MEMORANDUM AND OPINION
Plaintiffs Club Texting, Inc. (“Club Texting”), iSpeedbuy LLC (“iSpeedbuy”), and TextPower, Inc. (“TextPower”) (collectively “Plaintiffs”), bring this putative class action alleging violations of Sections 1 and 2 of the Sherman Act of 1890 (the “Sherman Act”), 15 U.S.C. §§ 1 and 2. Plaintiffs bring these claims, as alleged in their second amended complaint (“SAC”), against the following Defendants: CTIA — The Wireless Association (“CTIA”); Wireless Media Consulting, Inc. d/b/a WMC Global
As discussed in more detail below, these Defendants can be grouped based on the various functions they serve in the relevant market or on their relationships with the Plaintiffs. Currently before the Court are a number of motions that these Defendants have filed as individuals and as groups. Although these motions fall within two broad categories — arbitration motions and Formerly known as, and sued as, Syniverse Technologies, Inc. motions to dismiss — the Court’s Memorandum and Order addresses only the arbitration motions, filed pursuant to the Federal Arbitration Act, 9 U.S.C § 3 (the “FAA”). See Dkt. Nos. 159, 151, 162, 165, 171. Having considered these motions, and for the reasons discussed below, the Court concludes that a number of Defendants can compel arbitration and that the current matter must be stayed pending such arbitration.
I. FACTUAL AND PROCEDURAL BACKGROUND
Except as otherwise noted, the following facts are undisputed. This case relates to text messages or SMS (“short message service”) — short electronic messages transmitted over a cellular network, generally to cell phones, but also to other wireless communication devices. SAC ¶ 2. Specifically, the case relates to application-to-person text messages (“A2P” or “A2P SMS”). Unlike the more commonly known person-to-person (“P2P”) text messages, A2P text messages are sent from “applications” — businesses and institutions — to wireless subscribers, and are often sent simultaneously to a large number of recipients. SAC ¶¶ 3, 4, 5.
Although some A2P are sent using traditional 10-digit telephone numbers, issued under the North American Numbering Plan (“NANP”) and regulated by the Federal Communications Commission (“FCC”), the majority of A2P messages are sent using “common short codes” (“CSC”). CSCs are 5 or 6 digit numbers that are leased to businesses and institutions (“CSC Lessees”) for the purpose of sending A2P SMS. To obtain a CSC lease, prospective CSC Lessees must first submit a “Registrant Sublicense Agreement,” (the “RS Agreement” or “RSA”) through the Common Short Code Administration (“CSCA”) website, which is operated by Neustar, Inc. (“Neustar”). The RS Agreement, which contains an arbitration provision, is at the heart of the current dispute regarding whether certain Defendants can compel arbitration of Plaintiffs’ claims.
A. The Defendants
Prior to addressing the alleged scheme, it is prudent to define the various subsets of Defendants. It bears noting, initially, that Neustar, the only entity entitled to lease the CSCs at issue in this action and the direct signatory to the RS Agreement, SAC ¶ 8, is listed as a co-conspirator, but it is not a named Defendant in this action.
1. The Carrier Defendants
The “Carrier Defendants” consist of five of the six largest wireless service provid
2. CTIA — The Wireless Association
CTIA is the cellular telecommunications and wireless services trade association. As alleged in the SAC, at all relevant times the CTIA has counted among its members the vast majority of the carriers providing most of the telecommunications services in the United States, including all of the Carrier Defendants. SAC ¶ 49. Plaintiffs allege that since 2002, the presidents and CEOs of the Carrier Defendants
3. The Aggregators
The “Aggregator Defendants” consist of the following Defendants: Air2Web, Ericsson, Sybase, SoundBite, 2ergo, Syniverse, Vibes, and 3Cinteractive. Additionally, there are two Defendants — mBlox and OpenMarket — who serve as aggregators, but who have filed separate motions and are thus distinct from the general class of Aggregator Defendants. According to the SAC, aggregators serve as required intermediaries between CSC Lessees and the Carrier Defendants. SAC ¶ 102. As alleged, only a select few CSC Lessees are permitted to deal directly with the Carrier Defendants, while the vast majority must instead be connected to the Carrier Defendants through aggregators.
A Wireless Media Consulting
WMC is a Virginia-based corporation that provides CSC monitoring and compliance services to CTIA. Dkt. No. 152 at 7. In this capacity, WMC reviews advertisements and other content to make sure that it is in compliance with CTIA’s standards, as set forth in the RS Agreement and the Acceptable Use Policy (“AUP”), described and incorporated therein. RSA ¶ 5. If WMC detects a violation, they issue a notice of violation, which the offending CSC Lessee is required to fix within a set period of time. Dkt. No. 152 at 8. Violations can lead to the imposition of fees, a Carrier Defendant suspending a CSC Lessee from its individual network, or the general suspension or termination of the CSC lease. Id.; RSA ¶¶ 5, 8. According to WMC, during the relevant period, it issued 228 violation notices to Plaintiffs. Dkt. No. 152 at 8.
B. The Alleged Conspiracy
Plaintiffs allege that beginning in 2002 or 2003, Defendants engaged in a four-step plan to create a system to extract the
C. Plaintiffs’ Claims
Plaintiffs’ putative class consists of themselves and the thousands of CSC Lessees who leased CSCs from Neustar between April 5, 2008, and the present (the “Class Period”) and who have sent or received A2P SMS through one or more aggregators. SAC ¶¶ 120, 121, 122. On behalf of themselves and this putative class, Plaintiffs bring three claims for violations of the Sherman Act, two pursuant to Section 1 and a third pursuant to Section 2. See 15 U.S.C. §§ 1, 2.
Plaintiffs’ First Claim alleges that Defendants “agreed to and did refuse to deal during the Class Period with any CSC Lessees seeking to transmit A2P SMS through ten-digit numbers.” SAC ¶ 138. Plaintiffs’ Second Claim alleges that Defendants (except WMC) engaged in a conspiracy: “(a) to force ... would-be CSC Lessees to lease CSCs through co-conspirator Neustar at artificially fixed, maintained, inflated or stabilized prices; (b) to force ... all CSC Lessees to connect to the Carrier Defendants through the Aggregator Defendants and pay unnecessary connectivity fees and inflated per-message fees; and (c) to charge ... program review fees to CSC lessees at unnecessary and inflated prices.” SAC ¶ 142. Finally, Plaintiffs’ Third Claim alleges that Defendants “intentionally conspired to monopolize the market for transmission of A2P SMS,” and that they did so by “prohibiting the transmission of A2P SMS from ten-digit numbers and requir[ing] the transmission of A2P SMS through CSCs leased on coordinated terms through a joint selling agent, Neustar, which was granted a monopoly over CSC leases.” SAC ¶¶ 155, 156.
D. Defendants’ Motions
Defendants, individually and as groups, argue that the claims are subject to arbitration, and, to the extent they are not, the matter should be stayed pending resolution of the claims that are subject to arbitration. The Court agrees.
II. GENERAL LEGAL STANDARD
In general, “the party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration.” Green Tree Fin. Corp.-Ala. v. Randolph,
“The threshold question facing any court considering a motion to compel arbitration is ... whether the parties have indeed agreed to arbitrate.” Schnabel,
III. ARBITRATION UNDER THE FAA
Xhe FAA, 9 U.S.C. §§ 1 et seq., “creates a body of federal substantive law of arbitrability applicable to arbitration agreements ... affecting interstate commerce.” Alliance Bernstein Inv. Research & Mgmh, Inc. v. Schaffran,
Whether a dispute is arbitrable comprises two questions: “(1) whether there exists a valid agreement to arbitrate at all under the contract in question ... and if so, (2) whether the particular dispute sought to be arbitrated falls within the scope of the arbitration agreement.” Nat’l Union Fire Ins. Co. v. Belco Petroleum Corp.,
IV. ARBITRATION UNDER THE RS AGREEMENT
The Carrier Defendants, CTIA, and WMC argue, inter alia, that Plaintiffs’ claims must be arbitrated pursuant to the arbitration clause in the RS Agreement. They argue that although none of these Defendants are explicitly signatories of the RS Agreement, they may nonetheless enforce the arbitration clause in that agreement under the common law principle of equitable estoppel or as third-party beneficiaries,
A. The RS Agreement
The Carrier Defendants, CTIA, and WMC seek to enforce the arbitration provision in the RS Agreement, which as noted above, is the agreement that prospective CSC Lessees must first agree to and sign in order to apply for a CSC lease. Pursuant to its terms, the RS Agreement is a legally binding agreement between Neustar and the CSC Lessee. RSA p. 1. Accordingly, each of the Plaintiffs and each of the putative class members are or would be signatories to the RS Agreement.
In relevant part, the arbitration provision in the RS Agreement says:
Any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination, non-renewal of this Agreement or any CSC, refusal to grant new CSCs, or the validity of this Agreement, shall be finally settled in accordance with the commercial arbitration rules of the American Arbitration Association (the “AAA”).
RSA ¶ 19. It also provides that “[t]he place of arbitration shall be the County of Loudoun, Virginia,” that “arbitrators shall determine the matters in dispute in accordance with the internal law of the Commonwealth of Virginia,” and that, to the extent permitted under law, “the internal procedural and substantive laws of Virginia and the [FAA] shall govern all questions of arbitral procedure, arbitral review, scope of arbitral authority, and arbitral enforcement.” RSA ¶ 19.
Although the Carrier Defendants, CTIA, and WMC are not signatories to the RS Agreement, they seek to enforce the arbitration clause contained within that agreement against the Plaintiffs who are signatories. Courts have “recognized a number of common law principles of contract law that may allow non-signatories to enforce an arbitration agreement, including equitable estoppel.” Ross v. Am. Express Co.,
Under principles of estoppel, “signatories to an arbitration agreement can be compelled to arbitrate their claims with a non-signatory where a careful review of the relationship among the parties, the contracts they signed ..., and the issues that had arisen among them discloses that the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed.” Denney v. BDO Seidman, L.L.P.,
Courts in this district have distilled these requirements and established a two-part “intertwined-ness” test, under which they “examine whether: (1) the signatory’s claims arise under the ‘subject matter’ of the underlying agreement, and (2) whether there is a ‘close relationship’ between the signatory and the non-signatory party.” Ragone,
“The first question for the Court to consider when applying the equitable estoppel test is whether [Plaintiffs’] claims arise from the ‘subject matter’ ” of the RS Agreement. Lismore,
Plaintiffs’ factual allegations alone demonstrate that the claims here arise directly from the subject matter of the RS Agreement. Specifically, Plaintiffs allege that to effectuate their anti-competitive scheme, Defendants: “voted to create and implement the CTIA system,” SAC ¶ 60; forced businesses into “using the new five-digit (later also six-digit) CSCs,” SAC ¶ 63; “only permitted] the transmission of A2P SMS through [CSCs],” SAC ¶63; “refuse[d] to deal with any CSC Lessee seeking to use [non-CSC numbers],” SAC ¶¶ 64, 65; and “formed an extra-governmental agency, which has prescribed rules for the regulation and restraint of interstate commerce and provided extra-judicial methods for determination and punishment of violations, including denial of access to the Carrier Defendants’ networks,” SAC ¶ 70. Indeed, the very term Plaintiffs conscript to describe themselves and the putative class members, “CSC Lessees” — a group they define as “persons transmitting A2P SMS,” SAC ¶ 7 — is premised upon the relationships entered into through the RS Agreement and is a status only conferred to those who have assented to the terms of that agreement. These factual allegations, alone, indicate that the claims premised upon these same facts “arise from the subject matter” of the RS Agreement. See Lismore,
The specific allegations in Plaintiffs’ claims make this all the more clear. In their first claim, Plaintiffs allege that “Defendants have enforced and continue to enforce their combination or conspiracy ... through the audit process conducted by WMC and other Defendants and by blocking CSCs.” SAC ¶ 135. That claim
The same is true for Plaintiffs’ second and third claims. In the second claim, Plaintiffs allege that Defendants forced “would-be CSC Lessees to lease CSCs through co-conspirator Neustar at artificially fixed, maintained, inflated or stabilized prices,” required “all CSC Lessees to connect to the Carrier Defendants through the Aggregator Defendants and pay unnecessary connectivity fees and inflated per-message fees,” and charged “program review fees to CSC Lessees at unnecessary and inflated prices.” SAC ¶¶ 142, 143. In the third claim, Plaintiffs allege that by requiring prospective A2P users to lease CSCs in order to transmit messages to the Carrier Defendants’ subscribers, Defendants conspired to eliminate competition and establish monopolistic control over the A2P market, and that they maintained further control of this monopoly by requiring Lessees to use aggregators and by implementing an onerous and expensive content auditing process. SAC ¶¶ 156, 157, 158, 159. As with the first claim, these claims are directly related to the CSC system, its use, the systems it creates, and the relationships that arise as a result of signing the RS Agreement.
Finally, it is telling that Plaintiffs have not included Neustar as a named defendant in this action. As Plaintiffs’ counsel stated at oral argument, part of their purported rationale for not naming Neustar was “[b]ecause there is an arbitration clause that might apply to Neustar, and we didn’t want to have to litigate that with Neustar.” Tr. 32:14-16. The Court will address additional implications of this statement, see infra Sections IV.C.2 and VI, but notes now that counsel’s statement supports the conclusion that the claims at issue fall within the subject matter of the arbitration clause. That is, the statement acknowledges that if Plaintiffs had named Neustar as a defendant, their claims against Neustar — which are identical to those against the named Defendants— would likely fall within the subject matter of the RS Agreement and the arbitration clause.
2. The Relationship Between the Parties
“The second prong of the equitable estoppel test looks at whether there exists a sufficiently ‘close relationship’ between the signatory and the non-signatory who seeks to compel arbitration.” Lismore,
Plaintiffs’ relationship with the Carrier Defendants, CTIA, and WMC is sufficiently close to justify estopping Plaintiffs from denying their contractual obligation under the RS Agreement to arbitrate disputes of this kind. First, CTIA and Carrier Defendants are “linked textually” to the RS Agreement that Plaintiffs signed. See Choctaw Generation, Ltd. P’ship,
Second, these Defendants are not only mentioned or referred to in the RS Agreement, they are also vested with rights and responsibilities. Without addressing the additional question whether these or other Defendants can enforce the RS Agreement as third party beneficiaries, it is nonetheless compelling that they have active roles in the Agreement. This is particularly clear with regard to CTIA. For instance, the first line of the second paragraph of the RS Agreement states that “Registry and CTIA reserve the right to modify any of the terms and conditions contained in this Agreement or any terms, policies, or guidelines incorporated by reference at any time and in its sole discretion,” RSA p. 1, and provides that “Registry, CTIA and their agents/subcontractors reserve the right ... to strictly enforce th[e] Agreement,” RSA ¶ 8. This second provision, then, would also apply to WMC, as an agent of CTIA, as would the separate provision noting that “CTIA or its agents may attempt to notify you in the event of any ... penalties being imposed,” for violations oftheAUP. RSA ¶ 5.
The RS Agreement also provides, among other things, the following with regard to CTIA and Carrier Defendants: (1) “[CSC Lessees] consented] to the disclosure by Registry to CTIA or to Participating Carriers ... [of] the Application Information and all data relating to the use of the CSC,” RSA ¶ 6; (2) recognition that violations of the acceptable use policy “may result in Participating Carriers restricting [Lessees] ability to use the CSC,” RSA ¶ 7(b)(1); and (3) that the Lessees “agree to indemnify, defend and hold harmless Registry, CTIA, the ‘Participating Carriers,’ and each of their respective parents, subsidiaries, shareholders, [and] members,” RSA ¶ 16. The conferral of
Overall, the inclusion of these Defendants in the language and effects of the RS Agreement fully supports the application of equitable estoppel in this matter. Plaintiffs cannot claim that they were unaware that by signing onto the Agreement they were entering into a relationship with CTIA, its agents — to include WMC — and the Carrier Defendants, whereby disputes between them and related to the content and substance of the RS Agreement could be subject to arbitration through the RS Agreement’s arbitration provision. And, indeed, Plaintiffs do not argue that they were anything but aware of this fact. Accordingly, because the claims at issue arise from the subject matter of the RS Agreement and there is a “close relationship” between the parties, and in light of Plaintiffs not denying either of these contentions, Defendants have made the necessary showing for equitable estoppel. Plaintiffs argue that equity should nonetheless preclude Defendants from enforcing the arbitration clause through equitable estoppel, which the Court will now address.
3. Unclean Hands
As noted above, in lieu of arguing that equitable estoppel is not appropriate in this case, Plaintiffs argue that Defendants cannot avail themselves of this equitable doctrine because they have unclean hands. Specifically, Plaintiffs argue that Defendants’ wrongful actions — in establishing and maintaining the CSC system — are “sufficient to invoke the unclean-hands doctrine to block any claim of equitable estoppel.” Pis. Opp. 7. Defendants argue that the unclean hands doctrine only acts as a bar to enforcement of an arbitration agreement under equitable estoppel if the unclean hands relate to the arbitration agreement itself, not to the merits of the underlying dispute. Dkt. No. 189 at 4. For the reasons discussed below, the Court agrees with Defendants that unclean hands is inapplicable to the current dispute.
“The doctrine of ‘unclean hands’ is an ancient maxim of equity courts,” Richards v. Musselman,
In addition to the general limitations on the application of the unclean hands doctrine, the scope of the Court’s review is constrained in two manner. First, pursuant to the FAA, “in passing upon a [FAA] § 3 application for a stay while the parties arbitrate, a federal court may consider only issues relating to the making and performance of the agreement to arbitrate,” and may not consider challenges to the contract generally. Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
Because the Court’s subject matter jurisdiction in reviewing a § 3 motion is limited to challenges that “go[] to the ‘making’ of the agreement to arbitrate,” Prima Paint,
More persuasive is Plaintiffs argument that because equitable estoppel nec
The Supreme Court has firmly established that, pursuant to the statutory language of the FAA, the Court’s ability to review the “making of the agreement to arbitrate,” is derived from the severability of arbitration clauses from the contracts in which they are located. See Buckeye Check Cashing, Inc. v. Cardegna,
In that way, it is incorrect to say that equitable estoppel looks beyond the scope of the arbitration clause or that in applying equitable estoppel the scope of the permissible arguments with regard to unclean hands is broadened. Rather, in contesting the application of equitable estoppel, Plaintiffs still must discuss why Defendants’ hands are unclean with regard to the “making of the agreement to arbitrate.” Buckeye Check Cashing, Inc.,
Ultimately, even after being given the opportunity at oral argument to specifically address this point, none of Plaintiffs’ “unclean hands arguments] implicate[ ] the making of the arbitration agreement in any way.” See Wolff v. Westwood Mgmt., LLC,
As a final note, Plaintiffs’ argument fails on practical grounds: if a plaintiff seeking to avoid being equitably estopped from arbitrating her dispute could rely on nothing more than the allegations in her complaint, the unclean hands doctrine would effectively preclude a defendant from ever compelling such arbitration on equitable grounds. That is, if any claim of wrongful conduct in a complaint could be used to demonstrate the defendant’s unclean hands, no defendant could ever use equitable estoppel — or any other equitable doctrine — to enforce an arbitration agreement. Such a result is unsupported by logic or the law. It would not only run afoul of the substantial case law allowing defendants to equitably estop plaintiffs from avoiding certain arbitration clauses, but would also be contrary to the underlying rationale for applying equitable estoppel in the arbitration context. See AT & T Mobility LLC v. Concepcion, — U.S. -,
Accordingly, because Plaintiffs failed to point to any argument or allegation that could be construed, either explicitly or implicitly, as demonstrating that Defendants’ hands were unclean with respect to the arbitration clause or the making of the arbitration agreement, the Court concludes that Defendants may equitably es-top Plaintiffs from avoiding arbitration pursuant to the RS Agreement. Cf. Wiglesworth v. Taylor,
A Conclusion: Equitable Estoppel Applies
Without addressing the alternate theories under which Defendants could potentially compel arbitration, the Court concludes that Plaintiffs are estopped from avoiding arbitration under the RS Agreement with the Carrier Defendants, CTIA, and WMC. This, alone, does not resolve the pending motions to compel. Rather, the Court must still address whether the dispute at issue falls within the scope of the arbitration agreement, and, eventually, whether Plaintiffs can avoid arbitration of this dispute, as a whole, because the cost of arbitration would deny them effective vindication of their claim. Infra, Section VI.
C. Scope of the RS Agreement’s Arbitration Clause
Having determined that these Defendants can require Plaintiffs to arbitrate under the RS Agreement, the next question is whether the dispute falls within the scope of the arbitration clause. Plaintiffs argue that their Sherman Act antitrust claims, and indeed all federal claims, fall outside the scope of the disputes covered by the arbitration clause. Specifically, they argue that the RS Agreement’s arbitration provision only covers disputes arising out of the substantive, internal laws of the Commonwealth of Virginia and does not apply to disputes, like this one, that arise under federal statutes. Plaintiffs recognize that the overall scope of the arbitration clause is broad, but argue that the breadth of the clause itself is nonetheless limited by the sentence in it providing that “[t]he arbitrators shall determine the matters in dispute in accordance with the internal laws of the Commonwealth of Virginia, without reference to the Convention on Contracts for the International Sale of Goods.” RSA ¶ 19; PL Opp. 3-5. This, they argue, means that “only disputes arising under the internal laws of Virginia are arbitrable.” Pl. Opp. 3. Defendants argue that Plaintiffs’ contentions are meritless because “the provision [Plaintiffs discuss] says nothing about what law the ‘matters in dispute’ must arise under; rather, it goes to the procedures the arbitrators
For the reasons discussed below, the Court concludes that Plaintiffs’ federal antitrust claims fall within the broad scope of the RS Agreement’s arbitration provision. Before addressing the parties arguments, however, it first bears noting that with this argument, as with the argument regarding whether the claims arose out of the subject matter of the dispute, Plaintiffs’ position is undercut by their original stated rationale for not naming Neustar as a defendant in this action. Specifically, by stating that they did not name Neustar because the arbitration clause “might apply,” Tr. 32:15, Plaintiffs again effectively recognize the weakness of their arguments with regard to the scope of the RS Agreement’s arbitration clause. Although not conclusive, both the failure to name Neustar and the original explanation for this failure nonetheless color the discussion of scope.
1. The RS Agreement Arbitration Provision
As noted above, the first line of the RS Agreement’s arbitration provision states that the provision covers “[a]ny dispute, controversy, or claim arising out of or relating to this Agreement or the breach, termination, non-renewal of this Agreement or any CSC, refusal to grant new CSCs, or the validity of this Agreement ____” RSA ¶ 19. Notwithstanding the expansive language of this initial line, Plaintiffs argue that “only disputes arising under the internal laws of Virginia are arbitrable,” based on language in the remainder of the arbitration provision that says:
The arbitrators shall determine the matters in dispute in accordance with the internal law of the Commonwealth of Virginia, without reference to the Convention on Contracts for the International Sale of Goods. Except as precluded by the United Nations Convention on the Recognition and Enforcements of Foreign Arbitral Awards, the internal procedural and substantive laws of Virginia and the [FAA] shall govern all questions of arbitral procedure, arbitral review, scope of arbitral authority, and arbitral enforcement.
RSA ¶ 19. They argue that this language limits the otherwise broad scope of the arbitration agreement to causes of action arising under Virginia law.
2. Discussion
The question whether the parties have submitted a particular dispute to arbitration, i.e., the “question of arbitrability,” is “an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise.” AT & T Techs., Inc. v. Commc’ns Workers of America,
Pursuant to federal and Virginia state law, although “a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit,” U.S. Postal Serv. v. Am. Postal Workers Union, AFL-CIO,
Although Virginia contract law applies, pursuant to federal law, “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration,” to include issues regarding “the construction of the contract language itself.”
The first line of the provision at issue is typical of broad arbitration provisions, which “encompass[] any disputes that touch matters covered by the contract
Plaintiffs maintain that the later portion of the arbitration provision is an unambiguous and explicit “clarification of the scope of the arbitration provision,” Tr. 39:1-2, but have at best put forward a plausible reading of the provision as implicitly limiting the otherwise extraordinarily broad language that opens the paragraph. This reading, plausible though it may be, in no way amounts to an “express provision excluding [all disputes not arising under Virginia substantive law] from arbitration.” See Warrior & Gulf Nav. Co.,
Plaintiffs argue that this conclusion renders superfluous the later “Governing Law” paragraph of the arbitration provision. Pis. Opp. 5. Specifically, they argue that if the provision at issue is “merely a conflict-of-law provision,” then it would be unnecessary to include a “Governing Law” provision as well. Defendants disagree. They argue that the “Governing Law” provision “is a rule of construction for interpreting the entire contract that ousts ordinary conflict-of law analysis,” whereas “the reference to Virginia law in the arbitration clause applies only to the conduct of the arbitrators in resolving disputes.” Dkt. No. 189 at 3.
Defendants’ readings of the relevant provisions does not render the Governing Law provision superfluous. In applying Virginia contract law, “this Court must construe the contract as a whole,” and must do so “from an examination of the entire instrument, giving full effect to the words the parties actually used.” Signature Flight Support Corp. v. Landow Aviation Ltd. P’ship,
Finally, even if the Court were convinced that the arbitration provision was limited to “[a]ny dispute, controversy or claim,” cognizable under substantive Virginia law, and “arising out of or relating to [the RS] Agreement or the breach, termination, non-renewal of this Agreement ...,” the dispute at issue would nonetheless fall within the scope of that more narrow, exclusive provision. Pursuant to Supreme Court precedent, “the exclusion of some areas of possible dispute from the scope of an arbitration clause does not serve to restrict the reach of an otherwise broad clause in the areas in which it was intended to cover.” Mitsubishi Motors Corp.,
D. Conclusion
For the reasons discussed above, the Court concludes that the dispute at issue falls within the scope of the RS Agreement’s arbitration provision.
V. ARBITRATION UNDER THE AGGREGATOR AGREEMENTS
Having determined that Plaintiffs must arbitrate their dispute with the Carrier Defendants, CTIA, and WMC, pursuant to the RS Agreement, the Court will now address the joint motion filed by individual aggregator Defendants OpenMarket and mBlox. Although filed jointly, given the nature of their arguments, the Court will address OpenMarket’s and mBlox’s arbitration arguments separately. Ultimately, the Court concludes that Open-
A. OpenMarket’s Arbitration Arguments
OpenMarket argues that all three Plaintiffs should be required to arbitrate their disputes with it, pursuant to two of its Commercial Service Agreements (“CSA”) — one, between OpenMarket and TextPower (the “TextPower CSA”), and a second, between OpenMarket and non-party 4INFO, Inc. (the “4INFO CSA”). Specifically, OpenMarket argues that it can compel TextPower to arbitrate because the TextPower CSA contains a valid and enforceable arbitration agreement, which this dispute falls within, and that iSpeedbuy and Club Texting should be equitably es-topped from avoiding arbitration because, although not signatories to any agreement with OpenMarket, they knowingly received direct benefits from the TextPower CSA and the 4INFO CSA, respectively. The Court will address these arguments in turn.
1. The Agreements
By their terms, the TextPower CSA is an aggregator agreement between Open-Market and TextPower, which took effect on January 1, 2010, and the 4INFO CSA is an aggregator agreement between Open-Market and non-party 4INFO, Inc. (“4INFO”), which took effect on April 1, 2011. Emmet Deck Ex. A 15; id. at Ex. B 4. Both agreements contain, among other things, the relevant contractual provisions describing the aggregator services that OpenMarket was to provide as well as the fees, costs, and terms associated with those services. See generally, id. at Ex. A, B. In addition, the two agreements contain an identical “Governing Law and Arbitration,” clause, which provides:
This Agreement shall be governed by the laws of the State of New York without reference to its principles of conflicts of laws. Any claim arising out [sic] or relating to this Agreement ... shall be resolved exclusively by arbitration conducted in New York, NY, by a sole arbitrator (“Arbitrator”) in accordance with the rules of the American Arbitration Association (“AAA”).
Emmet Deck Ex. A ¶ 14.5; Ex. B ¶ 21.5. Overall, the general terms of these agreements, though differently numbered, are essentially the same.
2. Direct Enforcement
The first question is whether Open-Market can compel arbitration with TextPower pursuant to the terms of their agreement. As with the RS Agreement, the scope of the arbitration clause is broad and presumptively enforceable. See Robinson Brog,
Because Plaintiffs recognize that some portion of TextPower’s claims against OpenMarket are subject to arbitration under the parties’ agreement, the Court is required to stay pending arbitration, regardless, and need not reach the question whether the arbitration provision in the TextPower CSA has retroactive effect such
3. Equitable Estoppel of a Non-Signatory
Having determined that TextPower is required to arbitrate with OpenMarket, the Court now turns to Defendants’ arguments that: (1) iSpeedbuy is required to arbitrate its dispute with OpenMarket, also pursuant to the TextPower CSA; and (2) Club Texting is required to arbitrate its dispute with OpenMarket, pursuant to the 4INFO CSA. Defendants argue that although iSpeedbuy and Club Texting are not signatories to the relevant agreements (the OpenMarket CSA and the 4INFO CSA, respectively), they are nonetheless required to arbitrate under the terms of those agreements because they have knowingly received direct benefits from these agreements. Specifically, Defendants argue that iSpeedbuy and Club Texting directly benefited by using TextPower and 4INFO — and thereby those entities’ aggregator services, i.e., OpenMarket — to transmit A2P SMS to their customers, and that they should therefore be equitably es-topped from avoiding the arbitration clause in the relevant agreements. Dkt. No. 166 at 17-20. For the reasons discussed below, the Court agrees with Defendants.
i. Legal Standard
The Second Circuit has “set forth two types of estoppel cases.” Smith/Enron Cogeneration Ltd. P’ship v. Smith Cogeneration Int’l,
“Under th[is] estoppel theory, a company ‘knowingly exploiting [an] agreement [with an arbitration clause can be] es-topped from avoiding arbitration despite having never signed the agreement.’ ” MAG Portfolio, Consultant, GMBH v. Merlin Biomed Grp. LLC,
ii. Arbitration Between OpenMarket and iSpeedbuy
Plaintiffs argue that iSpeedbuy cannot be bound to the arbitration agreement because it did not directly benefit from the TextPower CSA, and, if it did receive a direct benefit, it did not receive that benefit knowingly.
Contrary to Plaintiffs’ position, the Court concludes that the benefit iSpeedbuy received did flow directly from the TextPower CSA. Specifically, the contractual relationship that the TextPower CSA established between OpenMarket and TextPower allowed iSpeedbuy to send A2P text-messages to its customers without having to enter into its own aggregator contract with OpenMarket. As Plaintiffs allege in the complaint, aggregator contracts like the TextPower CSA were required in order for CSC Lessees — like TextPower and iSpeedbuy — to actually send messages through the CSC system. SAC ¶100 (“[A]ll CSC Lessees had to transmit their A2P SMS through aggregators.”). The uncontested facts show that iSpeedbuy, which did not itself have a contract with OpenMarket, was able to send its messages to TextPower, which, in turn, sent the messages to iSpeedbuy’s customers through OpenMarket and under the terms of the TextPower CSA.
Based on this, the Court concludes that the benefits to iSpeedbuy from the Tex
As noted, Plaintiffs also argue that because the agreement contained a secrecy provision, which prohibited either Open-Market or TextPower from disclosing the agreement to third parties, “Club Texting could never have seen the agreement and knowingly accepted any benefits.” Pis. Opp. 19-20 (emphasis in original) (citing Emmet Decl. Ex. A ¶ 14.8). This contention is undercut by the undisputed facts, which show that iSpeedbuy was aware that it was required to use an aggregator to send A2P SMS to its customers, SAC ¶¶ 100,101,
iii. Arbitration Between OpenMarket and Club Texting
Finally, OpenMarket argues that Club Texting should also be required to arbitrate because it knowingly accepted the benefits of the 4INFO CSA, an agreement between OpenMarket and non-party 4INFO, to which Club Texting is not a signatory. Here again, the uncontested facts show that Club Texting d/b/a/ EZ Texting, does not have an aggregator agreement with OpenMarket, but was able to send its messages to 4INFO, which in turn sent those messages to Club Texting’s customers through OpenMarket and pursuant to the terms of the 4INFO CSA. Indeed, the Court finds no material difference between the factual scenarios, Defendants’ theories of enforcement, or Plaintiffs arguments against enforcement. Accordingly, for the same reasons discussed above, the Court concludes that Club Texting, like iSpeedbuy, although not a signatory to the agreement containing the arbitration provision, knowingly received direct benefits from that agree
B. mBlox’s Arbitration Arguments
Defendants argue that Club Texting must also arbitrate its dispute with mBlox, pursuant to an agreement between mBlox and Mobiworx LLC (“Mobiworx”), a wholly owned subsidiary of Club Texting.
1. The Agreement, Termination, and Survival
The effective date for the Mobiworx MSA is listed as March 22, 2007. Cowell Decl. Ex. A p. 1. As noted, mBlox and Mobiworx are the two signatories of the Mobiworx MSA, id. at ¶26, but on or about November 14, 2007, Mobiworx validly assigned all of its rights and obligations under that agreement to Club Texting. Cowell Deck ¶ 4; id. at Ex. B. Shortly thereafter, on December 20, 2007, Club Texting sent a letter to mBlox “inform[ing] [mBlox] that effective immediately Club Texting Inc. [was] cancelling [sic] its account” and requesting that this happen “as soon as possible.” Cowell Decl. Ex. C. By its terms, the Mobiworx MSA is governed by the laws of the State of California. Id. at Ex. A ¶ 24.
The parties do not dispute these facts or the validity of Club- Texting’s cancelation, but instead dispute the effects of the cancelation on the arbitration provision in the agreement. In relevant part, that provision states:
The parties agree to attempt to settle any claim, controversy, or dispute arising out of or relating to this Agreement (“Dispute”) through good faith settlement negotiations. To the extent such*494 settlement negotiations have not resulted in a mutually agreeable resolution of any Dispute ... the Parties agree that such dispute shall be settled by binding arbitration before the American Arbitration Association (“AAA”).
Cowell Decl. Ex. A. ¶ 18. It is undisputed that this provision, as with the previous provisions, is a “prototypical broad arbitration provision,” Oldroyd v. Elmira Sav. Bank, FSB,
As a general rule, “[w]e presume as a matter of contract interpretation that the parties did not intend a pivotal dispute resolution provision to terminate for all purposes upon expiration of the agreement.” Litton Fin. Printing Div. v. Nat’l Labor Relations Bd.,
Plaintiffs argue that the clause here did not survive because it is not included in the “Survival” provision of the Mobiworx MSA. That provision states:
Notwithstanding anything to the contrary in th[e] Agreement, the provisions of this Section and Sections 1, 4.2, 4.3, 5, 11, 12, 13, 14, 15, 17, 19, 20, 21, and 23 will survive the termination of this Agreement. Further, all accrued payment obligations, and any other provisions that by their nature are intended to survive, also will survive the termination of this Agreement.15
Cowell Decl. Ex. A ¶ 16. Although this provision does not expressly negate survival of the arbitration clause — Section 18 — it would be reasonable to infer from the conspicuous absence of this section in the broad survival provision that the parties did not intend for the arbitration provision to survive. However, it would also be reasonable to infer that, in light of the presumption that arbitration provisions generally survive termination, the parties did not specifically list Section 18 because it fell within the category of “other provisions that by their nature are intended to survive.” Id. Because both of these are reasonable inferences, the Court cannot say that there is a “clear implication” that the parties did not intend for the provision to survive. Litton Fin. Printing Div.,
2. Scope
Plaintiffs’ argument that the claims fall outside the relevant scope of the agreement is unavailing. Plaintiffs argue that their claims cannot arise out of the Mobiworx MSA because the claims date back to April 2008, while the Mobiworx MSA terminated in December 2007. As Defendants note, however, the factual basis for the claims as asserted in the complaint clearly falls within the scope of the broad arbitration clause in the Mobiworx Agreement. Parties to arbitration agreements cannot be permitted to plead their way around arbitration requirements by asserting predicate facts that fall within the scope of the agreement, but limiting the temporal scope of their damages so as to avoid the agreements. See Litton Fin. Printing Div.,
C. Conclusion
For the reasons discussed above, the Court concludes that all Plaintiffs must arbitrate their disputes with OpenMarket, and that Club Texting must also arbitrate its dispute with mBlox.
VI. ARBITRATION COST AND EFFECTIVE VINDICATION
Plaintiffs argue that if Defendants can enforce the relevant arbitration provisions, and if the claims at issue do fall within the scope of those provisions, Defendants’ motions should nonetheless be denied because the clauses in the agreements do not allow for class-wide arbitration.
A. The Supreme Court’s Decision in American Express
In American Express, the Supreme Court answered in the affirmative the question “whether a contractual waiver of class arbitration is enforceable under the [FAA] when the plaintiffs cost of individually arbitrating a federal statutory claim exceeds the potential recovery.”
The Second Circuit disagreed. Relying heavily on the “effective vindication” language from Mitsubishi Motors Corp.,
The Supreme Court first concluded that there was no “contrary congressional command” in the Sherman and Clayton Acts or Federal Rule of Civil Procedure 23 that would override Congress’ command in the FAA that “courts must ‘rigorously enforce’ arbitration agreements according to their terms” and, thus, prohibit individual arbitration of claims like those at issue.
To reach this conclusion, the Supreme Court first noted that “the [effective vindication] exception finds its origins in the desire to prevent ‘prospective waiver of a party’s right to pursue statutory remedies.’ ” American Express,
B. Application to the Current Case
Plaintiffs argue that, even after American Express, the arbitration agreements at issue are unenforceable in this case because the “filing and administrative fees attached to arbitration ... are so high as to make access to the forum impracticable.” Dkt. No. 205 (citing Am. Express,
Assuming that filing fees and administrative costs could in fact render a forum impracticable, and that these costs in this case would be as high as Plaintiffs claim, this “does not constitute the elimination of [Plaintiffs’] right to pursue” their claims in arbitration in this case. American Express,
Finally, although TextPower and iSpeedbuy have asserted that they will not proceed in arbitration because of the fees associated with doing so, the fact that Club Texting has made no similar claim further belies any potential argument that the fees and administrative costs associated with arbitrating these disputes would be “so high as to make access to the forum impracticable.” American Express,
C. Conclusion
Under these facts, and in light of the Supreme Court’s ruling in American Express, the Court concludes that Plaintiffs have failed to demonstrate that the administrative costs and filing fees associated with arbitration would amount to a statutory deprivation of their right to pursue their claims.
VIL SUMMARY OF THE MOTIONS TO COMPEL ARBITRATION
To this point, and for the reasons stated above, the Court has concluded that all Plaintiffs are required to arbitrate their disputes with the Carrier Defendants, CTIA, WMC, and OpenMarket, and that Plaintiff Club Texting is required to arbitrate its dispute with Defendant mBlox. These Defendants have all moved to “compel” arbitration, but have done so under § 3 of the FAA, which discusses stays, rather than § 4, which allows for the Court issue an “order to compel arbitration.” 9 U.S.C. §§ 3, 4. On a number of occasions during oral argument, Plaintiffs noted this as an irregularity, but gave no indication as to why this was irregular or what effect any such irregularity would have on the outcome of the motions.
Given the posture, the Court concludes that moving under § 3 was permissible and that it was logical insofar as Defendants position is not that they are interested in arbitrating these disputes, but rather in having the Court conclude that if Plaintiffs are interested in bringing the disputes, they must do so through the agreed upon arbitration procedures. Cf. J.P. Morgan Sec. Inc. v. Louisiana Citizens Prop. Ins.,
Although the Court may dismiss when all of the issues raised in a complaint are subject to arbitration, see Lismore,
VIII. THE REMAINDER OF THE ACTION WILL BE STAYED
The final motion that the Court will address on its merits is the Aggregator Defendants’ Motion to Stay Pending Arbitration. The Aggregator Defendants “have not executed arbitration agreements with Plaintiffs,” but move to “stay proceedings on Plaintiffs’ claims against [them] pending the outcome of any arbitration between Plaintiffs and the other Defendants in this case.” They argue that a stay is warranted because the arbitrable claims substantially overlap with the remainder of the claims — both legally and factually — and it would promote judicial economy and reduce the danger of inconsistent results to stay all claims pending the mandatory arbitration.
If, as here, a court concludes “that some, but not all, of the claims in [a] case are arbitrable, it must then decide whether to stay the balance of the proceedings pending arbitration.” Guyden v. Aetna,
If, as here, the movant can make this initial showing, it then bears the burden of demonstrating: (1) that a stay will not “hamper the progress of the proceeding,” Sierra Rutile Ltd.,
Plaintiffs concede that a stay will not “hamper the progress of the proceeding,”
Plaintiffs argue, however, that because iSpeedbuy and TextPower have indicated that they will not participate in arbitration, the arbitration necessarily will not conclude within a reasonable time (as it will never begin). Novel though this argument is, in light of the facts that Club Texting has not similarly indicated its unwillingness to proceed with arbitration and for the reasons discussed above, the Court concludes that staying the matter as to Aggregator Defendants is appropriate under the circumstances.
IX. CONCLUSION
For the reasons discussed above, Defendants’ motions to compel and stay proceedings, pending arbitration Docket Numbers 149,151,162,165, and 171, are GRANTED insofar as previously indicated. The action is hereby stayed as to all Defendants pending arbitration. In light of this, the pending motions to dismiss, Docket Numbers 144, 146, 154, 156, and 168 are administratively denied, without prejudice to refilling. Finally, Plaintiffs’ procedurally flawed motion to file a sur reply, Docket Number 194, is DENIED and Defendants’ motion to strike that sur reply, Docket Number 195 is GRANTED: Plaintiffs motion is substantially non-compliant with the Court’s Individual Practices, it does not respond to “new issues which are material to the disposition of the question before the [Cjourt,” U.S. v. Int’l Bus. Mach,
This Order resolves Docket Numbers 144, 146, 149, 151, 154, 156, 162, 165, 168, 171,194, and 195.
SO ORDERED.
Notes
. Formerly known as, and sued as, Syniverse Technologies, Inc.
. Or their predecessors.
. At the conference in this matter on July 30, 2012, defense counsel noted that aggregators "represent the connections, the end that connects entities known as content providers, those who produce the ring tones [and] text messages themselves, and the carriers on the other hand.” July 30, 2012 Tr. 14: 4-6.
. CTIA’s primary argument is that they may compel arbitration as a party to the RS Agreement. The Court does not reach this argument, however, because it concludes that, regardless, CTIA may compel arbitration through equitable estoppel.
. Because the Court concludes that these Defendants can enforce the RS Agreement's arbitration clause on the basis of equitable estoppel, the Court does not reach the question whether they can compel arbitration as third-party beneficiaries of the RS Agreement or any of their arguments for compelling arbitration under the aggregator contracts discussed below.
. “CSCs are a string of numeric characters that are interoperable across communication service providers in the United States that are participating in CSC services (“Participating Carriers”).” RSA ¶ 2.
. The Court recognizes that Plaintiffs now assert that these claims also would not be arbitrable under their theory as to the limitation on scope. That ultimately unavailing argument is likewise weakened by the failure to name Neustar and the rationale for not doing so, and will be discussed in more detail below.
. The parties agree that Virginia law applies to the determination of unclean hands with regard to the RS Agreement. Tucker v. Ford Motor Co.,
. ‘‘[I]f you look at their equitable estoppel arguments, it’s not ... based just on the arbitration clause. It's based on the whole agreement. It’s based on the relationship of the parties. So, is that the way it works? They use the allegations in the complaint? They can use the entire contract to prove equitable estoppel? And we can’t rebut it for the unclean hands doctrine because we’re limited just to the arbitration clause. That doesn’t seem fair.” Tr. 58:19-59:2.
. Plaintiffs incorrectly argue that any ambiguity should be read against the drafter. The Supreme Court has applied the presumption of enforceability, rather than the rule of contra proferentem, when determining questions of arbitrability. See Moses H. Cone Mem’l Hosp.,
. Plaintiffs also argue that neither Open-Market nor mBlox can avail itself of equitable estoppel because they have unclean hands. Although under these contracts New York rather than Virginia law governs the application of equitable estoppel and unclean hands, Plaintiffs have not established — and nor does the Court find — any material difference between the laws of theses states on these matters. Accordingly, Plaintiffs’ unclean hands argument is equally inapplicable here and the Court will not bar iSpeedbuy and Club Texting from invoking equitable estoppel.
. The only portion of the declaration from OpenMarket’s general manager, Jay Emmet, that Plaintiffs contest is the assertion that “OpenMarket ... agreed to provide mobile message aggregating services to ... the entities represented by TextPower [and 4INFO].” Pls. Opp. 19 n. 27, 28.
. These same allegations are contained in iSpeedbuy’s.Class Action Complaint, as filed in one of the now consolidated actions. iSpeedbuy LLC v. Cellco P’ship, No. 12 Civ. 3731, Dkt. No. 1 at 16-17, "Class Action Complaint” (May 10,2012).
. mBlox initially asserted that TextPower was also required to arbitrate its claims with mBlox pursuant to the Master Services Agreement between mBlox and non-party Phat Digit (the “Phat Digit MSA”). mBlox did not reassert this position in its reply, and, at oral argument, defense counsel, speaking on behalf of all Aggregator Defendants, stated that Defendants “don’t rest on [the Phat Digit MSA] any longer and [that] there is a footnote to that effect in [their] reply papers.” Tr. 24:22-24. Although the Court can locate no such footnote, it considers mBlox to have conceded that it may not compel arbitration with TextPower under the Phat Digit MSA. mBlox asserts no grounds for compelling arbitration of its dispute with iSpeedbuy.
. Defendant mBlox has requested that this Section, among many others, be redacted in full. That request does not address the Second Circuit's decision in Lugosch v. Pyramid Co. of Onondaga,
. The clauses do not specifically disallow class-wide arbitration, but the Supreme Court has held that arbitration clauses will not be read to implicitly authorize class-wide arbitration unless such a provision is explicitly contained in the agreement. Stolt-Nielsen S.A.,
. Plaintiffs’ effective vindication argument, as with their arguments regarding subject matter and scope, are once again weakened by their failure to name Neustar as a defendant and by their stated rationale for not so doing. See supra Sections IV.B.1 and IV.C.2. As before, although this point is not conclusive, it does suggest an overall weakness as to these specific arguments, and as to Plaintiffs’ overall argument in opposition to arbitration.
. Because this ruling is directly on-point to the current dispute, the Court will not further address the question of contrary congressional command.
. There is much dispute between the parties as to what the fees and administrative costs associated with arbitration would actually amount to in this case. This dispute is ultimately immaterial as, even were the filing and administrative costs as high as Plaintiffs argue they could be, they would still be less than the recovery sought. See Sutherland,
. For efficiency, and unless otherwise noted, the Court will include mBlox with the remainder of the Aggregator Defendants in addressing the motion to stay.