McKinney v. Google, Inc. et al

Filing 52

Reply Memorandum In Support Of 39 Motion To Compel Arbitration And To Stay Claims filed by HTC Corp.. (Ring, Rosemarie) (Filed on 9/22/2010) Modified on 9/23/2010,(link to motion.) (cv, COURT STAFF).

McKinney v. Google, Inc. et al

Doc. 52

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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 REPLY MEMORANDUM IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND TO STAY CLAIMS

Judge: Date: Time: Courtroom:

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

HTC'S REPLY ISO MOTION TO COMPEL ARBITRATION CASE NO. 5:10-CV-01177 JW

Dockets.Justia.com

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MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION AND BACKGROUND Plaintiff opposes Defendant HTC Corporation's ("HTC") Motion to Compel Arbitration on two grounds. First, Plaintiff argues that her arbitration agreement with T-Mobile, upon which HTC's Motion to Compel Arbitration is based, is unenforceable. Second, Plaintiff argues that HTC cannot enforce her arbitration agreement with T-Mobile because HTC is not a third-party beneficiary of that agreement. Both arguments are without merit. All of Plaintiff's claims are based on her alleged failure to receive "consistent" 3G connectivity when using her Nexus One device on T-Mobile's wireless network. When Plaintiff activated the T-Mobile service at issue in this case, she entered into a contract with T-Mobile setting forth the terms and conditions of service, including 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 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."), Docket Entry 33, Ex. A, ¶ 2, filed with TMobile's Motion to Compel Arbitration (emphasis in original). As set forth in T-Mobile's Motion to Compel Arbitration and all supporting papers ("T-Mobile's Motion") 1 , the Arbitration Agreement is valid and enforceable. HTC joins and incorporates herein by reference T-Mobile's Motion, and will not repeat the facts and arguments set forth therein except as necessary to provide context for responding to Plaintiff's contention that HTC is not a third-party beneficiary of the Arbitration Agreement. For the reasons set forth in HTC's opening brief and below, HTC is a third-party
The supporting papers include T-Mobile's opening and reply memoranda, supporting declarations, and opposition to Plaintiff's evidentiary objections.

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beneficiary of the Arbitration Agreement. Accordingly, this Court should grant HTC's Motion to Compel Arbitration and issue an order compelling Plaintiff to arbitrate her individual claims against HTC. II. ARGUMENT A. HTC Is a Third-Party Beneficiary of the Arbitration Agreement

Plaintiff asserts that the determination whether HTC is a third-party beneficiary of the Arbitration Agreement is governed by California law, not Pennsylvania law, and that, under either state's law, HTC is not a third-party beneficiary of the Arbitration Agreement. Although Plaintiff is correct that California and Pennsylvania law yield the same result, she is wrong about the governing law and wrong about the result. Pennsylvania law governs the determination of HTC's status as a third-party beneficiary pursuant to the choice-of-law provision in Plaintiff's agreement with T-Mobile. See Duvall v. Galt Medical Corp., No. C-07-03714, 2007 WL 4207792, *8 (N.D. Cal. Nov. 27, 2007); see also Opening Br. at 3. But, regardless of how this choice-of-law issue is resolved, the result is the same because HTC is a third-party beneficiary of the Arbitration Agreement under both Pennsylvania and California law. Opening Br. at 3-4. 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. See Scarpitti v. Weborg, 609 A.2d 147, 150 (Pa. 1992). Both requirements are met in this case, for reasons that also establish HTC's status as a third-party beneficiary under California law. As to the first prong of Pennsylvania's third-party beneficiary test, the plain language of the Arbitration Agreement demonstrates the parties' intent to allow HTC to arbitrate the claims at issue in this action. In addition to claims against T-Mobile related to Services or Devices, the Arbitration Agreement covers "any claims against other parties relating to Services or Devices provided or billed to [Plaintiff] (such as our suppliers or retail dealers) whenever [Plaintiff] also asserts claims against [T-Mobile] in the same proceeding." Plaintiff does not, and cannot, argue
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that her claims against HTC do not "relate to" T-Mobile services or devices provided or billed to her, or that she has not asserted claims relating to T-Mobile services or devices against T-Mobile and HTC in the "same proceeding." Instead, Plaintiff makes a series of arguments that contradict the plain language of the Arbitration Agreement and defy common sense. First, Plaintiff argues that the term "other parties" is too broad to constitute a class of third-party beneficiaries under the Arbitration Agreement. Plaintiff cites no authority to support this contention. She also ignores the explicit limitations in the Arbitration Agreement that serve to narrow the class of third-party beneficiaries. Under the Arbitration Agreement, the right to arbitrate claims is limited to "other parties" who are defending claims "relating to" T-Mobile services or devices in the "same proceeding" as T-Mobile. In other words, the clear and limited intent of the Arbitration Agreement is to allow T-Mobile and third parties who are defending claims related to T-Mobile services or devices in the same proceeding to arbitrate those claims together. Here, HTC clearly falls within this "class" of third-party beneficiaries. Second, Plaintiff argues that HTC is not a third-party beneficiary of the Arbitration Agreement because HTC is not included among the examples of "other parties" explicitly identified in the Agreement. This contention also ignores the plain language of the Arbitration Agreement, as well as a common sense understanding of its terms. In describing "other parties," the Arbitration Agreement includes examples in a parenthetical introduced by the phrase "such as." According to Plaintiff, because this parenthetical does not include HTC or "manufacturers" generally, the parties did not intend HTC, or any other manufacturer, to be a third-party beneficiary of the Arbitration Agreement. This argument is nonsensical. The phrase "such as" is widely recognized as introducing an illustrative list, rather than a limiting or exhaustive one. See In re Fonash, 401 B.R. 143, 146 (Bankr. M.D. Pa. 2008) (recognizing that the phrase "such as" in the bankruptcy statutes is not limiting); United States v. Technic Servs., Inc., 314 F.3d 1031, 1045 (9th Cir. 2002) (noting that the "use of the phrase `such as' [in the Federal Rules of Evidence] implies that the ensuing list is not exhaustive, but is only illustrative"), overruled on other grounds by United States v. Contreras, 593 F.3d 1135 (9th Cir. 2010). That the Arbitration Agreement does not specifically identify HTC or "manufacturers" in its illustrative list of "other -3HTC'S REPLY ISO MOTION TO COMPEL ARBITRATION CASE NO. 5:10-CV-01177 JW

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parties" does not mean that HTC is not an intended third-party beneficiary of the Arbitration Agreement. Indeed, because the phrase "such as" is illustrative only, it indicates that the parties contemplated that parties other than those specifically identified could enforce the Arbitration Agreement. 2 Third, Plaintiff argues that HTC cannot be a third-party beneficiary of the Arbitration Agreement unless she was using a device manufactured by HTC at the time she entered into the Arbitration Agreement. In other words, Plaintiff contends that the Arbitration Agreement is limited to claims "relating to [T-Mobile] Services or Devices" that also relate to the device in use at the time she activated the T-Mobile service at issue in this case. Again, this interpretation of the Arbitration Agreement is inconsistent with its plain language. The only qualification on the requirement that claims "relating to [T-Mobile] Services or Devices" be subject to arbitration is that they be brought in the same proceeding as claims against T-Mobile. There is no requirement that such claims must also relate to the particular device in use when the T-Mobile service at issue was activated, which makes sense given that the Arbitration Agreement is part of Plaintiff's service agreement with T-Mobile. Plaintiff does not, and cannot, dispute that her claims are based on her alleged failure to receive "consistent" 3G connectivity when using her Nexus One device with T-Mobile service, or that the service agreement with T-Mobile that was in effect when she suffered these alleged service failures contained the Arbitration Agreement. Therefore, because her claims "relate to [ T-Mobile] devices or services" and were brought in the "same proceeding" as claims against T-Mobile, they are subject to the Arbitration Agreement, regardless of what device she was using at the time she signed up for the T-Mobile service at issue. Turning to the second prong of Pennsylvania's third-party beneficiary test, Plaintiff claims

The above analysis is equally applicable under California law, which requires the same showing of intent to confer benefits on the third party as does Pennsylvania law. See Spinks v. Equity Residential Briarwood Apts., 171 Cal. App. 4th 1004, 1023 (2009). Plaintiff's California authorities simply stand for the unremarkable proposition that a third-party beneficiary may enforce an arbitration agreement. See, e.g., Bouton v. USAA Cas. Ins. Co., 167 Cal. App. 4th 412, 424 (2008) (recognizing that an intended third-party beneficiary of an arbitration agreement may enforce it); Spinks, 171 Cal. App. 4th at 1022 (stating the test for an intended beneficiary). Even if California law applies, HTC has met its burden of demonstrating that it is an intended beneficiary of the Arbitration Agreement. See Neverkovec v. Fredericks, 74 Cal. App. 4th 337, 348-49 (1999).

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T-Mobile is not a "promisee" under Scarpitti because Plaintiff did not promise to fulfill "the content" of the Arbitration Agreement. This argument simply recasts and regurgitates Plaintiff's argument that the Arbitration Agreement is unenforceable because she did not assent to its terms. As demonstrated in T-Mobile's Motion, this argument is without merit. Plaintiff, by assenting to the service contract with T-Mobile, promised T-Mobile (and "other parties" covered by its terms, including HTC) that she would arbitrate claims within its scope. B. Plaintiff's Contention That HTC Cannot Enforce the Arbitration Agreement Because Her Claims Against HTC and T-Mobile Do Not Implicate "Identical Legal Principles" Is Without Merit

Plaintiff argues that, even if HTC is a third-party beneficiary of the Arbitration Agreement, HTC cannot enforce its provisions because her claims against T-Mobile do not implicate "identical legal principles" as those asserted against T-Mobile. Again, this contention is unsupported by case law and inconsistent with the plain language of the Arbitration Agreement. The only case Plaintiff cites supports HTC's position, instead of her own. See Dodds v. Pulte Home Corp., 909 A.2d 348, 350 (Pa. Super. 2006) (enforcing an arbitration agreement even where additional non-contract theories were added to the complaint and a new defendant joined). And, nowhere does the Arbitration Agreement require that T-Mobile and third-party beneficiaries, such as HTC, be subject to claims based on "identical legal principles" in order to arbitrate claims together. To the contrary, Plaintiff agreed to arbitrate claims against T-Mobile and "any claims against other parties relating to Services or Devices provided or billed to [her] (such as our suppliers or retail dealers) whenever [she] also assert[s] claims against [T-Mobile] in the same proceeding." Baca Decl., Docket Entry 33, Ex. A, ¶ 2. The Arbitration Agreement makes no mention of legal principles, let alone "identical legal principles;" it requires only that third parties seeking to enforce the Arbitration Agreement be subject to claims that "relate to" TMobile services or devices in the "same proceeding" as T-Mobile, as HTC is here. // // //

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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: September 22, 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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