McArdle v. AT&T Mobility LLC et al

Filing 257


Download PDF
1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 5 6 7 8 9 United States District Court For the Northern District of California 10 11 12 STEVEN MCARDLE, an individual, on behalf of himself, the general public and those similarly situated, Plaintiff, v. No. C 09-1117 CW ORDER GRANTING DEFENDANTS’ RENEWED MOTION TO COMPEL ARBITRATION AND STAY ACTION AT&T MOBILITY LLC; NEW CINGULAR WIRELESS PCS LLC; and NEW CINGULAR WIRELESS SERVICES, INC., Defendants. _____________ ___________________/ 13 Defendants AT&T Mobility LLC, New Cingular Wireless PCS LLC, 14 and New Cingular Wireless Services, Inc. (collectively, ATTM) have 15 filed a renewed motion to compel arbitration of Plaintiff Steven 16 McArdle’s claims.1 Plaintiff opposes the motion. Having 17 considered the parties’ papers and oral argument on the matter, 18 the Court GRANTS Defendants’ motion. 19 BACKGROUND 20 ATTM is a cellular telephone service provider. It owns New 21 Cingular Wireless PCS LLC and New Cingular Wireless Services, Inc. 22 McArdle is a customer of ATTM who asserts claims, on behalf of 23 himself and all others similarly situated, under California law 24 25 26 1 27 28 In a separately filed order, the Court granted Defendants’ unopposed motion to compel arbitration of Kenneth Thelian’s claims in the related case, Thelian v. AT&T Mobility LLC, No. 10-3440. 1 for false advertising, unfair business practices, fraud and 2 violation of the Consumers Legal Remedies Act. 3 McArdle’s service agreement with ATTM contains a provision 4 that requires the parties to the agreement to arbitrate “all 5 disputes and claims” between them. 6 customers from pursuing claims in arbitration on behalf of a class 7 of individuals. 8 on class arbitration is not severable from the rest of the 9 arbitration provision. United States District Court For the Northern District of California 10 The provision prohibits ATTM’s According to its express terms, the prohibition Relying upon Discover Bank v. Superior Court, 36 Cal. 4th 148 11 (2005), and Shroyer v. New Cingular Wireless Services, Inc., 498 12 F.3d 976 (9th Cir. 2007), the Court entered an order dated 13 September 14, 2009, finding that the class arbitration waiver was 14 unconscionable. 15 was expressly not severable from the other portions of the 16 arbitration provision, the Court found that the arbitration 17 provision as a whole was not enforceable. 18 Moreover, because the class arbitration provision ATTM filed an interlocutory appeal of the Court’s order and, 19 when the United States Supreme Court granted certiorari in AT&T 20 Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), this Court 21 stayed the case pending the Supreme Court’s decision in that case. 22 Following the April 27, 2011 decision in Concepcion, in which 23 the Supreme Court held that the Discover Bank rule was preempted 24 by the Federal Arbitration Act, the Ninth Circuit reversed and 25 remanded. 26 18517 (9th Cir.). 27 “to consider in the first instance McArdle’s arguments based on 28 generally applicable contract defenses.” See McArdle v. AT&T Mobility, 2012 U.S. App. LEXIS The purpose of the remand was for this Court 2 Id. at *2. 1 2 On April 11, 2013, ATTM filed a renewed motion to compel arbitration and stay the action. 3 LEGAL STANDARD 4 Under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1, et 5 seq., written agreements that controversies between the parties 6 shall be settled by arbitration are valid, irrevocable and 7 enforceable. 8 another to arbitrate under a written arbitration agreement may 9 petition the district court which would, save for the arbitration 9 U.S.C. § 2. A party aggrieved by the refusal of United States District Court For the Northern District of California 10 agreement, have jurisdiction over that action, for an order 11 directing that arbitration proceed as provided for in the 12 agreement. 13 Franchise Corp., 622 F.3d 996, 1005 (9th Cir. 2010) (noting that 14 the party seeking to compel arbitration bears the burden of 15 proving the existence of a valid arbitration agreement by a 16 preponderance of the evidence). 17 18 19 20 21 22 Id. § 4. See Bridge Fund Capital Corp. v. Fastbucks The FAA further provides: If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement . . . . 23 9 U.S.C. § 3. 24 arbitration agreement or the failure to comply with the agreement 25 is not in issue, the court shall make an order directing the 26 parties to proceed to arbitration in accordance with the terms of 27 the agreement.” 28 unmistakably provide otherwise, the question of whether the If the court is satisfied “that the making of the Id. § 4. “Unless the parties clearly and 3 1 parties agreed to arbitrate is to be decided by the court, not the 2 arbitrator.” 3 America, 475 U.S. 643, 649 (1986) (citations omitted). 4 AT&T Technologies, Inc. v. Communications Workers of The FAA reflects a “liberal federal policy favoring 5 arbitration agreements.” 6 (citations and internal quotation marks omitted). 7 court must compel arbitration under the FAA if it determines that: 8 (1) there is a valid agreement to arbitrate; and (2) the dispute 9 falls within its terms. Concepcion, 131 S. Ct. at 1745 A district Stern v. Cingular Wireless Corp., 453 F. United States District Court For the Northern District of California 10 Supp. 2d 1138, 1143 (C.D. Cal. 2006) (citing Chiron Corp. v. Ortho 11 Diagnostic Sys., 207 F.3d 1126, 1130 (9th Cir. 2000)). 12 The FAA “permits agreements to arbitrate to be invalidated by 13 ‘generally applicable contract defenses, such as fraud, duress, or 14 unconscionability,’ but not by defenses that apply only to 15 arbitration or that derive their meaning from the fact that an 16 agreement to arbitrate is at issue.” 17 1746. 18 that the arbitration provision is unconscionable. 19 Romero v. Superior Court, 184 Cal. App. 4th 825, 836 (2010). The party opposing arbitration bears the burden of proving 20 21 22 Concepcion, 131 S. Ct. at Arguelles- DISCUSSION I. Broughton-Cruz Doctrine McArdle first argues that arbitration is foreclosed by 23 California’s Broughton-Cruz rule which prohibits arbitration of 24 public injunctive relief claims under the Consumer Legal Remedies 25 Act (CLRA), Cal. Civ. Code § 1750 et seq., and the Unfair 26 Competition Law (UCL), Cal. Bus. and Prof. Code § 17200 et seq., 27 because such claims are “designed to prevent further harm to the 28 public at large rather than to redress or prevent injury to a 4 1 plaintiff.” 2 303, 316 (2003); see also Broughton v. Cigna Healthplans of 3 California, 21 Cal. 4th 1066 (1999). Cruz v. PacifiCare Health Systems, Inc., 30 Cal. 4th 4 ATTM argues that the Broughton-Cruz doctrine is not a 5 generally applicable contract defense because it applies only to 6 certain types of cases and only to arbitration. 7 argues, the Court lacks authority to consider McArdle’s Broughton- 8 Cruz argument because that argument exceeds the scope of the Ninth 9 Circuit’s mandate. Accordingly, ATTM See Mendez-Guttierrez v. Gonzalez, 444 F.3d United States District Court For the Northern District of California 10 1168, 1172 (9th Cir. 2006) (“[A] district court is limited by this 11 court’s remand in situations where the scope of the remand is 12 clear.”). 13 McArdle responds that the Court could find that the 14 arbitration provision is unenforceable because it violates the 15 public policy set out in the Broughton-Cruz doctrine. 16 of this argument, McArdle cites Fisher v. DCH Temecula Imports 17 LLC, 187 Cal. App. 4th 601, 617 (2010), which holds that there is 18 a “generally available contract defense” in California that 19 “private contracts that violate public policy are unenforceable.” 20 The Broughton court relied on the United States Supreme In support 21 Court’s holding that “not . . . all controversies implicating 22 statutory rights are suitable for arbitration.” 23 1075 (quoting Mitsubishi Motors v. Soler Chrysler-Plymouth, 473 24 U.S. 614, 627 (1985).2 25 26 27 28 21 Cal. 4th at The Broughton court held that the issue of 2 As discussed more fully below, both the majority and the dissent in American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013), made clear that Mitsubishi Motors applies only to federal statutory claims. This further calls into question the continuing viability of the Broughton-Cruz rule. 5 1 suitability “turns on congressional intent, which can be 2 discovered in the text of the statute in question, its legislative 3 history or in an inherent conflict between arbitration and the 4 statute’s underlying purposes.” 5 Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991)) 6 (internal quotation marks omitted). 7 to hold that “two factors taken in combination” evidenced an 8 inherent conflict “between arbitration and the underlying purpose 9 of the CLRA’s injunctive relief remedy.” 21 Cal. 4th at 1075 (citing The Broughton court went on 21 Cal. 4th at 1082. United States District Court For the Northern District of California 10 The two factors were that the relief sought was “for the benefit 11 of the general public rather than the party bringing the action” 12 and that “the judicial forum [had] significant institutional 13 advantages over arbitration in administering a public injunctive 14 remedy.” 15 Broughton remained good law in the wake of intervening United 16 States Supreme Court decisions and extended its holding to public 17 injunctive relief claims under the UCL. Id. In Cruz, the California Supreme Court held that 30 Cal. 4th at 311-16. 18 The Broughton-Cruz doctrine applies only to arbitration 19 agreements and only to certain claims brought pursuant to the CLRA 20 and UCL. 21 policy concerns, it is not a generally applicable contract defense 22 as contemplated by the FAA. 23 (holding that, even though the Discover Bank rule finds “its 24 origins in California’s unconscionability doctrine and 25 California’s policy against exculpation,” it is not a generally 26 applicable contract defense). 27 not a generally applicable contract defense, it does not survive 28 Concepcion. Although the Broughton-Cruz doctrine is based on public See Concepcion, 131 S. Ct. at 1746-47 Because the Broughton-Cruz rule is 6 1 McArdle argues that the Ninth Circuit’s en banc opinion in Kilgore v. Key Bank, 718 F.3d 1052 (9th Cir. 2013) (Kilgore II), 3 “preserved the viability of” the Broughton-Cruz doctrine. 4 Opposition at 8. 5 panel opinion in Kilgore v. Key Bank, 673 F.3d 947 (9th Cir. 2010) 6 (Kilgore I), held that the Broughton-Cruz doctrine was preempted 7 by the FAA in light of Concepcion. 8 decision did not reach the preemption issue and contends that this 9 indicates that the Broughton-Cruz rule survives Concepcion. 10 United States District Court For the Northern District of California 2 fact, the en banc court held, “Even assuming the continued 11 viability of the Broughton-Cruz rule, Plaintiffs’ claims do not 12 fall within its purview.” 13 II expressly did not decide the continued viability of the 14 Broughton-Cruz rule. 15 finds that the Broughton-Cruz rule is preempted by the FAA in 16 light of Concepcion. 17 II. This argument is based on the fact that the McArdle notes that the en banc Kilgore II, 718 F.3d at 1060. In Kilgore For the reasons stated above, the Court Bar to Public Injunctive Relief 18 McArdle next argues that the arbitration agreement is 19 unenforceable because it “purports to bar customers from seeking 20 public injunctive relief in any forum.” 21 arbitration agreement provides, “The arbitrator may award 22 declaratory or injunctive relief only in favor of the individual 23 party seeking relief and only to the extent necessary to provide 24 relief warranted by that party’s individual claim.” 25 Dec., Ex. 2, ¶ 2.2(6). 26 right to seek public injunctive relief under the CLRA and UCL is 27 unconscionable because it undermines the purposes of the statutes, Opposition at 15. The Figueroa McArdle argues that this waiver of the 28 7 1 which provide that individuals may seek public injunctive relief. 2 See Cal. Bus. & Prof. Code § 17203; Cal. Civ. Code § 1780(a)(2). 3 In other words, McArdle argues, even if Concepcion permits ATTM to compel arbitration of his CLRA and UCL claims, ATTM cannot 5 preclude the arbitrator from awarding public injunctive relief. 6 However, this argument relies on the United States Supreme Court’s 7 decision in Mitsubishi Motors for the proposition that “by 8 agreeing to arbitrate a statutory claim, a party does not forego 9 the substantive rights afforded by statute; it only submits to 10 United States District Court For the Northern District of California 4 their resolution in an arbitral, rather than a judicial forum.” 11 473 U.S. at 628. 12 vindication” rule, applying it only to federal statutory rights, 13 while others extended the rule to state statutory rights, such as 14 the rights McArdle asserts in this case. 15 Supreme Court case, American Express Co. v. Italian Colors 16 Restaurant, the majority strongly suggested that the effective 17 vindication rule applies only to federal statutory rights, 18 repeatedly referring to federal rights or the pursuit of federal 19 remedies. 20 “potential deprivation of a claimant’s right to pursue federal 21 remedies”); id. at 2311 (discussing “‘effective vindication’ of a 22 federal right”). 23 stated the point even more clearly in their effort to distinguish 24 the case they were considering from Concepcion. 25 26 27 28 Some courts have limited this “effective However, in a recent See, e.g., 133 S. Ct. at 2310 n.2 (discussing The dissenting justices in American Express And if that is not enough, [Concepcion] involved a state law, and therefore could not possibly implicate the effective-vindication rule. When a state rule allegedly conflicts with the FAA, we apply standard preemption principles, asking whether the state law frustrates the FAA’s purposes and objectives. If the state rule does so—as the Court found in [Concepcion]—the Supremacy 8 1 2 3 4 5 Clause requires its invalidation. We have no earthly interest (quite the contrary) in vindicating that law. Our effective-vindication rule comes into play only when the FAA is alleged to conflict with another federal law, like the Sherman Act here. American Express, 133 S. Ct. at 2320 (Kagan, J. dissenting). Moreover, the other cases McArdle cites are distinguishable. 6 McArdle relies on Bridge Fund Capital Corp. v. Fastbucks Franchise 7 Corp., 622 F.3d 996 (9th Cir. 2010), for the proposition that a 8 waiver of a statutory right to injunctive relief is substantively 9 unconscionable and accordingly unenforceable. In Bridge Fund, the United States District Court For the Northern District of California 10 Ninth Circuit affirmed the district court’s finding that class 11 action and injunctive relief waivers in the arbitration provision 12 of a franchise contract were unconscionable and unenforceable. 13 However, Bridge Fund relied in large part on a California Court of 14 Appeal case which held that such waivers were unenforceable by 15 applying the California Supreme Court’s decision in Discover Bank 16 to the California Franchise Investment Law. 17 at 1004 (citing Independent Ass’n of Mailbox Center Owners, Inc. 18 v. Superior Court, 133 Cal. App. 4th 396 (2005)). 19 above, the Discover Bank rule is preempted by the FAA. 20 Bridge Fund, 622 F.3d As discussed McArdle also relies on a line of cases in which courts have 21 found that representative action waivers cannot apply to 22 California Private Attorney General Act (PAGA) claims. 23 McArdle fails to address a key difference between, on the one 24 hand, the CLRA and UCL, which permit an individual to seek public 25 injunctive relief and, on the other, PAGA, which allows an 26 individual to seek penalties under the Labor Code in an action 27 brought “on behalf of himself or herself and other current or 28 former employees.” Cal. Lab. Code § 2699. 9 However, The courts that have 1 found representative action waivers unconscionable in PAGA cases 2 have specifically noted this limitation. 3 Orkin Servs. of Cal, 882 F. Supp. 2d 1152, 1167 (C.D. Cal. 2011) 4 (noting that a court that found such waivers enforceable under 5 Concepcion “failed to take into account that there are no separate 6 individual claims in a PAGA action”), rev’d on other grounds, 2013 7 U.S. App. LEXIS 16718 (9th Cir.); Brown v. Ralph’s Grocery Co., 8 197 Cal. App. 4th 489, 503 (2011). 9 cases are not applicable here. United States District Court For the Northern District of California 10 11 See, e.g., Urbino v. The Court finds that these CONCLUSION For the reasons stated above, the Court GRANTS ATTM’s motion 12 to compel arbitration and stay the action. 13 case is stayed pending arbitration, which must be diligently 14 pursued.3 15 dismissal or disposition of this action, and, should further 16 proceedings become necessary or desirable, any party may move to 17 restore the case to the Court’s calendar. 18 (Docket No. 222) The Nothing contained in this order shall be considered a IT IS SO ORDERED. 19 20 Dated: 9/25/2013 CLAUDIA WILKEN United States District Judge 21 22 23 24 25 26 3 27 28 There appears to be no further reason at this time to maintain the file as open for statistical purposes, and the Clerk is instructed to submit a JS-6 Form to the Administrative Office. 10

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?