Vasquez v. Cebridge Telecom CA, LLC

• Decision Date: 03 November 2021
• Docket Number: Case No. 21-cv-06400-EMC
• Citation: 569 F.Supp.3d 1016
• Parties: Nick VASQUEZ, Plaintiff, v. CEBRIDGE TELECOM CA, LLC, et al., Defendants.
• Court: U.S. District Court — Northern District of California

569 F.Supp.3d 1016

Nick VASQUEZ, Plaintiff,

v.CEBRIDGE TELECOM CA, LLC, et al., Defendants.

Case No. 21-cv-06400-EMC

United States District Court, N.D. California.

Signed November 3, 2021

Daniel Morley Hattis, Che Corrington, Pro Hac Vice, Hattis & Lukacs, Bellevue, WA, Paul Karl Lukacs, Hattis & Lukacs, Thousand Oaks, CA, for Plaintiff.

Archis Ashok Parasharami, Mayer Brown LLP, Washington, DC, for Defendants.

ORDER DENYING DEFENDANTS’ MOTION TO COMPEL ARBITRATION

Docket No. 12

EDWARD M. CHEN, United States District Judge

I. INTRODUCTION

Plaintiff Nick Vasquez, individually, as a private attorney general, and on behalf of a putative class of other customers similarly situated, alleges that Defendants Cebridge Telecom CA, LCC and Altice, USA, Inc., doing business as Suddenlink Communications (collectively, "Suddenlink" or "Defendants"), engaged in false advertising by failing to disclose a "Network Enhancement Fee" for internet services, and misrepresenting that the fee is a tax or government regulation. Vasquez asserts claims under California law pursuant to the Consumer Legal Remedies Act, False Advertising Law and Unfair Competition Law seeking public injunctive relief, declaratory relief and restitution.

Now pending is Suddenlink's motion to compel the entirety of the action to arbitration subject to an arbitration agreement that prohibits non-individualized relief.

Docket No. 12. In the alternative, Suddenlink argues Plaintiff Vasquez lacks Article III standing to bring this action. Docket No. 23. For the following reasons, the Court DENIES Suddenlink's motion to compel arbitration and finds that Plaintiff Vasquez has Article III standing to pursue this action.

II. BACKGROUND

A. Summary of Allegations

The operative complaint alleges that Suddenlink has engaged, and continues to engage, in a false advertising scheme in California by publicly advertising specific flat monthly rates for its internet service plans for a specified time period, but then charging "higher monthly rates during that period via a disguised and fabricated extra charge on the bill (which Suddenlink calls the ‘Network Enhancement Fee’)." Docket No. 22 ("Second Amended Complaint" or "SAC") ¶¶ 1-2. The SAC alleges the "Network Enhancement Fee" was concocted by Suddenlink as a means to covertly increase customers’ rates, including during their advertised and promised fixed-rate promotional period. SAC ¶¶ 1, 23.

Furthermore, the SAC alleges that Suddenlink does not disclose that it can increase customers’ monthly service rates, even during a promised fixed-rate promotional period, by increasing the amount of the Network Enhancement Fee. Id. ¶¶ 23, 30-38. For example, in February 2019, Suddenlink allegedly added "a new $2.50 per month disguised double-charge for internet service, which it buried in a section of the bill with taxes and government fees," and later increased that fee to "$3.50 per month for California subscribers." Id. ¶ 2. In the event that a customer notices that they have been charged the Network Enhance Fee and contacts Suddenlink to inquire about the fee, Suddenlink agents allegedly "falsely tell the customer that the Fee is a tax or government fee or is otherwise out of Suddenlink's control" when, in "actuality, the Network Enhancement is not a tax or government fee. Id. ¶¶ 5-6, 40-46. Suddenlink's false and misleading statements about pricing allegedly appear in advertisements on its website and in its California retail stores where customers can sign up for Suddenlink services, as well as online video advertisements via YouTube, Facebook, and Twitter. Id. ¶¶ 19, 25–33. Suddenlink's false advertising is allegedly ongoing. See SAC ¶¶ 100, 108, 116, 122, 133, 138.

Plaintiff brings claims individually, as a private attorney general, and on behalf of a putative class consisting of "[a]ll current and former Suddenlink customers who were charged a ‘Network Enhancement Fee’ on their bill for Suddenlink internet services received in California within the applicable statute of limitations." Id. ¶ 79. Plaintiff brings clams under the Consumer Legal Remedies Act ("CLRA"), California Civil Code § 1750 et seq. , False Advertising Law ("FAL"), Cal. Bus. & Prof. Code § 17500 et seq. , and Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq. SAC ¶¶ 91-140. The SAC seeks public injunctive relief to stop Suddenlink's allegedly ongoing false and deceptive price advertising to the general public under the UCL, FAL, and CLRA. SAC ¶¶ 8, 109, 123, 139, Prayer, § A. Separately but still pursuant to his claim under the UCL, FAL and CLRA, Plaintiff seeks, on behalf of himself and the proposed class, restitution, damages and a private injunction prohibiting Suddenlink from continuing to charge the Network Enhancement Fee to him and the class of current subscribers who signed up for service after being induced by Suddenlink's allegedly misleading pricing scheme. SAC ¶¶ 8, 110, 124, 140, Prayer, § C.

B. Procedural Background

Plaintiff filed this action in Humboldt County Superior Court on May 3, 2021, and Defendants were served with the Summons and Complaint on July 20 and 21, 2021, respectively. Docket No. 1 ("Notice of Removal") at 2. Defendants timely filed a notice of removal under 28 U.S.C. § 1446(b) on August 18, 2021. Id. Defendants assert this Court has jurisdiction pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332, because the putative class action has 100 or more class members (allegedly 20-30,000 class members, id. at 3), the aggregate amount in controversy exceeds $5 million (id. at 5-6), and there is minimal diversity (Plaintiff is a citizen of California, Defendants Altice and Cebridge are Delaware corporations with their principal place of business in New York, id. at 3-4).

Now pending is Defendants’ motion to compel arbitration pursuant to the arbitration agreement Plaintiff entered into and to stay these proceedings during the pendency of arbitration. Docket No. 12. Defendants’ reply brief on this motion challenged, for the first time, Plaintiff Vasquez's standing to pursue public injunctive relief in this action under Article III. Docket No. 18. At the hearing on Defendants’ motion to compel arbitration, the Court allowed Plaintiff leave to amend his complaint on the limited ground to address issues related to his Article III standing to pursue public injunctive relief. Docket No. 21. Accordingly, Plaintiff filed the operative Second Amended Complaint on October 25, 2021. See SAC. Defendants were granted leave to file a supplemental brief in response to the SAC regarding Plaintiff's standing to bring this action, Docket No. 21, which they did, Docket No. 23.

In this order, the Court addresses Defendants’ arguments on Plaintiff's standing and in support of their motion to compel arbitration.

C. Relevant Arbitration Provisions

Suddenlink moves to compel arbitration based on its Residential Services Agreement ("RSA"), which Plaintiff Vasquez agreed to when he signed up for Suddenlink's services online. The parties agree that they entered into the RSA. Docket No. 12 ("Motion to Compel") at 3; Docket No. 14 ("Opposition") at 5.

The relevant provisions of the arbitration agreement upon which Suddenlink moves the Court to compel arbitration are contained in a section titled "Binding Arbitration." Docket No. 12-5 ("RSA") § 24. The "Binding Arbitration" provision provides:

Any and all disputes arising between You and Suddenlink, including its respective parents, subsidiaries, affiliates, officers, directors, employees, agents, predecessors, and successors, shall be resolved by binding arbitration on an individual basis in accordance with this arbitration provision. This agreement to arbitrate is intended to be broadly interpreted. It includes, but is not limited to:

- Claims arising out of or relating to any aspect of the relationship between us, whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory;

- Claims that arose before this or any prior Agreement,

- Claims that may arise after the termination of this Agreement....

YOU AGREE THAT BY ENTERING INTO THIS AGREEMENT, YOU AND SUDDENLINK EACH WAIVE THE RIGHT TO A TRIAL BY JURY AND THE RIGHT TO PARTICIPATE IN A CLASS, REPRESENTATIVE, OR PRIVATE ATTORNEY GENERAL ACTION.

Id. (Emphasis in the original). The RSA also includes an express provision for "Waiver of Class and Representative Actions," which states:

YOU AGREE TO ARBITRATE YOUR DISPUTE AND TO DO SO ON AN INDIVIDUAL BASIS; CLASS, REPRESENTATIVE, AND PRIVATE ATTORNEY GENERAL ARBITRATIONS AND ACTIONS ARE NOT PERMITTED. You and Suddenlink agree that each party may bring claims against the other only in Your or its individual capacity and may not participate as a class member or serve as a named plaintiff in any purported class, representative, or private attorney general proceeding. This arbitration provision does not permit and explicitly prohibits the arbitration of consolidated, class, or representative disputes of any form. In addition, although the arbitrator may award any relief that a court could award that is individualized to the claimant and would not affect other Suddenlink account holders, neither You nor Suddenlink may seek, nor may the arbitrator award, non-individualized relief that would affect other account holders. Further, the arbitrator may not consolidate or join more than one person's claims unless all parties affirmatively agree in writing.

If any of the prohibitions in the preceding paragraph is held to be unenforceable as to a particular claim, then that claim (and only that claim) must be severed from the arbitration and brought in court. In that instance, or any instance when a claim between You and Suddenlink proceeds to court rather than through arbitration, You and Suddenlink each waive the right to any trial by jury through this Agreement.

Id. § 24(g) (emphasis in the original).

III. LEGAL STANDARDS

A. Subject Matter Jurisdiction and Standing ( Rule 12(b)(1) ...