Meyer v. T–Mobile USA Inc.

• Decision Date: 23 September 2011
• Docket Number: No. C 10–05858 CRB.,C 10–05858 CRB.
• Citation: 836 F.Supp.2d 994
• Court: U.S. District Court — Eastern District of California
• Parties: Genevieve MEYER, Plaintiff, v. T–MOBILE USA INC., Defendant.

836 F.Supp.2d 994

Genevieve MEYER, Plaintiff,

v.T–MOBILE USA INC., Defendant.

No. C 10–05858 CRB.

United States District Court, N.D. California.

Sept. 23, 2011.

Rosemary M. Rivas, Mark Punzalan, Finkelstein Thompson LLP, San Francisco, CA, Gordon M. Fauth, Jr., Litigation Law Group, Alameda, CA, for Plaintiff.

Joseph Edward Addiego, III, Davis Wright Tremaine LLP, San Francisco, CA, James Condon Grant, Davis Wright Tremaine LLP, Seattle, WA, for Defendant.

MEMORANDUM AND ORDER GRANTING MOTION TO COMPEL ARBITRATION AND STAYING CASE

CHARLES R. BREYER, District Judge.

Plaintiff Genevieve Meyer has brought a putative class action against T–Mobile USA, Inc. (“T–Mobile”), alleging four causes of action relating to T–Mobile's assessment of state and federal surcharges on its bills to subscribers for mobile telephone services. See generally Rivas Decl. (dkt. 20–1) Ex. A (“Complaint”).

Now pending is T–Mobile's Motion to Compel Arbitration and Stay the Case. See generally Mot. (dkt. 16). T–Mobile argues that Plaintiff is bound to an arbitration agreement, including class action waiver, included in the Terms and Conditions (“T & C”) of the Service Agreement Plaintiff signed when she purchased and renewed her T–Mobile phone service. See Mot. (dkt. 16) at 2.

Because Plaintiff's claims are covered by the arbitration agreement and the arbitration agreement is valid and enforceable, the Motion to Compel Arbitration is GRANTED, and the case is STAYED.

I. BACKGROUND

In 1996, Congress passed the Telecommunications Act, requiring telecommunications companies such as T–Mobile to contribute to a federal Universal Service Fund (“Fed–USF”) to facilitate universal telecommunications service. Rivas Decl. (dkt. 20–1) Ex. A (“Complaint”) ¶ 3. A company's required contribution to Fed–USF is calculated according to the company's interstate and international telecommunications revenues, and the company may lawfully pass along to its subscribers the costs of fulfilling its required contribution. Id. ¶ 3.

California also has a Universal Service program (“Cal–USF”) to which telecommunications companies must contribute. Id. ¶ 5. A company's required contribution to Cal–USF is calculated according to the company's intrastate revenues. Id. A company may lawfully pass along to its subscribers the costs of fulfilling its required contribution, but the company's calculation of its state contribution cannot be based on its interstate or international telecommunications revenues. Id.

Plaintiff Genevieve Meyer purchased two lines of service and phones from T–Mobile on June 27, 2004. See generally Baca Decl. (dkt. 17) Ex. A (“2004 Service Agreement”). Thereafter, Plaintiff renewed and extended her T–Mobile service three times: on June 28, 2007, January 5, 2008, and, most recently, August 1, 2008. Baca Decl. (dkt. 17) ¶ 5.

Plaintiff claims that, during her service contract, T–Mobile assessed “Cal–USF fees based on the aggregate calculation of intrastate, interstate, and international telecommunications services, rather than on intrastate services alone. T–Mobile's practice of including interstate and international revenues in the calculation of Cal–USF fees artificially and unlawfully inflates the five Cal–USF charges on its subscribers' phone bills.” Rivas Decl. (dkt. 20–1) Ex. A (“Complaint”) ¶ 6. Based on T–Mobile's alleged misconduct, Plaintiff has brought a putative class action on behalf of herself and those similarly situated. Id. ¶ 1. Plaintiff alleges four causes of action: (1) violation of the Federal Communications Act (“FCA”); (2) violation of California's Unfair Competition Law (“UCL”); (3) fraudulent concealment; and (4) violation of the Consumers Legal Remedies Act (“CLRA”). See generally id.

T–Mobile argues that Plaintiff is bound to the arbitration agreement, including class action waiver, contained in the T & C of the Service Agreement Plaintiff signed when she purchased and renewed her T–Mobile phone service. See Mot. (dkt. 16) at 2. Plaintiff argues that the arbitration agreement is unenforceable for the following reasons:

(1) T–Mobile agreed that any provision in the Service Agreement rendered invalid under California law would be unenforceable, and the class action waiver was invalid under California law at the time Plaintiff entered the agreement in August 2008;

(2) the arbitration agreement is unconscionable; and

(3) the arbitration agreement would prevent Plaintiff from vindicating her statutory rights. See generally Opp'n (dkt. 20).

If the Court does not find the arbitration agreement unenforceable based on Plaintiff's arguments and available evidence, Plaintiff requests to conduct limited discovery on the issue of whether the arbitration agreement is valid. ¹Id. at 17.

II. LEGAL STANDARD

The Federal Arbitration Act (FAA) provides that an agreement to submit commercial disputes to arbitration shall be “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Congress's purpose in passing the Act was to put arbitration agreements “upon the same footing as other contracts,” thereby “reversing centuries of judicial hostility to arbitration agreements” and allowing the parties to avoid “the costliness and delays of litigation.” Scherk v. Alberto–Culver Co., 417 U.S. 506, 510–11, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974) (quoting H.R.Rep. No. 96, 68th Cong., 1st Sess., 1, 2 (1924)).

In applying the Act, courts have developed a “liberal federal policy favoring arbitration agreements.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The Supreme Court has emphasized that courts should refer a matter for arbitration “unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582–83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). “In the absence of any express provision excluding a particular grievance from arbitration ... only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail.” Id. at 584–85, 80 S.Ct. 1347. Thus, any doubt about the applicability of an arbitration clause must be “resolved in favor of arbitration.” Id. at 589, 80 S.Ct. 1347.

At the same time, however, the Supreme Court has repeatedly emphasized that “arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” AT & T Tech. Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (quoting United Steelworkers, 363 U.S. at 582, 80 S.Ct. 1347). Thus, a federal court's task in reviewing the arbitrability of a particular dispute is to determine whether the parties have agreed to submit that dispute to arbitration.

“The standard for demonstrating arbitrability is not high.” Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir.1999). “By its terms, the Act leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Dean Witter Reynolds v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) (citing §§ 3 and 4 of the FAA) (emphasis in original).

The final phrase of § 2 of the FAA provides that arbitration agreements are to be declared unenforceable “upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Thus, in addition to determining the arbitrability of a dispute, courts should determine the enforceability of the arbitration agreement. Grounds for declaring an arbitration agreement unenforceable are determined by “ordinary state-law principles that govern the formation of contracts.” Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir.2002) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)). “[T]he party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration.” Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 81, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000).

III. DISCUSSIONA. Plaintiff's Claims Are Covered By the Arbitration Agreement

Plaintiff's claims are covered by the arbitration agreement.²

The arbitration agreement contained in the T & C states in relevant part:

WE EACH AGREE THAT, EXCEPT AS PROVIDED BELOW ... ANY AND ALL CLAIMS OR DISPUTES BETWEEN YOU AND U.S. 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.

See Baca Decl. (dkt. 17) Ex. D (“2008 T & C”) ¶ 2 (emphasis in original).

The arbitration agreement also contains a class action waiver, which states in part:

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.

Id. (emphasis in original).³ All of Plaintiff's causes of action—(1) violation of the FCA; (2) violation of the UCL; (3) fraudulent concealment; and (4) violation of the CLRA—arise from T–Mobile's alleged misconduct in assessing surcharges on its bills, and thus are billing disputes covered by the arbitration agreement. Because the class action waiver broadly covers “any dispute resolution proceedings, whether in arbitration or court,” it applies to all of Plaintiff's claims in this case. Thus, Plaintiff's claims are subject to arbitration unless the arbitration agreement is unenforceable.

B. The Arbitration Agreement Is Valid and Enforceable

1. The Arbitration Agreement Is Not Governed Only By California Law

Plaintiff argues that “T–Mobile...