Adams v. AT&T Mobility LLC

• Decision Date: 20 September 2011
• Docket Number: Case No. C10–763RAJ.
• Citation: 816 F.Supp.2d 1077
• Court: U.S. District Court — Western District of Washington
• Parties: Bonnie ADAMS, et al., Plaintiffs, v. AT & T MOBILITY, LLC, Defendant.

816 F.Supp.2d 1077

Bonnie ADAMS, et al., Plaintiffs,

v.AT & T MOBILITY, LLC, Defendant.

Case No. C10–763RAJ.

United States District Court, W.D. Washington,at Seattle.

Sept. 20, 2011.

Clifford A. Cantor, Sammamish, WA, for Plaintiffs.

Archis A. Parasharami, Mayer Brown LLP, Washington, DC, David A. Bateman, K & L Gates LLP, Seattle, WA, for Defendant.

ORDER

RICHARD A. JONES, District Judge.

I. INTRODUCTION

This matter comes before the court on motions to compel arbitration pending in this case and in Stoican v. Cellco P'ship, No. C10–1017RAJ. In each case, the Defendant is a wireless phone service provider invoking § 4 of the Federal Arbitration Act (“FAA”) (9 U.S.C. § 4) to force arbitration of a claim from a consumer who prefers to litigate the dispute in court. AT & T Mobility, LLC (“ATTM”) is the Defendant in this case, and Cellco Partnership, doing business as Verizon Wireless (“Verizon”), is the Defendant in the Stoican case. The only party to request oral argument on either motion was ATTM. The court finds both motions suitable for disposition without oral argument. For the reasons stated below, the court GRANTS ATTM's motion to compel arbitration (Dkt. # 37) as well as Verizon's motion. The court DENIES ATTM's motion to seal (Dkt. # 60) and GRANTS its motion for leave to file an additional brief (Dkt. # 67). Because no party has requested a stay pending arbitration, the court directs the clerk to DISMISS both actions without prejudice to Plaintiffs raising their claims in arbitration. The clerk shall enter judgments for Verizon and ATTM. The court will issue a separate order in the Stoican case memorializing its decision.

II. BACKGROUND

A. Plaintiffs and Their Claims

Ms. Stoican is a Washington resident and a longtime Verizon customer. She does not dispute that she is a party to Verizon's wireless service agreement. She claims that she declined an offer from Verizon in 2009 for a free trial of its “Navigator” data service. Nonetheless, beginning in May 2009, Verizon charged her $9.99 each month for the service. It continued to do so for nine months despite Ms. Stoican's efforts to cancel the service and obtain a refund. Ms. Stoican asserts that Verizon's conduct violated the Communications Act of 1934 (“FCA”), specifically its prohibition on unjust and unreasonable charges and practices. 47 U.S.C. § 201(b). She also claims that Verizon breached its wireless service agreement and violated the Washington Consumer Protection Act (“CPA”). She hopes to represent a class of all Washington customers whom Verizon charged for Navigator service without their consent.

Unlike Ms. Stoican, Plaintiffs Bonnie Adams, Melissa Meece, and Alexandra Severance (collectively the “Adams Plaintiffs”) did not enter a service agreement with the cellular phone company they are now suing. Each of them is a resident of Vermont, and each of them entered a service agreement with Unicel, Inc. (“Unicel”). Verizon (by coincidence) sought to purchase Unicel, a transaction that drew scrutiny from federal antitrust regulators. To win federal approval for the transaction, Verizon agreed to divest itself of Unicel customers in certain regions, including virtually all of Vermont. Verizon arranged to sell its Vermont service agreements to ATTM in December 2008. ATTM itself did not acquire the service agreements, it instead used its subsidiary New Cingular Wireless PCS, LLC (“New Cingular”) to make the acquisition. ¹ No one disputes that New Cingular acquired the Adams Plaintiffs' Unicel agreements in December 2008. Carroll Decl. (Dkt. # 38) ¶ 3; McGee Decl. (Dkt. # 39) ¶ 4. No one disputes that at all relevant times, New Cingular was an ATTM subsidiary that held the Adams Plaintiffs' Unicel agreements. McGee Decl. ¶ 5.

ATTM hoped to convince the Unicel customers whose service agreements it had acquired to enter new agreements with ATTM. To that end, it sent text messages in 2009 to Unicel customers, including the Adams Plaintiffs. The text messages touted ATTM's services. Each Plaintiff contacted either ATTM or Unicel to request that they receive no more messages, but they received additional messages nonetheless.

The Adams Plaintiffs sued, contending that ATTM's unsolicited text messages violated the FCA's ban on certain automated messages. 47 U.S.C. § 227(b). ² They seek to pursue not only their own claims, but the claims of a nationwide class of Unicel customers who received similar unsolicited text messages from ATTM.

B. Terms of Plaintiffs' Wireless Service Agreements

Each of the Plaintiffs entered a wireless service agreement that contains an arbitration clause that includes a prohibition on class arbitration. Ms. Stoican's Verizon service agreement includes a clause entitled “Dispute Resolution and Mandatory Arbitration.” Verizon Agr. (Diaz Decl. (Dkt. # 6), Ex. B) at original pp. 12–13 (cited hereinafter as Verizon Arb. Cl.).³ In relevant part, it mandates arbitration for disputes arising out of the service agreement or arising out of products or services furnished in accordance with the agreement. Verizon Arb. Cl., preamble & ¶ 1. The only claims exempt from the arbitration clause are “qualifying small claims court cases.” Id. ¶ 1. For claims over $10,000, the clause specifies the use of the Wireless Industry Arbitration (“WIA”) Rules developed by the American Arbitration Association (“AAA”). Id. ¶ 2. For smaller claims, the clause specifies the use of AAA consumer arbitration rules or the arbitration rules of the Better Business Bureau (“BBB”). Id. ¶ 2. Critically, the clause “doesn't permit class arbitrations even if [the applicable arbitration rules] would.” Id. ¶ 3. Verizon agrees to pay for the consumer's arbitration filing fees, administrative fees, arbitration appeal fees, and the cost of the arbitrator, so long as the consumer first participates in at least one telephonic session of a non-binding mediation program that Verizon provides. Id. ¶¶ 3–4. Verizon employees may serve as mediators in the program. Id. ¶ 3. In the event, however, that an arbitrator finds the consumer's claim to be “frivolous or brought for improper purposes” within the meaning of Federal Rule of Civil Procedure 11, Verizon reserves the right to seek payment of arbitration fees and costs in accordance with the applicable arbitration rules. Id. ¶ 4. If the consumer recovers more than any Verizon pre-arbitration offer (or recovers any amount in the event that Verizon makes no offer), Verizon agrees to pay not only the consumer's attorney fees, but an award of $5000 if the arbitration award is less than $5000. Id. ¶ 5. The Verizon arbitration clause specifies that an arbitrator “can award the same damages and relief, and must honor the same limitations in this agreement, as a court would.” Id. (preamble). In a separate clause entitled “Waivers and Limitations of Liability,” the agreement declares that “unless the law forbids it in any particular case,” neither Verizon nor the consumer may claim “indirect, special, consequential, treble, or punitive damages.”

The Unicel Agreement that the Adams Plaintiffs entered contains an arbitration clause that is less friendly to consumers than Verizon's. Unicel Agr. (Sargent Decl. (Dkt. # 40), Ex. 1) ¶ 2 (cited hereinafter as Unicel Arb. Cl.). It permits either Unicel or the consumer to force the arbitration of any claim. Id. ¶ 2(a). WIA Rules apply. Id. ¶ 2(b). Unicel agrees to “pay the initial filing fee and the costs of the arbitration proceeding,” except that it requires a consumer who initiates arbitration to pay the first $75 of the initial filing fee. Id. ¶ 2(d). Each party is responsible for its own “attorney, witness, and expert fees and costs.” Id. A consumer has no “right to have any claim arbitrated as a class action under the [applicable] Rules or under any other rules of civil procedure.” Id. ¶ 2(e). Like the Verizon agreement, the Unicel agreement contains a clause separate from the arbitration clause that excludes “punitive, indirect, special or consequential damages,” but that waiver applies only “to the furthest extent allowed by the law.” Id. ¶ 15. The Unicel agreement also includes a waiver of “any claim for equitable relief,” but only “to the fullest extent allowed by the law.” Id.

ATTM has offered the Adams Plaintiffs the opportunity to avoid the relatively unfriendly terms of the Unicel agreement and arbitrate their claims in accordance with the arbitration agreement in ATTM's arbitration clause. ⁴ ATTM agrees to pay all of a consumer's arbitration costs for any claim under $75,000. Only in the event that an arbitrator finds the consumer filed a claim for an improper purpose or filed a frivolous claim (with the meaning of Rule 11) can ATTM seek reimbursement of its arbitration costs. If a consumer wins an arbitration award larger than ATTM's last settlement offer, ATTM will pay the consumer the larger of $10,000 or the amount of the award. In that event, ATTM will also pay double the consumer's attorney fees, and reimburse any expenses, including expert witness fees and costs. Like the Unicel and Verizon arbitration clauses, however, the ATTM clause prohibits class arbitration. Unlike Unicel and Verizon, ATTM does not attempt to limit the types of damages a consumer can recover in arbitration.

C. Consumer Arbitration Agreements and the Federal Arbitration Act

As the court will now discuss, a substantially similar version of the ATTM arbitration agreement features prominently in new legal authority that bears on the arbitrability of these Plaintiffs' disputes. Last year, Verizon and ATTM filed motions to compel arbitration of the disputes Ms. Stoican and the Adams Plaintiffs raised. At the time it filed its motion, Verizon conceded that Washington law and Ninth Circuit precedent spelled doom for its motion to compel arbitration. In Scott v. Cingular Wireless, 160 Wash.2d 843, 161 P.3d 1000 (2007), the Washington Supreme Court held that the arbitration clause in the wireless...