McKinney v. Google, Inc. et al

Filing 48

Memorandum in Opposition re 39 MOTION to Compel Arbitration And To Stay Claims; Memorandum Of Points And Authorities In Support Thereof filed byMary McKinney. (Attachments: # 1 Proposed Order Denying Defendant HTC Corp.'s Motion to Compel Arbitration and to Stay Claims)(Avila, Sara) (Filed on 8/25/2010)

McKinney v. Google, Inc. et al

Doc. 48

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MILSTEIN, ADELMAN & KREGER, LLP WAYNE S. KREGER, State Bar No. 154759 [e-mail] SARA D. AVILA, State Bar No. 263213 [e-mail] 2800 Donald Douglas Loop North Santa Monica, California 90405 Telephone [phone] Facsimile [phone] WHATLEY DRAKE & KALLAS, LLC Joe R. Whatley, Jr. (pro hac vice pending, NY Bar No.4406088) [e-mail] Edith M. Kallas (pro hac vice pending, NY Bar No. 2200434) [e-mail] Patrick J. Sheehan (pro hac vice pending, NY Bar No. 3016060) [e-mail] 1540 Broadway, 37th Floor New York, New York 10036 Tel: [phone] Fax: [phone] Attorneys for Plaintiff Additional Counsel Listed on Signature Page UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA ­ SAN JOSE DIVISION MARY MCKINNEY, Individually and on ) ) behalf of all others similarly situated, ) ) Plaintiff, ) ) v. ) GOOGLE, INC., a Delaware corporation; ) HTC CORP., a Delaware corporation; and ) T-MOBILE USA, INC., a Delaware ) ) corporation. ) ) Defendants ) 5:10-cv-01177-JW CLASS ACTION PLAINTIFFS' MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT HTC CORP.'S MOTION TO COMPEL ARBITRATION AND STAY CLAIMS Date: November 1, 2010 Time: 9:00 A.M. Courtroom: 8, 4th Floor Judge: Hon. James Ware

Plaintiff Mary McKinney ("Plaintiff"), on behalf of herself and all others similarly situated, submits this memorandum in opposition to Defendant HTC Corp.'s ("HTC" or "Defendant") motion to compel individual, non-class arbitration and to stay litigation (the "Motion"): 1
(CASE NO. 5:10-CV-01177-JW ) PLAINTIFFS' OPPOSITION TO DEFENDANT HTC CORP.'S MOTION TO COMPEL ARBITRATION AND STAY CLAIMS sf-2855868
Dockets.Justia.com

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I.

ISSUE PRESENTED Whether the arbitration provision contained in the T-Mobile service agreement applicable

to T-Mobile customers is applicable to Defendant HTC Corp. as a third-party beneficiary under applicable state law, whether California law or Pennsylvania law. II. SUMMARY OF ARGUMENT Defendant HTC Corp. cannot enforce the terms of a service agreement purportedly entered into between Plaintiff and Defendant T-Mobile USA, Inc. ("T-Mobile"). The Court should deny Defendant HTC Corp.'s Motion to Compel Arbitration because (1) the arbitration agreement contained in the service agreement between Plaintiff and T-Mobile is unenforceable and invalid; (2) even if the arbitration agreement between Plaintiff and T-Mobile were enforceable by TMobile, Defendant HTC Corp. cannot enforce the arbitration agreement. Plaintiff's claims do not fall within the scope of the arbitration agreement and Defendant HTC Corp. was not an intended third party beneficiary. III. STATEMENT OF FACTS Plaintiff purchased a Google Phone, which was marketed by Defendant Google and manufactured by Defendant HTC Corporation. Plaintiff engaged T-Mobile as her wireless service provider. Plaintiff's First Amended Complaint claims the Google Phone failed to maintain connectivity to T-Mobile's 3G wireless network and that Defendants Google and T-Mobile lacked sufficient customer support to assist Plaintiff and the Class in coping with this defect. T-Mobile and HTC claim Plaintiff entered into an arbitration agreement regarding Plaintiff's Google Phone, and that such agreement applies to the instant case. T-Mobile's arbitration provision contains a class action waiver that bars individuals from bringing representative actions: "We each agree that any dispute resolution proceedings, whether in arbitration or court, will be conducted only on an individual basis and not in a class or representative action or as a member in a class, consolidated or representative action." Declaration of Andrea Baca In Support of T-Mobile's Motion to Compel Arbitration and Motion 2
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to Dismiss ("Baca Decl."), Ex. C.1 However, that provision contains what has been called by at least one court a "self destruction provision," providing that if "a court or arbitrator determines in an action between [subscriber] and [T-Mobile] that this waiver is unenforceable, the arbitration agreement will be void as to [subscriber]." Id. Thus, this is not really an arbitration clause at all, as it would yield the same result if the clause required all litigants to go to small claims court, or any court for that matter. It is an anticlass action waiver clause, which the Ninth Circuit has repeatedly refused to enforce. Thus, the law favoring arbitration has no real applicability under these circumstances. As set forth in Plaintiff's Opposition to T-Mobile's Motion to Compel Arbitration and Stay Claims, filed concurrently herein, the arbitration clause between Plaintiff and T-Mobile is unenforceable. IV. ARGUMENT A. The Arbitration Clause Is Unenforceable By T-Mobile And HTC Corp.

For the reasons set forth in Plaintiff's Opposition to T-Mobile's Motion to Compel Arbitration, the Arbitration Clause is invalid and unenforceable by T-Mobile. T-Mobile failed to meet its burden of proof that any service agreement containing an arbitration clause was provided to Plaintiff at the time of purchase. Moreover, any purported arbitration clause is unenforceable under California law, Pennsylvania law and federal common law. Where an arbitration agreement is unenforceable between the signatories of the agreement, the arbitration agreement is also unenforceable by purported third party beneficiaries. Thus, the Arbitration Agreement, which is unenforceable by T-Mobile, is also unenforceable by HTC because a prerequisite to a finding there is a third party beneficiary to a contract is finding the contract is enforceable. Smay v. E.R. Stuebner, Inc., 864 A.2d 1266, 1270 (Pa. Super., 2004); McQuirk v. Donnelley, 189 F.3d 793, 798 (9th Cir. 1999) //
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In documents filed along with this Memorandum, McKinney disputes the authenticity, validity, reliability, and admissibility of the Baca Declaration. As such, this Court should not consider the Baca Declaration for the proof of the truth of the matters asserted therein. 3
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B.

The Determination Whether T-Mobile's Arbitration Clause Applies to HTC Corp. Is Analyzed Under California Law

As fully set forth in Plaintiff's Opposition to T-Mobile's Motion to Compel Arbitration and Stay Claims, the Court must analyze the enforceability of the Arbitration Clause under California law. T-Mobile's Motion to Compel Arbitration concedes in its motion to compel that if California law governs the claims of all Plaintiff in terms of the arbitration clause, its Arbitration Clause is unenforceable, as the Ninth Circuit, this Court and a number of other courts have held. HTC Corp. would also be unable to enforce the Clause as a third party beneficiary because the Clause would be null and void. C. Defendant HTC Corp. Was Not An Intended 3rd Party Beneficiary Of The TMobile Arbitration Clause (1) HTC Corp. Is Not An Intended Beneficiary Under California Law

" `As a general matter, only signatories to an arbitration agreement may enforce it[.]'" Bouton v. USAA Cas. Ins. Co., 167 Cal.App.4th 412 (Cal. App. 2008) (citing Rowe v. Exline, 153 Cal.App.4th 1276, 1284 (2007)); Smith v. Cumberland Group, Ltd., 455 Pa.Super.276 (Pa. 1997). However, where a party does not prove it was an intended beneficiary under an arbitration agreement, there is no error in denying the party's petition for arbitration. Bouton, 167 Cal.App.4th 412. The intended beneficiary of a contract " `bears the burden of proving that the promise he seeks to enforce was actually made to him personally or to a class of which he is a member.'" Spinks v. Equity Residential Briarwood Apartments, 171 Cal.App.4th 1004, 1024 (citing Neverkovek v. Fredericks, 74 Cal.App.4th 337, 348-89 (1999)). "In making that determination, the court must read the contract as a whole in light of the circumstances under which it was entered. Neverkovek, 74 Cal.App. at 349. Here, HTC Corp. does not meet its burden to show the language of the Arbitration Clause demonstrates Plaintiff intended for the Arbitration Clause to apply to HTC Corp.

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HTC concedes the T-Mobile Service Agreement containing the Arbitration Clause does not specifically name HTC as a party to the agreement. Yet HTC Corp. contends it is a member of a "class" to which Plaintiff intended the Clause to apply. The Arbitration Clause states the assent to arbitrate "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." (Baca Decl., Ex. A, filed with T-Mobile's Motion to Compel). The term "other parties" is too overbroad to be considered a "class." HTC cannot show Plaintiff actually intended for the Arbitration Clause to protect every other party against whom she brings claims, at any time. Even if the class of individuals was limited to T-Mobile's "suppliers or retailer dealers," HTC does not demonstrate that Plaintiff would have reasonably contemplated this class to include HTC Corp., the manufacturer of the device. The phone was marketed and distributed by Google, not HTC. HTC does not set forth evidence it supplied the Google Phone to T-Mobile, nor that it was a retail dealer that sold the Google Phone. It is therefore unreasonable to assume Plaintiff and other consumers intended the Clause to apply to a manufacturer, let alone to specifically apply to HTC. Moreover, in viewing the circumstances surrounding the purported assent to arbitrataion, HTC does not even state whether, at the time Plaintiff purported signed the agreement, HTC was an intended beneficiary. T-Mobile contends Plaintiff "accepted contract extensions and renewals [on her T-Mobile account] at least 63 times since she began service in March 2002." (Baca Decl. at )2 If HTC was not the manufacturer of Plaintiff's phone at the time Plaintiff purportedly assented to the Arbitration Clause, HTC cannot possibly hold itself out as an intended beneficiary. (2) HTC Corp. Is Not An Intended Beneficiary Under Pennsylvania Law

Even under Pennsylvania law, HTC is required to establish: (1) the recognition of the beneficiary's right must be appropriate to effectuate the intention of the parties, and (2) Again, Plaintiff objects to the Baca Decl. as lacking personal knowledge, and Plaintiff does not admit any purported facts in the Baca Decl. as truthful. 5
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circumstances indicate the promisee intends to give the beneficiary the benefit of the promised performance. Scarpitti v. Weborg, 530 Pa.366, 371-73 (1992). HTC cannot satisfy these requirements. First, HTC does not sufficiently establish Plaintiff and T-Mobile intended the Arbitration Clause to benefit HTC. As set forth above, the Clause does not specifically state that a manufacturer of a product utilized by T-Mobile customers, such as HTC, is entitled to enforce the Clause, without regard to whether Plaintiff purchased her Google Phone from T-Mobile or Google directly. If T-Mobile had intended the Clause to bind manufacturers, it would have specifically set forth such. Moreover, there is no intent on behalf of Plaintiff to agree to permit the manufacturer of her telephone, HTC, to enforce an agreement between Plaintiff and her service provider. Second, HTC does not demonstrate any circumstances by which a purchaser of services would intend for a manufacturer of a product to be bound by an agreement between the consumer and the service provider. T-Mobile is not a "promisee" because Plaintiff did not promise to fulfill the contents of the Clause. Even if she did, the Clause does not show T-Mobile intended to extend the benefit of arbitration of claims arising out of T-Mobile services and devices to manufacturers of the devices. The term "any other party" is much too broad to apply specifically to HTC Corp. If T-Mobile had intended for the Arbitration Clause to apply to HTC it would have specifically named HTC or included an example for "manufacturer." (3) Plaintiff's Claims Against HTC Do Not Implicate Identical Legal Principles As Those Asserted Against T-Mobile Where a claim against one signatory to an arbitration agreement by another signatory of the agreement is distinguishable from the claims against a purported third-party beneficiary, the third-party cannot enforce the arbitration agreement. See Dodds v. Pulte Home Corp., 909 A.2d 348, 351-52 (Pa. Super. 2006). Here, Plaintiff's claims against T-Mobile and HTC Corp. do not implicate identical legal principals. T-Mobile arise out of T-Mobile's defective 3G network and lack of customer service to assist Plaintiff and members of the Class with their Google Phone problems. On the other hand, 6
PLAINTIFFS' OPPOSITION TO DEFENDANT HTC CORP.'S MOTION TO COMPEL ARBITRATION AND STAY CLAIMS sf-2855868 (CASE NO. 5:10-CV-01177-JW )

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Plaintiff's claims against HTC arise out of HTC's manufacturing of the Google Phone. If a trier of fact were to determine it was T-Mobile's 3G network that was defective, whether HTC's manufacture of the Google Phone would be irrelevant to such determination. Likewise, a finding that HTC defectively manufactured the Google Phone has no bearing on whether T-Mobile's 3G network failed to provide proper connectivity, nor whether T-Mobile's customer service, or lack thereof, was insufficient. Therefore, enforcing the Arbitration Clause between T-Mobile and Plaintiff should not be enforceable by HTC Corp. V. CONCLUSION

For the foregoing reasons, Plaintiff respectfully requests that this Court deny Defendant HTC Corp.'s Motion to Compel Arbitration in its entirety. DATED: August 25, 2010 Attorneys for Plaintiff Mary McKinney and the Proposed Class

By:

/s/ Sara D. Avila MILSTEIN, ADELMAN & KREGER, LLP Wayne S. Kreger Sara D. Avila WHATLEY DRAKE & KALLAS, LLC Joe R. Whatley, Jr. Edith M. Kallas Patrick J. Sheehan LAW OFFICE OF HOWARD RUBINSTEIN Howard Rubinstein SMITH & VANTURE, LLP Brian W. Smith

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 /s/ David Marin Edith M. Kallas Email: [e-mail] James Condon Grant Email: [e-mail] Joe R. Whatley , Jr Email: [e-mail] Joseph Edward Addiego , III Email: [e-mail] Patrick J. Sheehan Email: [e-mail] Rosemarie Theresa Ring Email: [e-mail] Sara Dawn Avila Email: [e-mail] Wayne Scott Kreger Email: [e-mail] CERTIFICATE OF SERVICE I hereby certify that I have this 25th day of August 2010, served via the Court's electronic filing system, a true and correct copy of the above and foregoing on counsel as follows: