argued, inter alia, that the punitive damages award 16 violated its due process rights, more specifically, “because arbitration lacks the procedural 17 protections and meaningful judicial review required for the imposition of punitive damages.” Id. 18 at 1190. The Eleventh Circuit rejected the argument. It noted first that “the state action element 19 of a due process claim is absent in private arbitration cases” because private arbitration is by itself 20 “a voluntary contractual agreement of the parties.” Id. at 1191. As to the defendant‟s assertion 21 that the district court‟s confirmation of the punitive damages award provided the requisite state 22 action, the court disagreed. The Eleventh Circuit echoed the Ninth Circuit‟s analysis in Ohno that 23 the defendant was offering a “Shelley v. Kraemer theory that a court‟s enforcement of a private 24 contract constitutes state action” but “[t]he holding of Shelley . . . has not been extended beyond 25 26 27 28 5 To the extent Plaintiffs have suggested that enforcement here is the equivalent of or comparable to a court-ordered injunction, the Court does not agree. The enforcement of the arbitration agreements would not “require[] the [C]ourt to take such an active role in, or to exercise sustained supervision of, the [arbitration agreements or even the arbitrations themselves] that it becomes appropriate to review the [C]ourt‟s activities as governmental actions.” Ohno, 723 F.3d at 1000. 5 1 the context of race discrimination.” Id. See also Katz v. Cellco P’ship, No. 12 CV 9193 (VB), 2 2013 U.S. Dist. LEXIS 176784, at *10, 17 (S.D.N.Y. Dec. 12, 2013) (in a case where plaintiff 3 argued that “application of the FAA to his state law claims violates Article III of the Constitution 4 – both the structural protections of our tripartite system of government (i.e., separation of powers) 5 and his personal right to have his claims adjudicated before an independent Article III judge,” 6 agreeing with defendant that “there is insufficient state action for plaintiff to maintain an action 7 under Article III”; stating that “the fact that Verizon sought a court order compelling arbitration 8 does not transform enforcement of the parties‟ arbitration agreement into state action”), vacated in 9 part on other grounds, No. 14-138, 2015 U.S. App. LEXIS 13055 (2d Cir. July 28, 2015); Smith v. (stating that “[w]e do not believe that our limited power to conduct an after-the-fact review of an 12 For the Northern District of California Argenbright, Inc., No. 99 C 7368, 1999 U.S. Dist. LEXIS 19827, at *8 (N.D. Ill. Dec. 27, 1999) 11 United States District Court 10 arbitration panel for bias constitutes the requisite governmental action to implicate Batson”); 13 Cremin v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 957 F. Supp. 1460, 1468 (N.D. Ill. 1997) 14 (rejecting contention that defendant was “using a government official, i.e., this Court, to enforce 15 the arbitration rules that will inevitably deprive her of due process”; “refus[ing] to hold that every 16 time a Court enforces a private arrangement it potentially violates one party‟s constitutional 17 rights”); United States v. Am. Soc’y of Composers, Authors & Publ’rs, 708 F. Supp. 95, 97 18 (S.D.N.Y. 1989) (stating that “[t]he mere approval by this Court of the use of arbitration did not 19 create any state action[;] [i]ndeed, under [party‟s] strained interpretation . . . , all arbitrations could 20 be subject to due process limitations through the simple act of appealing the arbitrator‟s decisions 21 to the court system”). At bottom, “[government] permission of a private choice cannot support a 22 finding of state action.” Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 54 (1999). 23 Finally, the Court takes note that, in many private contracts, there are provisions that 24 arguably affect access to the courts or otherwise implicate significant rights, such as choice-of- 25 venue, choice-of-law, statute-of-limitations, and limitations-on-damages provisions. Although 26 these provisions may be subject to restrictions imposed by statutory and/or common law (e.g., the 27 doctrine of unconscionability, violation of public policy), courts have not held that judicial 28 enforcement of these provisions, particularly as found in contracts between private parties, raises 6 1 constitutional claims. See, e.g., Soltani v. W. & S. Life Ins. Co., 258 F.3d 1038, 1045 (9th Cir. 2 2001) (holding that a six-month statute-of-limitations provision was enforceable); Severn Peanut 3 Co. v. Indus. Fumigant Co., 807 F.3d 88, 92 (4th Cir. 2015) (rejecting assertion that consequential 4 damages exclusion in contract was not enforceable). 5 B. The FAA and Its Interpretation 6 In their papers, Plaintiffs argued that, nevertheless, there is state action based on 7 Congress‟s enactment of the FAA. See Opp‟n at 4. This argument is similar to that rejected by 8 the Ninth Circuit in Duffield. There, the plaintiff argued that “state action is present because 9 „federal law requires all broker-dealers to register with a national securities exchange (i.e., the rules – as a condition of their continued employment.‟” Id. at 1200. The Ninth Circuit rejected 12 For the Northern District of California NYSE or NASD), and to abide by the rules of that exchange – including its mandatory arbitration 11 United States District Court 10 the argument, stating that 13 14 15 16 17 18 19 [t]he rules of NASD and the NYSE are not fairly attributable to the government unless they carry the force of federal law. And prior to 1993, no federal statute or regulation required [the plaintiff] to register with the securities exchanges, much less to sign Form U-4 or to arbitrate employment disputes. Thus, when [the plaintiff] signed her Form U-4 in 1988 and thereby waived her rights to litigate employment-related disputes in a judicial forum, she did not do so because of any state action. Id. at 1201 (emphasis added). The court acknowledged that, in 1993 – two years before the plaintiff‟s employer actually 20 invoked the arbitration agreement – the Securities and Exchange Commission (“SEC”) had 21 “adopted a regulation that required all broker-dealers to be registered with at least one of the 22 securities organizations of which [the plaintiff‟s employer] was a member – i.e., the NASD and 23 the NYSE – before effecting any securities transaction.” Id. That “current requirement that new 24 employees register with a national securities exchange „constitutes government action of the purest 25 sort.‟” Id. Nevertheless, the Ninth Circuit was not persuaded by the plaintiff‟s argument that this 26 new regulation provided the requisite state action. The court noted: 27 28 State action can be present . . . only to the extent that there is “a sufficiently close nexus between the State and the challenged 7 action”; the action that [the plaintiff] challenges in her constitutional claims is the requirement that she waive her right to litigate employment-related disputes. Since agreements to arbitrate are “valid, irrevocable, and enforceable” to the same extent as any other contract, it is immaterial that years after [the plaintiff] signed her Form U-4 containing the arbitration provision, federal law required other employees like her to register with securities exchanges or even that it compelled her to remain registered. No federal law required [the plaintiff] to waive her right to litigate employmentrelated disputes by signing the Form U-4 in 1988, and no state action is present in simply enforcing that agreement. Insofar as [the plaintiff] argues that the “challenged action” is the requirement that she actually arbitrate her lawsuit, that requirement is found in her private contract, not in federal law. 1 2 3 4 5 6 7 8 Id. at 1201 (emphasis in original and added). The instant case is similar to Duffield in that, here, while Congress did enact the FAA, the 9 Duffield, 144 F.3d at 1201 (noting that “[s]tate action can be present . . . only to the extent that 12 For the Northern District of California mere enactment of the statute did not cause the deprivation of their constitutional rights. See 11 United States District Court 10 there is „a sufficiently close nexus between the State and the challenged action‟”) (emphasis in 13 original). In any event, the Court takes note that, at the hearing, Plaintiffs conceded that they did 14 15 actually not have a problem with passage of the FAA per se. Rather, Plaintiffs took the position 16 that it was judicial interpretation of the FAA that provided the requisite state action.6 In particular, 17 Plaintiffs argued that, if this Court were to compel arbitration, it would be interpreting the FAA as 18 applying to consumer adhesion contracts (and not just contracts between businessmen or 19 merchants), and this interpretation would be the source of Plaintiffs‟ constitutional injury. But this 20 asserted constitutional injury is predicated on the contract being one of adhesion – i.e., where the 21 consumer did not knowingly and/or voluntarily agree to arbitration and forfeits access to the 22 courts. Thus, the source of the alleged constitutional deprivation when a consumer is involved is 23 6 24 25 26 27 28 The Court acknowledges that, at the hearing, Plaintiffs emphasized that the enactment of the FAA by Congress was significant in that, prior to that time, arbitration agreements were typically not enforced, not only with respect to consumer contracts but also with respect to commercial contracts. Cf. Concepcion, 563 U.S. at 339 (noting that “[t]he FAA was enacted in 1925 in response to widespread judicial hostility to arbitration agreements”). However, the Court does not understand Plaintiffs to be taking the position that the enactment of the FAA, in and of itself, is a constitutional problem. Furthermore, it would be inconsistent for Plaintiffs to take that position given that, as discussed below, Plaintiffs‟ main contention is that the FAA should be considered unconstitutional only with respect to its application vis-à-vis consumer contracts, and not, e.g., commercial contracts. 8 1 not the judicial interpretation of the FAA; rather, the source is AT&T‟s private conduct in 2 purportedly forcing arbitration on an unwitting consumer. See Am. Mfrs., 526 U.S. at 50 (asking 3 whether “the allegedly unconstitutional conduct [is] fairly attributable to the State”) (emphasis 4 omitted). As the court held in Ohno, a court giving effect to a private contract does not 5 constitutionalize the contract. See Ohno, 723 F.3d at 993 (stating that “[t]he district court, in 6 giving effect to the judgment issued in Japan, has not participated in the action the [defendant] 7 claims is unconstitutional – namely, judging the truth or falsity of the [defendant‟s] religious 8 teachings or imposing liability for the consequences of religious expression”). At the hearing, Plaintiffs protested that, if the Court were to compel arbitration, then it 9 employ pre-dispute arbitration clauses, and this interpretation would also be the source of 12 For the Northern District of California would be interpreting the FAA as heavily favoring arbitration and encouraging private parties to 11 United States District Court 10 Plaintiffs‟ constitutional injury. Because this specific argument was not raised in Plaintiffs‟ 13 papers, the Court could disregard it as waived. But even if the Court were to consider the merits, Plaintiffs would fare no better. 14 15 Plaintiffs‟ argument rests on authority holding that 16 “[a] State normally can be held responsible for a private decision only when it has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must be deemed that of the State.‟ Mere approval or acquiescence in the initiatives or a private party is not sufficient to justify holding the State responsible for these initiatives.” 17 18 19 20 Duffield, 144 F.3d at 1200 (quoting Lugar v. Edmondson Oil Co., 457 U.S. 922, 936 (1982)7). In Duffield itself, the court held that the SEC did not sufficiently influence private conduct 21 22 because it had not: 23 moved beyond mere approval of private action into the realm of “encouragement, endorsement, and participation” of that action . . . with regard to the NASD‟s and NYSE‟s compulsory arbitration requirements. “To begin with the obvious, there is nothing in the [Securities Exchange Act of 1934] and there is no Commission rule 24 25 26 27 28 7 Lugar identifies two additional state action tests, i.e., as to whether the actions of private entities are fairly attributable to the state. See Duffield, 144 F.3d at 1200. Plaintiffs have not invoked either of these tests, relying instead only on the encouragement test. 9 or regulation that specifies arbitration as the favored means of resolving employer-employee disputes.” . . . This puts the role of the SEC in a critically different light than that of the Federal Railroad Administration in Skinner, which drafted regulations making plain its “strong preference for [drug] testing,” explicitly conferred on railroads the authority to conduct such tests, required railroads and employees to perform such tests, and codified its right to receive certain biological samples. 1 2 3 4 5 6 Id. at 1202 (emphasis added).8 Although Plaintiffs‟ position in the instant case has some force – factually, there is a 7 8 stronger case for encouragement here compared to, e.g., Duffield, 114 F.3d at 1202 (there was no 9 SEC rule or regulation that “„specifies arbitration as the favored means of resolving employer- 10 employee disputes‟”) (emphasis added) – it is not legally persuasive. First, the FAA on its face indicates that an arbitration agreement – like any other 12 For the Northern District of California United States District Court 11 agreement – may be challenged on “such grounds as exist at law or in equity for the revocation of 13 any contract.” 9 U.S.C. § 2. It purports to put arbitration agreements on equal, not more 14 favorable, ground with other contracts. Second, the Supreme Court‟s interpretation of the FAA, while acknowledging a general 15 16 policy favoring of arbitration, is expressly predicated on the stated purpose of putting arbitration 17 agreements on equal footing with all other contracts and preventing the disfavorable treatment of 18 such agreements. As explained by the Supreme Court in Concepcion: 19 The FAA was enacted in 1925 in response to widespread judicial hostility to arbitration agreements. Section 2, the “primary substantive provision of the Act,” provides, in relevant part, as follows: 20 21 “A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save 22 23 24 25 8 26 27 28 In Duffield, the plaintiff also invoked state action based on a completely different test – i.e., “„the private party has exercised powers that are traditionally the exclusive prerogative of the State.‟” Duffield, 144 F.3d at 1200. The Ninth Circuit explained that argument lacked merit because “[w]e have long held that, since dispute resolution is not an „exclusive‟ governmental function, neither private arbitration nor the judicial act of enforcing it under the FAA constitutes state action.” Id. Plaintiffs have not invoked the government function state action test in the instant case. 10 upon such grounds as exist at law or in equity for the revocation of any contract.” 1 We have described this provision as reflecting both a “liberal federal policy favoring arbitration,” and the “fundamental principle that arbitration is a matter of contract.” In line with these principles, courts must place arbitration agreements on an equal footing with other contracts, and enforce them according to their terms. 2 3 4 5 U.S. 576, 581 (2008) (stating that “Congress enacted the FAA to replace judicial indisposition to 8 arbitration with a „national policy favoring [it] and plac[ing] arbitration agreements on equal 9 footing with all other contracts‟”) (emphasis added); EEOC v. Waffle House, Inc., 534 U.S. 279, 10 294 (2002) (stating that, “[b]ecause the FAA is „at bottom a policy guaranteeing the enforcement 11 of private contractual arrangements,‟ we look first to whether the parties agreed to arbitrate a 12 For the Northern District of California Concepcion, 563 U.S. at 339 (emphasis added); see also Hall St. Assocs., L.L.C. v. Mattel, Ic., 552 7 United States District Court 6 dispute, not to general policy goals, to determine the scope of the agreement”). The problem as identified in Concepcion was that arbitration agreements were being 13 14 singled out simply because arbitration was the subject matter of the agreement. See Concepcion, 15 563 U.S. at 339 (stating that the “savings clause” in § 2 of the FAA “permits agreements to 16 arbitrate to be invalidated by „generally applicable contract defenses, such as fraud, duress, or 17 unconscionability,‟ but not by defenses that apply only to arbitration or that derive their meaning 18 from the fact that an agreement to arbitrate is at issue”). While it may be argued (as Plaintiffs 19 have here) that, in safeguarding the enforceability of arbitration clauses against even well- 20 established defenses based, e.g., on unconscionability and countervailing policy concerns 21 embodied in other laws and statutes (see, e.g., id. at 357 (Breyer, J., dissenting); Am. Express Co. 22 v. Italian Colors Rest., 133 S. Ct. 2304, 2313 (2013) (Kagan, J., dissenting)), the Supreme Court‟s 23 interpretation of the FAA has swung the pendulum to the point of actually encouraging businesses 24 to impose pre-dispute arbitration clauses, no court has yet to hold or suggest there is sufficient 25 encouragement or coercion by virtue of the FAA to implicate state action under Lugar.9 Whatever 26 27 28 9 Moreover, it is worth noting that Plaintiffs‟ argument here would apply not just to consumer contracts but commercial contracts as well. Accordingly, Plaintiffs‟ sweeping argument would constitutionalize enforcement of all arbitration agreements made possible by the FAA. 11 1 encouragement the FAA gives to the implementation of pre-dispute arbitration clauses, it falls 2 short of government conduct in cases where state action has been found. Cf. Skinner v. Railway 3 Labor Executives’ Ass’n, 489 U.S. 602, 615 (1989) (concluding that state action for purposes of 4 the Fourth Amendment was present because the “specific features of the regulations [imposed by 5 the Federal Railroad Administration] did more than adopt a passive position toward the underlying 6 private conduct”; “[t]he Government has removed all legal barriers to the [drug] testing authorized 7 by Subpart D, . . . has made plain not only its strong preference for testing, but also its desire to 8 share the fruits of such intrusions[,] . . . and has mandated that the railroads not bargain away the 9 authority to perform tests granted by Subpart D”); Howerton v. Gabica, 708 F.2d 380, 383 (9th there has been an actual “taking” of property by a police officer, but also when the officer assists 12 For the Northern District of California Cir. 1983) (noting that “„[t]here may be a deprivation within the meaning of § 1983 not only when 11 United States District Court 10 in effectuating a repossession over the objection of a debtor or so intimidates a debtor as to cause 13 him to refrain from exercising his legal right to resist a repossession‟”). 14 Finally, the Court notes that, at the hearing, it asked Plaintiffs for their best case to support 15 their claim of state action. Plaintiffs cited Denver Area Educational Telecommunications 16 Consortium, Inc. v. FCC, 518 U.S. 727 (1996) (addressing plaintiffs‟ challenge on constitutional 17 grounds to three provisions in the Cable Television Consumer Protection and Competition Act of 18 1992). However, Denver Area is of little support to Plaintiffs‟ position. Denver Area simply 19 stated the unremarkable proposition that the enactment of a statute by Congress constitutes state 20 action. See id. at 737 (noting that “petitioners attack (as „abridging . . . speech‟) a congressional 21 statute – which, by definition, is an Act of „Congress‟” – and therefore state action). But here 22 Plaintiffs have, as noted above, disavowed a challenge to the enactment of the FAA. Rather, their 23 focus is on the judicial interpretation of the statute, and that particular argument lacks merit for the 24 reasons discussed above. 25 26 II. CONCLUSION Because there is no state action in the instant case, Plaintiffs lack a viable First 27 Amendment challenge to the arbitration agreements. As Plaintiffs have not challenged the 28 arbitration agreements on any other bases, the Court grants AT&T‟s motion to compel arbitration. 12 1 Furthermore, as requested by AT&T, the Court stays this action pending the resolution of the 2 arbitration. See 9 U.S.C. § 3. 3 This order disposes of Docket No. 25. 4 5 IT IS SO ORDERED. 6 7 8 9 Dated: February 29, 2016 ______________________________________ EDWARD M. CHEN United States District Judge 10 12 For the Northern District of California United States District Court 11 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13

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