The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge
Previously pending on this court's law and motion calendar for August 25, 2011, was plaintiff's motion to compel further responses to arbitration related discovery. Jenelle Welling represented plaintiff. Kristine McAlister Brown appeared for defendant. After reviewing the pertinent papers and hearing oral argument, the court now issues the following order.
This is a putative class action concerning California residents who purchased unlimited cell phone data plans. Plaintiff claims T-Mobile deceptively advertised unlimited data on these plans but imposed an undisclosed cap on the amount of data subscribers could use. When the cap was exceeded, plaintiff received a text informing him that he exceeded the cap, and defendant imposed restrictions in his use for the remainder of the month. Claims are for violations of the Consumer Legal Remedies Act ("CLRA"), the Unfair Competition Law ("UCL"), and the False Advertising Law ("FAL"). Defendant T-Mobile removed this case from Yolo Superior Court, jurisdiction presumably based upon 28 U.S.C. § 1332(d) (class action removal).
Because Alvarez did not timely opt out of the arbitration provisions in his service contract, T-Mobile claims that plaintiff's causes of actions may only be heard individually in an arbitration proceeding or small claims court based on the arbitration provision in its terms and conditions, and has filed a motion to compel arbitration, i.e., there can be no class action in arbitration, and, of course, no class action in small claims court.*fn1 Plaintiff Alvarez challenges the validity of the arbitration provision, as not having agreed to it, and as unconscionable. With respect to the latter ground, the only apparent substantive issue has to do with the class action waiver provision and related opt out of arbitration which apparently resurrects the right to proceed in court via a class action.
T-Mobile moved the district judge to enforce the arbitration conditions. Because plaintiff bears the burden of demonstrating that the arbitration clause cannot be enforced, see below, the district judge permitted discovery on the arbitrability issue. Plaintiff is attempting to prove the arbitration clause is unenforceable under the common law doctrine of unconscionability and/or vindication of statutory rights as set forth in Gentry v. Superior Court, 42 Cal.4th 443 (2007). The district judge has temporarily vacated the hearing on the motion to compel arbitration, and has allowed the parties to conduct arbitration related discovery at this stage of the proceedings. (Dkt. no. 37).
However, the district judge clearly did not desire to open up discovery for all purposes of the underlying class action; he determined that discovery should initially be limited to the arbitration issues, and that it should be "speedy and limited" in that context. (Order, filed July 6, 2011, at 2.) (Emphasis added).
In the circumstances of this case, the discovery requested appears neither speedy nor limited. The vast bulk of discovery is directed at the issue of whether the arbitration provision results in oppressive, harsh results to the T-Mobile customer. See discussion infra. However, this discovery would entail much work and expense on the part of T-Mobile.
Alvarez seeks responses to both interrogatories and requests for production. In the interrogatories, Alvarez requests information regarding the total number of "postpaid" customers since 2006 whose contracts contained an arbitration clause (I-1); the number of disputes for postpaid customers in which arbitration was initiated (I-2); general submission of disputes to arbitration and number of small claims cases initiated by customers (I-3); specific information regarding the number of lawsuits which T-Mobile brought against its customers (I-4); specific information regarding the results of postpaid customers arbitration (I-5); number of arbitrations (in general) which involved injunctive relief (I-6); total number of customers who paid fees in connection with an "unlimited " data plan (I-7); postpaid customer who initiated arbitration complaining of payment of fees for "unlimited" data plans (I-8); total number of customers who opted out of arbitration(I-9); compilation of various statistics regarding the universe of arbitration awards initiated for whatever reason (I-10); the number of "disputes" for whatever reason received by T-Mobile from postpaid customers (I-11); compilation of the universe of small claims court awards statistics (I-12); compilation of "average monthly recurring charge for U.S. postpaid customers who paid fees in connection with an unlimited data plan (I-13); number of U.S. postpaid customers who paid fees in connection with an unlimited data plan (I-14); number of electronic notifications to U.S. postpaid customers who paid fees in connection with an unlimited data plan (I-15); number of telephonic or written complaints in connection with an unlimited data plan regarding electronic notices of possible throughput reductions (I-16); knowledgeable persons and internal procedures re arbitration (Is 17-18).
The Requests for Production similarly required analysis and production of documents regarding (almost) the universe of complaints, arbitrations and so forth along with a request for summary documents. For example, Requests 12 and 13 request a copy of a written resolution for every customer dispute between 2006-2011 which was resolved short of arbitration. Request 7 seeks every document relied upon by T-Mobile in answering the above interrogatories "regarding arbitration." The remainder of the requests seek a copy of the relevant rate plan, (R-1); all non-case correspondence between T-Mobile and the American Arbitration Assoc. (R-2); an exemplar copy of Terms and Conditions for any T-mobile device activated during the pertinent years (R-4); any document referencing T-Mobile's rate of success in arbitrations and documents reflecting analyses of all dispute resolution (Rs 5-6); studies relating to readability of arbitration provisions (R-8); documents which summarize etc. the nature of disputes in T-Mobile arbitration documents relied upon by a T-Mobile declarant (R-10); identification of arbitration judges (R-11).
The district court's order permitting arbitration related discovery required that it be "speedy and limited" in this context. Within those parameters, the undersigned has determined what discovery is speedy and limited in light of what is relevant. It is important to emphasize that the magistrate judge adjudicating a discovery dispute does not sit to decide on the ultimate issue in determining the arbitrability of the issues in plaintiff's case-- that is for the district judge. On the other hand, if the law clearly delimits plaintiff's ability to oppose arbitration, the undersigned is guided by that law in determining what is "speedy and limited." That is, if plaintiff's opposition to the arbitration agreement is strictly limited by case law, there is no sense in allowing discovery as if the limitations did not exist. Thus, the undersigned must examine the law in the first instance to rule correctly on the scope of discovery.
There are two umbrella issues concerning the motion to compel arbitration: (1) did the parties enter into an agreement to arbitrate; (2) whether there exists a defense to the arbitration requirement. The United States Supreme Court has held that, "[T]he first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute." Mitsubishi Motors v. Soler Chrysler-Plymouth, 473 U.S. 614, 626, 105 S. Ct. 3346 (1985). Whether an agreement to arbitrate exists is answered by applying state contract law, even where the agreement is covered by the FAA. Pokorny v. Quixtar, 601 F.3d 987, 994 (9th Cir. 2010). Unconscionability is proven against a backdrop of state law, Bridge Fund Capital Corp v. Fastbucks Franchise, 622 F.3d 996, 1003 (9th Cir. 2010)-- but only to a point. Each party has respective burdens at this stage of the proceedings. "'The [party seeking arbitration] bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.'" Id. At 1005 quoting ...