McKinney v. Google, Inc. et al

Filing 39

MOTION to Compel Arbitration And MOTION To Stay Claims; Memorandum Of Points And Authorities In Support Thereof filed by HTC Corp.. Motion Hearing set for 11/1/2010 09:00 AM in Courtroom 8, 4th Floor, San Jose. (Attachments: # 1 Proposed Order)(Ring, Rosemarie) (Filed on 7/12/2010) Modified on 7/13/2010,(counsel failed to properly select multiple motions.) (cv, COURT STAFF).

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HENRY WEISSMANN (SBN 132418) MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue Thirty-Fifth Floor Los Angeles, CA 90071-1560 Telephone: [phone] Facsimile: [phone] E-mail: [e-mail] ROSEMARIE T. RING (SBN 220769) SARALA V. NAGALA (SBN 258712) MUNGER, TOLLES & OLSON LLP 560 Mission Street Twenty-Seventh Floor San Francisco, CA 94105-2907 Telephone: [phone] Facsimile: [phone] E-mail: [e-mail] E-mail: [e-mail] Attorneys for Defendant HTC Corporation UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

MARY McKINNEY, et al., Plaintiff, vs. GOOGLE, INC., a Delaware corporation, HTC CORP., a Taiwanese corporation, and T-MOBILE USA, INC., a Delaware corporation, Defendants.

CASE NO. 5:10-CV-01177 JW HTC CORPORATION'S NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND TO STAY CLAIMS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF. [PROPOSED] ORDER FILED CONCURRENTLY

Judge: Date: Time: Courtroom:

Hon. James Ware November 1, 2010 9:00 a.m. 8, 4th Floor

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TO ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that on November 1, 2010, at 9:00 a.m., or as soon thereafter as the matter may be heard, in the courtroom of the Honorable James Ware of the above-entitled United States District Court, located at 280 South 1st Street, San Jose, CA 95113, Defendant HTC Corporation will and hereby does move this Court, pursuant to 9 U.S.C. §§ 4 and 5, for an Order to compel Plaintiff Mary McKinney to arbitrate her individual claims in this action against HTC Corporation and to stay this action. HTC Corporation joins in, and incorporates by reference, the Motion To Compel Arbitration And To Stay Claims filed by Defendant T-Mobile USA, Inc., on July 12, 2010. This Motion is based upon this Notice of Motion and Motion, the attached Memorandum of Points and Authorities, T-Mobile's Motion To Compel Arbitration And To Stay Claims and supporting Memorandum of Points and Authorities, all records on file with this Court, and such further oral and written argument as may be presented at, or prior to, the hearing on this matter. DATED: July 12, 2010 MUNGER, TOLLES & OLSON LLP HENRY WEISSMANN ROSEMARIE T. RING SARALA V. NAGALA

By: /s/ Rosemarie T. Ring ROSEMARIE T. RING Attorneys for Defendant HTC CORPORATION

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MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION AND BACKGROUND Defendant HTC Corporation ("HTC") joins Defendant T-Mobile USA, Inc. ("T-Mobile") in moving to compel arbitration and to stay this action pursuant to Plaintiff's arbitration agreement with T-Mobile. HTC joins, and incorporates herein by reference, T-Mobile's Motion To Compel Arbitration And To Stay Claims and supporting Memorandum of Points And Authorities ("T-Mobile's Motion"), and will not repeat the facts and arguments set forth therein except as necessary to provide context for the issue addressed in this motion: HTC's right to enforce Plaintiff's arbitration agreement with T-Mobile as a third-party beneficiary. For the reasons set forth below, and in T-Mobile's Motion, the Court should issue an order compelling Plaintiff to arbitrate her individual claims against HTC because (1) Plaintiff's claims against HTC in this action fall within the scope of the arbitration agreement; (2) the arbitration agreement is valid and enforceable; and (3) HTC is a third-party beneficiary of the arbitration agreement. In her First Amended Complaint ("FAC"), Plaintiff Mary McKinney, a Pennsylvania resident, asserts claims on behalf of herself and a putative nationwide class against Defendants Google Inc., HTC, and T-Mobile, based on the alleged failure of her Nexus One mobile device (referred to in the FAC as the "Google Phone") to "maintain connectivity to T-Mobile's 3G wireless network." FAC, ¶ 1. Plaintiff alleges that the Nexus One was developed, marketed and sold by Google, manufactured by HTC, and is used on T-Mobile's 2G/EDGE and 3G wireless networks. FAC, ¶¶ 3-6, 12, 39. According to Plaintiff, connectivity to T-Mobile's 3G network is not "consistent" because of deficiencies in "the infrastructure of T-Mobile's 3G wireless network and/or the Google Phone." Id., ¶ 55; see also id., ¶¶ 41, 44, 50. Thus, all of Plaintiff's claims challenge T-Mobile's service and/or use of the Nexus One on T-Mobile's wireless network. Plaintiff has T-Mobile service and entered into a contract with T-Mobile that contains the following arbitration provision ("Arbitration Agreement"): 2. * Dispute Resolution and Arbitration. WE EACH AGREE THAT, EXCEPT AS PROVIDED BELOW (AND EXCEPT AS TO PUERTO RICO CUSTOMERS), ANY AND ALL CLAIMS OR DISPUTES BETWEEN YOU
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AND US IN ANY WAY RELATED TO OR CONCERNING THE AGREEMENT, OUR SERVICES, DEVICES OR PRODUCTS, INCLUDING ANY BILLING DISPUTES, WILL BE RESOLVED BY BINDING ARBITRATION, RATHER THAN IN COURT. This includes any claims against other parties relating to Services or Devices provided or billed to you (such as our suppliers or retail dealers) whenever you also assert claims against us in the same proceeding. Declaration of Andrea Baca ("Baca Decl."), Ex. A, ¶ 2, filed with T-Mobile's Motion (emphasis in original). As set forth below, and in T-Mobile's Motion, the Arbitration Agreement covers Plaintiff's claims against HTC in this action, the Arbitration Agreement is valid and enforceable, and HTC has a right to enforce the Arbitration Agreement as a third-party beneficiary. Therefore, in response to the FAC, HTC brings this motion to compel arbitration and to stay claims. HTC is concurrently filing a motion to dismiss the FAC for failure to state a claim under Federal Rules of Civil Procedure 9(b) and 12(b)(6), and, in doing so, does not waive and expressly reserves its right to compel arbitration, including all appellate rights, under the FAA. See 9 U.S.C. § 16. II. ARGUMENT A. Plaintiff's Claims In This Action Against HTC Fall Within The Scope of The Arbitration Agreement

As set forth in T-Mobile's Motion, Plaintiff's claims in this action are well within the scope of the Arbitration Agreement because they "directly challenge services, devices or products." See T-Mobile Motion at 10-11. Under the Arbitration Agreement, all such claims "against other parties" are subject to arbitration "whenever [a plaintiff] also assert claims against [T-Mobile] in the same proceeding." Baca Decl., Ex. A, ¶ 2. Accordingly, Plaintiff's claims against HTC fall within the scope of the Arbitration Agreement because they challenge TMobile's "service" and/or use of the Nexus One "device" on T-Mobile's wireless network and Plaintiff has asserted the same claims against T-Mobile in this action.

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B.

The Arbitration Agreement Is Valid and Enforceable.

The Arbitration Agreement is valid and enforceable for the reasons set forth in T-Mobile's Motion. T-Mobile's Motion at 8-18. Pennsylvania law applies in determining the enforceability of the Arbitration Agreement. Id. at 10-13. Under Pennsylvania law, the Arbitration Agreement is valid and enforceable and therefore requires Plaintiff to arbitrate individuals claims within its scope. Id. at 13-18. C. HTC Has A Right To Enforce The Arbitration Agreement As A Third-Party Beneficiary.

HTC is a third-party beneficiary of the Arbitration Agreement and therefore has a right to enforce its terms. A non-signatory to an arbitration agreement can enforce its terms under traditional principles of contract and agency law, including the third-party beneficiary doctrine. See Comer v. Micor, Inc., 436 F.3d 1098, 1101 (9th Cir. 2006), citing E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187, 195 (3d Cir. 2001). Pennsylvania law applies in determining whether HTC is a third-party beneficiary of the Arbitration Agreement. See T-Mobile's Motion at 11-14; Duvall v. Galt Medical Corp., No. C07-03714 JCS, 2007 WL 4207792, *8 (N.D. Cal. Nov. 27, 2007) (holding that under California choice of law rules, the state law set forth in choice of law provision in the applicable agreement applies to the determination of whether a party is a third-party beneficiary of the agreement). Under Pennsylvania law, to be deemed a third-party beneficiary, a party must establish: (1) that the contract or circumstances express an intention to benefit the third party; and (2) circumstances demonstrating that the promisee intends to give the third party the benefit of the promised performance. Scarpitti v. Weborg, 530 Pa. 366, 372-73, 609 A.2d 147, 150 (1992). Both requirements are met here. First, the broad language of the Arbitration Agreement demonstrates the intention of the parties to allow non-signatories to enforce its terms. This court must apply general state law principles of contract interpretation 1 when determining whether parties have agreed to arbitrate a
Under Pennsylvania law, a court interpreting a contract must ascertain the intent of the parties to the contract. Kripp v. Kripp, 578 Pa. 82, 90, 849 A.2d 1159, 1163 (2004). When contract terms are clear and unambiguous, the intent of the parties is determined by the contract language itself. Id.
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dispute and must give "due regard to the federal policy in favor of arbitration by resolving ambiguities as to the scope of arbitration in favor of arbitration." Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1044 (9th Cir. 2009). In addition to requiring arbitration of claims against TMobile challenging "services, devices or products," the Arbitration Agreement states that the agreement to arbitrate "includes any" such claims brought against "other parties" when T-Mobile is a party in the same proceeding. Here, the term "other parties" must be broadly construed, both to effectuate the intent of the contracting parties and to align with the federal policy of resolving ambiguities in contractual arbitration provisions in favor of arbitration. See Mundi, 555 F.3d at 1044. As the manufacturer of the Nexus One, which Plaintiff alleges fails to provide "consistent" connectivity to T-Mobile's 3G network either because of deficiencies in T-Mobile's service or the device, HTC falls squarely within the class of "other parties" for which the Arbitration Agreement expressly provides a right of arbitration. Because Plaintiff has asserted claims against T-Mobile in this action, the other contractual prerequisite for requiring arbitration of claims against third parties is also satisfied. Second, the promisee to the Arbitration Agreement--T-Mobile--clearly intended to give third parties the benefit of the Arbitration Agreement. See Scarpitti, 530 Pa. at 372-73, 609 A.2d at 150. "Promisee" is defined as "one to whom a promise is made." BLACK'S LAW DICTIONARY (8th ed. 2004). Here, T-Mobile is the promisee because Plaintiff, by assenting to the Arbitration Agreement, promised T-Mobile that she would arbitrate claims covered by its terms. By drafting the Arbitration Agreement to cover claims challenging "services, devices or products," including any such claims against "third parties" sued in the same action, T-Mobile demonstrated its intention, as the promisee, to extend the benefits of the Arbitration Agreement to third parties. Accordingly, the plain language of the Arbitration Agreement demonstrates the intention of the parties to allow HTC to enforce its terms and T-Mobile's intention, as the promisee, to give HTC the benefit of defending against the claims brought by Plaintiff in an arbitral forum. 2
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Even if California law applied to the determination of whether HTC is a third-party beneficiary of TMobile's arbitration provision, the result would be the same. In California, a party is a third-party beneficiary if the intent to benefit it appears from the terms of the contract--that is, if it is an intended, rather than an incidental beneficiary. Spinks v. Equity Residential Briarwood Apts., 171 Cal. App. 4th 1004, 1021-22 (2009). "Ultimately, the determination turns on the manifestation of intent to confer a

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III.

CONCLUSION For the foregoing reasons, HTC respectfully requests that the Court issue an order

compelling Plaintiff to arbitrate her individual claims against HTC and staying this action until the conclusion of arbitration.

DATED: July 12, 2010

MUNGER, TOLLES & OLSON LLP HENRY WEISSMANN ROSEMARIE T. RING SARALA V. NAGALA

By:

/s/ Rosemarie T. Ring ROSEMARIE T. RING

Attorneys for Defendant HTC CORPORATION

benefit on the third party." Id. at 1023. Here, as explained above, there is a clear intent to allow third parties, including HTC, to enforce the arbitration provision in T-Mobile's agreement with Plaintiff.
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