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Shannon Carney v. Verizon Wireless Telecom

August 9, 2011

SHANNON CARNEY,
PLAINTIFF,
v.
VERIZON WIRELESS TELECOM, INC., ET AL.,
DEFENDANT.



The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge

ORDER GRANTING RENEWED MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS PENDING ARBITRATION [Docket No. 69]

Pending before the Court is a renewed motion by Defendants Verizon Wireless Telecom, Inc., and Cellco Partnership dba Verizon Wireless (collectively, Verizon) to compel Plaintiff Shannon Carney to arbitrate her claims against Verizon and to stay proceedings pending arbitration. (Doc. 69.) Having carefully considered the relevant legal authority and arguments of each party, the Court now grants Verizon's motion.

I. BACKGROUND

The current dispute centers around the scope of an arbitration provision between Plaintiff and Verizon, which is contained within the "Verizon Wireless Customer Agreement" (Customer Agreement) Plaintiff agreed to when she purchased cellular phones in two separate bundled transactions from Verizon. In those transactions, Plaintiff was able to purchase the phones at a discounted price, on the condition that she enter into a wireless service contract with Verizon for a specified duration of time. (First Amended Complaint ("FAC") ¶ 34.) Despite the discount, Verizon billed Plaintiff for the sales tax on the non-discounted price of the phone. (Id. ¶ 35.) Plaintiff alleges that Verizon deceived her when it informed her that California state law required the company to bill its customers tax based on the full retail price of the phone. This "tax," according to Plaintiff, is not a tax mandated by California law, but is merely a discretionary cost recovery fee. (Id.) In her FAC, Plaintiff alleges claims against Verizon under the Consumer Legal Remedies Act, Unfair Competition Law, False Advertising Law, Federal Communications Act, and for fraud. (Id. ¶¶ 55-104.)

On June 1, 2010, Verizon moved to compel arbitration of Plaintiff's claims against it and stay the proceedings pending the Supreme Court's decision in AT&T Mobility LLC v. Concepcion, ___ U.S. ___, 130 S.Ct. 3322 (2010). (Doc. 60.) This Court denied Verizon's motion to compel, finding the arbitration agreement to be unconscionable under Ninth Circuit law, but granted the motion to stay. (Doc. 68.)

On April 27, 2011, the Supreme Court issued its decision in Concepcion.*fn1 AT&T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740 (2011). The Court determined that the Federal Arbitration Act, 9 U.S.C. § 1, et seq. ("FAA"), "preempts California's rule which classified most collective-arbitration waivers in consumer contracts as unconscionable." Id. at 1746. In so holding, the Court noted that California's rule stood in the way of Congress's purpose in enacting the FAA -- "ensur[ing] that private arbitration agreements are enforced according to their terms." Id. at 1748, 53 (citations omitted). On June 2, 2011, in light of the Concepcion decision, Verizon renewed its motion to compel arbitration and stay the action pending arbitration. (Doc. 69.)

II. LEGAL STANDARD

The Federal Arbitration Act ("FAA") governs arbitration agreements in contracts involving transactions in interstate commerce. 9 U.S.C. § 1; Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983). Congress intended courts to construe commerce as broadly as possible. Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999). Pursuant to Section 2 of the FAA, arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds that exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. In determining whether to compel a party to arbitration, a district court may not review the merits of the dispute; rather, the court must limit its inquiry to: (1) whether a valid agreement to arbitrate exists, and, if it does (2) whether the agreement encompasses the dispute at issue. Samson v. NAMA Holdings, LLC, 637 F.3d 915, 923-24 (9th Cir. 2011)(citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). Finally, a court interpreting an arbitration agreement must give due regard to the federal policy favoring arbitration; ambiguities as to the scope of the arbitration clause are resolved in favor of arbitration. Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 62 (1995); AT & T Techs. Inc. v. Comm. Workers of America, 475 U.S. 643, 650 (1986) ("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.") If the Court is satisfied the issue involved in a suit is referable to arbitration, it "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement...." 9 U.S.C. § 3.

III. DISCUSSION

As an initial matter, the Court notes that the parties do not dispute the existence of a valid arbitration agreement. Rather, they disagree about the scope of that agreement, and whether it encompasses Plaintiff's underlying claims relating to her phone purchases.

In support of its motion, Verizon directs the Court to the terms of the Agreements Plaintiff entered into when she consummated the bundled transactions with Verizon on July 23, 2008, and again on January 26, 2009. The Agreement provides in pertinent part,

I AGREE TO THE CURRENT VERIZON WIRELESS CUSTOMER AGREEMENT (CA), INCLUDING THE CALLING PLAN ... AND OTHER TERMS AND CONDITIONS FOR SERVICES AND SELECTED FEATURES I HAVE AGREED TO PURCHASE AS REFLECTED ON THE RECEIPT ... AND WHICH I HAD THE OPPORTUNITY TO REVIEW. I UNDERSTAND THAT I AM AGREEING TO ... SETTLEMENT OF DISPUTES BY ARBITRATION AND OTHER MEANS INSTEAD OF JURY TRIALS AND OTHER IMPORTANT TERMS IN THE CA.

(Diaz Decl. Exs. 1 & 2) (capital letters in original.) The Customer Agreement referenced in the Agreement contains the arbitration ...


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