Meyer v. T-Mobile USA Inc.
2011 U.S. Dist. LEXIS 108249
N.D. Cal.2011Background
- Meyer filed a putative class action against T-Mobile alleging four surcharges-related claims (FCA, UCL, fraudulent concealment, CLRA).
- T-Mobile moved to compel arbitration and stay the case, invoking a binding arbitration clause and class action waiver in Meyer's Terms and Conditions.
- The arbitration clause covers disputes related to the service agreement, including billing disputes, and requires arbitration with a broad class action waiver.
- The 2008 T&C provide that the FAA governs, identify the governing law by Meyer's billing address, and include a 30-day opt-out.
- Plaintiff argued the class waiver was invalid under California law in 2008 and that the agreement is unconscionable and would impede statutory rights.
- The court ruled the arbitration agreement is valid and enforceable, the claims are arbitrable, and the case should be stayed pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Meyer's claims within the arbitration agreement's scope? | Meyer contends the four claims arise from billing and are subject to arbitration with a class waiver. | T-Mobile asserts all claims concerning surcharges are within the arbitration clause and waiver. | Yes; claims fall within the arbitration agreement and waiver. |
| Is the arbitration agreement valid and enforceable under the FAA preemption framework? | California law invalidated the class waiver in 2008; FAA preemption should render it unenforceable. | FAA preempts California rules on class waivers; the agreement is valid under FAA and Concepcion. | The arbitration agreement is valid and enforceable; FAA preempts challenged California law. |
| Is the arbitration agreement unconscionable under California law? | The agreement is procedurally and substantively unconscionable, including unilateral modification power. | There is an opt-out provision and clear presentation; the agreement is not procedurally unconscionable and only partially substantively unconscionable. | Not procedurally unconscionable; the overall agreement is not unconscionable. |
| Are the statutory claims arbitrable and does Concepcion preempt state-law public-injunctive relief restrictions? | Public-injunctive relief under CLRA/UCL should be non-arbitrable under state law. | Concepcion preempts state limits on arbitration of these claims; FCA and state claims are arbitrable. | FCA and state statutory claims are arbitrable; Concepcion preempts state-law limitations on injunctive relief in arbitration. |
| Is arbitration-related discovery appropriate here? | Limited discovery is necessary to evaluate validity of the arbitration agreement. | Discovery is limited to issues pertaining to the making/performance of the agreement; extensive discovery is beyond FAA scope. | Discovery denied; FAA favors expedited arbitration process. |
Key Cases Cited
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (arbitration of statutory claims allowed; FAA preemption governs)
- Lozano v. AT&T Wireless Services, Inc., 504 F.3d 718 (9th Cir. 2007) (statutory claims subject to arbitration absent Congress intent to preclude)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA preempts state law that prohibits arbitration of class-action waivers)
- Scherk v. Alberto-Culver Co., 417 U.S. 506 (U.S. 1974) (arbitration policy and enforceability principles)
- Dean Witter Reynolds v. Byrd, 470 U.S. 213 (U.S. 1985) (courts shall direct to arbitration issues covered by signed agreement)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (California unconscionability framework for arbitration clauses)
- Circuit City Stores, Inc. v. Adams, 279 F.3d 889 (9th Cir. 2002) (bilateral terms and opt-out considerations in adhesion contexts)
- Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005) (public policy considerations in class-action waivers)