Song v. Charter Communications, Inc. et al

Filing 18

ORDER Granting Defendants' Motion to Compel Arbitration and Stay Proceedings. The court grants Defendants' motion to compel arbitration and stay the proceedings in this case. The arbitrator must determine whether Plaintiff's first, third, fourth, and fifth causes of action belong in court or arbitration. Accordingly, the parties shall notify the court immediately upon the arbitrator's decision. Signed by Judge Jeffrey T. Miller on 3/28/2017.(rlu)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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MICHAEL SONG,

Case No.: 17cv325 JM (JLB)
Plaintiff,

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CHARTER COMMUNICATIONS, INC.;
CHARTER COMMUNICATIONS
HOLDING COMPANY, LLC; TIME
WARNER INC.; TIME WARNER
CABLE INFORMATION SERVICES
(CALIFORNIA), LLC,

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ORDER GRANTING DEFENDANTS’
MOTION TO COMPEL
ARBITRATION AND STAY
PROCEEDINGS

v.

Defendants.

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Defendants Charter Communications, Inc., Charter Communications

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Holding Company, LLC, Time Warner Cable Inc., and Time Warner Cable

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Information Services (California), LLC (collectively, “Defendants” or “Charter”) move

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the court, pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., to

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compel arbitration and stay proceedings in this matter. (Doc. No. 6.) Plaintiff opposes

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the motion. The court finds the matter appropriate for decision without oral argument

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pursuant to Local Rule 7.1(d)(1) and, for the following reasons, grants Defendants’

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motion.

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17cv325 JM (JLB)

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BACKGROUND

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Defendants operate one of the nation’s largest cable companies. (Doc. No. 1-3 at

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7, ¶ 11.) Plaintiff has subscribed to Defendants’ television, internet, and voice services

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for approximately two years. (Id. at 30, ¶ 74.) When Plaintiff switched to Defendants’

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services, he entered into a subscriber agreement (“the Agreement”).

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The first page of the Agreement states, in capitalized text: “THIS AGREEMENT

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CONTAINS A BINDING ‘ARBITRATION CLAUSE,’ WHICH SAYS THAT YOU

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AND [DEFENDANTS] AGREE TO RESOLVE CERTAIN DISPUTES THROUGH

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ARBITRATION . . . YOU HAVE THE RIGHT TO OPT OUT OF THESE PORTIONS

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OF THE AGREEMENT.” (Id. at 42.)

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In section 15, entitled “Unless you Opt Out, You are Agreeing to Resolve

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Certain Disputes Through Arbitration,” the Agreement states, “Only claims for money

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damages may be submitted to arbitration; claims for injunctive orders or similar relief

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must be brought in a court (other than claims relating to whether arbitration is

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appropriate, which will be decided by an arbitrator, not a court). You may not combine a

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claim that is subject to arbitration under this Agreement with a claim that is not eligible

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for arbitration under this Agreement.” (Id. at 52 (emphasis in original).)

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Plaintiff did not opt out.

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On November 9, 2016, Plaintiff filed a complaint in San Diego Superior Court

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alleging that Defendants unlawfully charge California customers a surcharge of $8.75 per

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customer per month. The complaint contains five causes of action: (1) breach of

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contract; (2) for declaratory and injunctive relief; (3) violation of California’s unfair

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competition law, Cal. Bus. & Prof. Code § 17200 et seq.; (4) violation of California’s

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false advertising law, Cal. Bus. & Prof. Code § 17500 et seq.; and (5) violation of

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California’s Consumers Legal Remedies Act, Cal. Civ. Code § 1750 et seq. Plaintiff

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seeks preliminary and permanent injunctions against the misconduct alleged, declaratory

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relief, attorneys’ fees, costs, and all other further relief the court deems necessary, just,

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and proper. (Doc. No. 1-3 at 39.)
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17cv325 JM (JLB)

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Though he did not style his complaint as a class action, Plaintiff asserts that he

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“brought the lawsuit to put an end to Charter’s unlawful actions, not only for his benefit

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but also for the benefit of millions of California consumers whom Charter continues to

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target with this illegal and fraudulent scheme.” (Id. at 6, ¶ 7.) Based on that allegation,

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Defendants removed the action to this court under the Class Action Fairness Act

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(“CAFA”). (See Doc. No. 1).1 One week later, on February 24, 2017, Defendants filed

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the motion now before the court.

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LEGAL STANDARDS

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The FAA applies to arbitration provisions found in written agreements that

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evidence a transaction involving commerce. 9 U.S.C. § 2. An agreement to arbitrate is

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“valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity

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for the revocation of any contract.” Id. Federal policy favors arbitration, and arbitration

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agreements may not be placed in a disfavored position relative to other contracts. See

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Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003).

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The court must grant a motion to compel arbitration if a valid agreement to

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arbitrate exists and the dispute at issue falls within the scope of that agreement. See

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Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). “[T]he

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In footnote 2 to his opposition to Defendants’ motion, Plaintiff argues that this case is
not a class action subject to CAFA jurisdiction, and although he has yet to challenge
subject matter jurisdiction, he “reserves his right to address jurisdictional issues at a later
time.” Of course, the court is ultimately responsible for ensuring its own jurisdiction. At
this time, based on Defendants’ notice of removal, the court determines that it has
jurisdiction to enter this order. See Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536
F.3d 418, 424 (5th Cir. 2008) (“‘[T]he definition of class action is to be interpreted
liberally. Its application should not be confined solely to lawsuits that are labeled class
actions by the named plaintiff or the state rulemaking authority. Generally speaking,
lawsuits that resemble a purported class action should be considered class action for the
purpose of applying these provisions.’” (quoting S. Rep. No. 109–14, at 35 (2005), U.S.
Code Cong. & Admin. News 2005, p. 3)).
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17cv325 JM (JLB)

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language of the contract . . . defines the scope of disputes subject to arbitration, E.E.O.C.

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v. Waffle House, Inc., 534 U.S. 279, 289 (2002), and “any doubts concerning the scope

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of arbitrable issues should be resolved in favor of arbitration,” Moses H. Cone Mem’l

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Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983).

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If the court refers the matter to arbitration, it must then stay the proceedings
pending the outcome of that arbitration. 9 U.S.C. § 3.

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DISCUSSION

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According to Defendants, Plaintiff’s complaint is a clever attempt to evade the

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Agreement’s arbitration clause. Rather than seek money damages at this stage, Plaintiff

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has limited his demand to injunctive and declaratory relief, as well as attorneys’ fees and

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costs. Defendants argue that, despite his cabined prayer for relief, four of Plaintiff’s five

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claims are actually legal rather than equitable in nature, and once he successfully

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sidesteps arbitration, Plaintiff can and will seek to amend his complaint to “conform to

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proof to add prayers for monetary relief” on those claims. In response, Plaintiff contends

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that because he only seeks injunctive and similar relief “at this stage,” (Doc. No. 13 at

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17), his claims are properly before the court. He argues that he may draft his complaint

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however he sees fit.2

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Plaintiff also argues that the Agreement’s arbitration clause is downright unenforceable.
In support, Plaintiff notes that “generally applicable contract defenses, such as . . .
unconscionability, may be applied to invalidate arbitration agreements.” See Doctor’s
Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996); Cal. Civ. Code § 1670.5. But under
California law a “finding of unconscionability requires a procedural and a substantive
element, the former focusing on oppression or surprise due to unequal bargaining power,
the latter on overly harsh or one-sided results.” AT&T Mobility LLC v. Concepcion, 563
U.S. 333, 340 (2011). Because he was free to choose another service provider, or even to
opt out of the arbitration provision altogether, Plaintiff cannot demonstrate the first
element, see Bruni v. Didion, 160 Cal. App. 4th 1272, 1288 (2008) (stating that
oppression arises from “no real negotiation and an absence of meaningful choice”), and
thus his claim must fail. While the analysis necessarily ends there, the court also
recognizes that another federal court recently determined that the exact same arbitration
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17cv325 JM (JLB)

Put simply, the parties dispute the arbitrability of Plaintiff’s claims—specifically

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his first, third, fourth, and fifth causes of action.3

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The question, then, is “who has the primary power to decide arbitrability” of

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Plaintiff’s claims? See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943

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(1995). That answer “turns upon what the parties agreed about that matter. Did the

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parties agree to submit the arbitrability question itself to arbitration?” Id. (emphasis in

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original). If the parties “clearly and unmistakably” agreed to submit the question to the

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arbitrator, “the court[] will be divested of [its] authority and an arbitrator will decide in

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the first instance whether a dispute is arbitrable.” United Bhd. of Carpenters & Joiners of

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Am., Local No. 1780 v. Desert Palace, Inc., 94 F.3d 1308, 1310 (9th Cir. 1996).

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Here, the Agreement states: “Only claims for money damages may be submitted to

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arbitration; claims for injunctive orders or similar relief must be brought in a court (other

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than claims relating to whether arbitration is appropriate, which will be decided by an

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arbitrator, not a court).” (Doc. No. 1-3 at 52 (emphasis added).) Though it could be

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reworded slightly, the Agreement is clear and unmistakable that “claims relating to

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whether arbitration is appropriate . . . will be decided by an arbitrator, not a court.”

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Consequently, under binding Ninth Circuit precedent, this court can proceed no further.

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In sum, the court agrees with Defendants that if “Plaintiff is correct that his claims

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are not arbitrable, then the arbitrator will so decide.” (Doc. No. 16 at 8.) But “Plaintiff’s

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confidence in his own creative drafting does not permit him [or the court] to stand in the

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shoes of the arbitrator or ignore the parties’ arbitration agreement.” (Id.) Thus, the court

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will not rule that Plaintiff’s claims are legal in nature and belong in court, as Defendants

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provision was not substantively unconscionable. See Damato v. Time Warner Cable,
Inc., 2013 WL 3968765, at *13 (E.D.N.Y. July 31, 2013).

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The court is aware that resolving this dispute may give rise to another, as the Agreement
prohibits either party from combining “a claim that is subject to arbitration under this
Agreement with a claim that is not eligible for arbitration under this Agreement.” (Doc.
No. 1-3 at 52.)
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argue, or that Plaintiff successfully drafted his complaint to avoid arbitration, as Plaintiff

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argues. Given the language of the Agreement, that determination must be left to the

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arbitrator.

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CONCLUSION
For the foregoing reasons, the court grants Defendants’ motion to compel

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arbitration and stay the proceedings in this case. The arbitrator must determine whether

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Plaintiff’s first, third, fourth, and fifth causes of action belong in court or arbitration. If

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the arbitrator determines that those claims belong in court, this case will proceed at that

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time. If the arbitrator determines that those claims belong in arbitration, the court will

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continue to stay the proceedings on Plaintiff’s second cause of action until the arbitration

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concludes, because the result of that arbitration will “streamline subsequent proceedings

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before this court.” Wilcox v. Ho-Wing Sit, 586 F. Supp. 561, 567 (N.D. Cal. 1984)

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(holding that district court “has discretion whether to proceed with the non-arbitrable

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claims before or after the arbitration and has authority to stay proceedings in the interest

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of saving time and effort for itself and litigants”). Accordingly, the parties shall notify

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the court immediately upon the arbitrator’s decision.

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IT IS SO ORDERED.

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DATED: March 28, 2017
JEFFREY T. MILLER
United States District Judge

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17cv325 JM (JLB)