arbitration agreement the court sent an order around a few weeks ago asking us to explain where we preserve these arguments and i think that the letters of the four parties filed last week have explained that these arguments are all preserved mirka i don't think so i didn't read it that way i thought your argument below was different from that for all i'll do i'll try to explain it your honor you know you just didn't make that particular argument was the case not decided yet or something i guess i don't know which particular argument we didn't mean argument you've made a delegation i didn't and that was our our primary argument below absolutely was was they place the argument for left or right that's what the district court ruled on i disagree with that your honor we quoted in our letter page from our reply explains that we believe that the majority of the arguments that they were presenting were in fact a broad side on the entire terms of service and not just the arbitration agreement we quoted ran a center for that because we've been quoting right of center for the entirety of the  primary argument we raised below but the quote that we took from run a center was the supreme court's articulation of the general prime of paint rule and then we applied that in the next two parents he didn't say where in her opinion did she realize that she did not and that was one of the reasons that we objected on this to this argument on appeal we said we presented it to her let's assume you presented it i don't think you win on it do you well this is this is plainly an attack on the arbitration cost there's no there there's no what they're not looking to get rid of their vonage service was that would be that they said we want to stop dealing with vonage they simply said we want to we want to take our disputes with vonage to court rather than to arbitrator but the judge was i believe that they've gone a bit beyond the arbitration agreement and the provisions of the terms of service that they're objecting to well perhaps they've objected to the wrong terms of service in that so i don't that's a separate issue in the version i mean the specific terms within the twenty thirteen terms of service but by the way are we dealing w submitted below the snowden declaration that the two thousand and thirteen terms of service the october first twenty thirteen terms of service when in effect just a few days after they filed suit right they seem to agree that we're dealing with twenty thirty that's right because as mr snowden said in the declaration the arbitration agreement hadn't changed since february two thousand and twelve so what vonage has a large terms of service that covers all of the products and offerings that they are you can spend as much time on the prime with pain argument as you want i guess my my sense is that if you haven't waived it it's still not very efficacious for you because i think they're attacking the arbitration agreement well like i'd like a chance to persuade you you're wrong well if you think you've written in your brief and i think they're more interesting questions because if the rest of the panel doesn't want to hear about it i'm happy to move on to the other aspects of the case but i do think that the the reason that their prime a pain argument that what why the district court heard is actually reinforced by this cour decision in the grampa case in a grampa case asked a substantive question what is the crux of the claim what are these people challenging are they trying to get out of the entire agreement are they trying to get out of just the arbiter what's the evidence  arbitration provisions of the terms of service like the time limitations that apply to claims whether they are arbitrated or whether they're legal and those may be incorrect arguments about unconscionably with me but the prime of paint issue is whether they're trying to if there's other provisions would not apply yes that's exactly what they said below on page thirty five of the excerpts of record where they told the court quote if the terms of service were enforced vonage customers would have no need to arbitrate in their view the time limits that appl during litigation to feed their claims the indemnity provisions that apply in litigation defeat their claims and the releases of liability defeat their claims we think because of those other non arbitration specific portions of the terms of service they believe to feed their claims whether they're arbitrated or whether they're litigated that their attack on the unconscionable ity of the terms of service was broader than just an attack on the arbitration provisions there were doubts to attack your view if you look can you go down t arbitration the green shirt releases of liability that are in the terms of service the time limitations that apply to all claims whether they're arbitrator litigated and the indemnities that's on page forty two of the excerpts of record which is their opposition a motion to compel where they talk about these non arbitration provisions and the reason we know why these provisions apply beyond just arbitration is because of the exceptions to the arbitration agreement the parties have agreed not to arbitrate all of their claim against you sure well your honor it's not that the provision applies to intellectual property claims for at large i know i mean it's much more specific understands i was using your term so we don't have to i might well i thought i said i wish to be precise because this is an error that the district court made below the exception of applies disputes that arise from the validity of intellectual property claims merkin and smith of the only ones who could subject object to the validity of our little intellectual property if they have no because you would you'll never have an intellectual property claim against them i think that's unlikely yes but but more to the point if we just had an intellectual property claim that would i believe be arbitrated but when they interject the political of our intellectual property then they're the ones who get to pursue if we if we don't i'm trying to isolate th in the surf a case there was a unilateral modification provision and the california court of appeal held that it was they did not render the agreement substantively unconscionably because the covenant of good faith and fair dealing applies to unilateral modification provisions and the objections that the party was raising to the substantive unconscionable ety of the contract were adequately addressed by the covenant of good faith and fair dealing now your honor judge who was mentioned in the earlier argument that you drew a distinction between you know a lot of modification provisions as substantively unconscionable you know their mere presence in the terms of service or in the arbitration agreement does the existence of the term as a substantive matter render the agreement is unconscionable and then a procedural aspect to it does the use of a modification provision render the contract oppressive and surprising such that it has a procedural component of it is procedurally unconscionable now the cases that we've cited in all the cases that we've been able to find deal with the just the substantive unconscionable ety of a unilateral modification provision and we believe pretty consistently show that it is not automatically it is  fact not even on maggie it is not substitute unconscionable to have a unilateral modification provision written into the agreement and again i would distinguish from a case like douglas vs talk america where there was no unilateral modification provision in the contract and the party just made a modification and this court held that that was that was unconscionable so we have an instance here where the provision is actually written into the contract notice is given at the time of sign up that we will make changes and those changes then were made over many first off that number of the thirty some odd changes that have happened over the years those are the number of changes to the entire terms of service which again reinforces the argument that i perhaps not persuaded the court that there's a problem paint violation that i mean the actual arbitration agreement itself changed only a handful of times over the course of those years writing didn't become more favorable to bondage over the years oh no on the contrary it became much more favorable to consumers over here in the district court noted that we got rid of the requirement that arbitrations take place in vonage is in new jersey it's in new jersey and i'd like that but i seems to me california consumers wouldn't we got rid of the requirement that we added a provision that vonage would pay for the arbitration fees and this in them right i believe that's the case yeah and i would guess so and if we're if we were to affirm the district court this could have implications for a lot of different kinds of providers even more implications in california than in other parts of the country they get to correct your honor yet that there's there's a broad sweeping effect of the decision below in the the reality is what vonage does with its terms of service and this again  which is attached to the reply that we fall below it makes changes in light of several things when it adds a new line new product line new services it changes to update to say here's a new product here's the terms of service that apply the definite doesn't touch the entirety this isn't tinkering constantly with all the provisions of the terms of service similarly when the law changes it particularly the law of arbitration vonage responds in a way so that the arbitration agreement we believe can be more consumer friendly i would like to address the were a lopsided using the fact that the standard that we called the likelihood approach zero who is more likely to take advantage of these exceptions than the other the court said that three of the exceptions favored vonage and didn't find any favor california supreme court decided the decision in sanchez we think that's a very important because sanchez was a case where an arbitration agreement had a small claims exception just like manages and addressing the mutuality of that arbitration agreement the california supreme court said that the customer was likely to bring almost every claim that a customer was likely to bring would come within the small claims court exception so than doing the balancing which isn't just a you know this isn't a balancing to see who is more likely than not the standard arbitration correct what the second part of that exception says is that if vonage is vonage assigns a claim for collection then the arbitration doesn't automatically apply right so i'm trying to figure out there's a balance between due to  those there's nothing in this record about how large your collection claims are likely to be is that there is nothing in it strikes me with a prepaid model they're not likely to be that large but i just trying to figure out if there is a rough equivalence between those two the consumer can go to court for little claims and you can go to court for little claims or or is there an imbalance there i think that's close to your at your honoree this is not a very expensive product when i like competitive market that competes with landline telephone and and cell phones in the court probably knows what now we have a monthly subscription service and then we bill every month ok that's just like other telephone providers if the court would indulge it would appreciate a few moments for rebuttal thank you existing cases prime and paint says you need to look at the arbitration clause in particular and not at the remit as a whole that's what the district court in this case did concepcion says you cannot be applying law that is targeted at  unique to arbitration agreements and that's not what happened here that there's plenty of case law that says that california's unconscionably rules that subset of a country billet he was looking at unfairly one sided agreements survive some claims outside of arbitration and so on the inside is unconscionable of the ones that are kept outside are liable to be the ones at the end that the drafter of a contract is going to break that strikes me in that sense the question of your poem as an the class action arbitration if you yes everything does survives with the cases say when you're looking at an unfairly one sided test so there are there is ways in which not arbitration provisions could be unfairly one sided if they say for example the statue of limitations statue limitations or merits those wouldn't be a political here the ones unfairly one sided case law applies across all parts of the contract it's not arbitration specific and i gave you an example earlier if it said  substantively substantively i get to keep all of my claims and you don't get your claims well that would be unfairly one sided and it's not related to arbitration or remedies or statutes of limitation that's a doctrine that would apply whether or not there's an arbitration caution a contract here we have a doctrine that says when dividing between arbitration and litigation there's a there's a certain way you must do it or the contract would be unconscionable well i mean it does not that's what those cases say  your honour's argument would apply any time you took that unfairly one sided testing applied to arbitration agreements and that's not what the law and my problem is the converse of that in just a your argument would it would would make every every california doctrine still applicable because what underlies it is this notion of unfairness trying to figure out where the middle ground i guess and here's what i think the answer is to that question this is not an arbitration specific doctrine it's simply the rule look the look at the contract whether in other cases you're looking at the big contract when this case you're looking at the arbitration provision and here's the standard district court for you to apply is it unfairly one sided do you agree that we're dealing with a confession thirteen contract we didn't argue the i'm just asking that's the contract we're looking at right yes ok so and so you saw me so so that the unconscionably provisions that you identify in that contract are the ability to unilaterally modify the  on appeal i would tell you under the dock of the firm for any reason that the modification clause also would bolster the subset of incompatibility so we severed that out for second didn't deal with it it we only dealing with fourteen ten yes  ok and are you arguing that the exception for collections is substantively unconscionable or not it's it's all of it as a whole is unfairly one sided and it's unfairly one sided because when you to arbitrate but the defendants do not you know i'm just trying to isolate it because it would be very helpful to us try solely with respect to the small claims court exception do you agree that your ability to take two did that it roughly balances out with their collections exception notice or and here's why they're they can go to court regular old superior why they can't if it's a small client it can't it's a bigger claim i know that much but it's my question is it a bigger claim or smaller crime it could be either i believe and i'm believe but we unified the courts in california so we don't have a municipal court so that we're not certain what the dollar limits are but after unification understanding it's mostly not so certain and they i think that it's enough to say that they reserve for themselves any more substantial claims they can go to court and the plaintiffs cannot but i think for any claims the way this is written if you look at the words of it they it doesn't say it be neutral it said we can  take in alternative arbitration we vonage can take our claims to small claims court it doesn't say that it says if we sign them the person is actually collecting the money can go to court it's an exception to the arbitration and that's invalid so would you respond to your opponent's argument  that these really aren't on balanced carve outs because there's so much the claims are ones that you were only you were likely to bring to the where you're not going to be attacking your intellectual property because you're just buying telephone service go to arbitration or well and that's what respond to his his argument that with respect at least to intellectual property that's not true that there are quite unlikely to be bringing an intellectual property claim against you i think that they would be bringing it i think it is and indeed then that would be bringing an intellectual property claim that if somebody took some part of their service their software code for example or their technology or their trademarks or anything else and used those they would want to stop the user it's the but are crushed our customers strip squiers libel to be defended from that kind of i understand how competitors are so i think so i think very much so in a piracy case or a theft case or any other kind of case and and they have reserved those rights for themselves to go to court is what the district court sure you know the question is whether that's right we all agree they reserve intellectual property violations i can't possibly consider a case where a customer using a phone service is going to sue the phone carrier for violating the customer's intellectual property there's only one way that provision is done it's protecting vantages intellectual property not not the telling council why don't we just separate that provision doesn't apply to your client anyway we're not dealing with intellectual property rights so why don't why don't we just separate and move on because we're just making these hypotheticals and it went off  her discretion by not severing and then me me answer your question directly there were several provisions in this car about that as a whole are considered together were found to be unconscionable my question is do we provision get seven and there's never an unconscionable the funny because you can always strike the offending provisions and just end up with we both agreed arbitrary let me ask you about the district court's severability ruling because i'm having this is one reason i'm asking you what constitutes science which contractor dealing with the district court said i can't sever because then i don't know what version of the contract i would have and i'm devon difficulty squaring that with the position that both sides take that we're dealing with the two thousand and thirteen version of the contract from now when i think what the district court was saying is i don't know whether then i return to the two thousand and six contract or the two thousand and four one or someone in between and therefore i don't to and i think the court thought that you probably have a sever the provisions that were added to the contract might be added to the contract in between but since you both concede we're dealing with a two thousand and thirteen contract isn't that reason ok so we're doing it in two thousand and thirteen agreement yes the district court says i'm not sure what agreement i would have if i severed these allegedly unconscionable provisions and i say it's easy you have the rest of the two thousand and thirteen agreement i don't know if that's the case if it if it is the all merge together in combined as one is only for a particular provision counteracts an earlier provision and so you have to look back and figure out ok if it's not for if these exceptions don't often was there something in the next earlier one well that's that's what it that's why i'm asking both sides of the question which contract are we dealing with you want to be dealing with an earlier one we've got all kinds of different questions in this case then we do with respect to this one but if you're dealing with this one then it seems to me that just lopping off everything that you say is unconscionable i understand your other argument leaves us with this one that's what i get is not true i'm not sure it is true and i want to placeholder come back to it that is not the only reason for the district courts right but i didn't know i'm asking that question on that particular one i'm not sure that analytically logically that's true your honor that if if these combined agreements the thirty six iterations of them are all considered part of the agreement analytically your honor i think is correct if it is the case that two thousand and thirteen supersedes in all respects the prior agreements then then it stands to reason that you know it's just two thousand and thirteen but i'm not sure it does i think that the that there are parts of those prior agreements that remain agreement didn't have in it on the carve outs the cards the fourteen point fourteen point ten provision would it be unconscionable under the district court's reasoning we argued other things right under the district court's reasoning no sir it would not be unconscionable but that does not mean you can just separate fourteen ten because then i want to start with the incentive argument but i want to come back to the judges of the reasoning you could as as a company if you wanted to put any manner of unconscionable provisions in a contract a list of one hundred unconscionable exceptions and provisions long knowing comfortably that in every case of somebody found in a condo and just right i agree with that i agree with that but here we're dealing with i think you say really one provision notes or fourteenth that provision but there's a number of exceptions within that yes or it's fourteen ten but it goes to the heart of the contract and taints the entire contract this is not why does it go to the heart of the depositions and we get five and you get none and the court would find that a constable that could be struck because it's collateral to the central purpose of the agreement but the central purpose of this agreement is you have to arbitrate we don't so to strike all of those unconscionable provisions goes cuts to the heart of what's going on in this arbitration is not collateral in fact i can't imagine something more central than this i can't find a case for magine something more central and saying you have to arbitrate we don't oh my understanding and maybe i'm wrong but i thought the reason she didn't think severance was appropriate the unilateral modification that it could be changed at any time so that just severing a provision wouldn't mean that it would come out of this contract but not appear in the next contract or some there some form of it would not appear in the next time that they modified the contract they fairly read you are that is a bolstering reason she provides a list of reasons and that's one of the applies excerpts of record page one hundred two which is the provision that identifies a modification power states expressly that it supersedes all prior versions of the contract and vonage is not here trying to enforce the open for you know six agreements that would be perverse bondages change those agreements as arbitration rules because the law changed you know it said you can't force people to go to certain forums we've made the changes in order to improve them if we had to defend the agreements that we don't even want to apply anymore  provisions is there any change so the last change at all the record shows is that the last change the arbitration provision was in february two thousand and twelve and that was it eighteen months until they filed their lawsuit there were changes to the terms of service but i did the record doesn't disclose what was the change that occurred in february two thousand and twelve so the record doesn't disclose that because i can find a two thousand and four agreement of two thousand and six and and the twenty thirteen but i can't find anything in between correct that wasn't order to improve them as the law is there any attack in this case as a substantive matter on the arbitration on the substantive content of the arbitration clause itself other than the exception drawn or no and i wanted to point the page fifty the excerpts of record of the four things that they challenge below as substantively unconscionable in the two thousand and twelve and you read the whole page you won't see the word modification power on there they did not challenge that as a basis for substantive unconscio says expressly that the parties which has been in every version i should say over four of six had a severability clause in two thousand and thirteen had a substantially identical severability clause that said the parties want to maintain as much of this agreement as possible and given the policy of the federal f a a that is a strong policy in favor of arbitration california's own policy which we've cited in our most recent twenty eight j letter the canela case decided last year where california courts have held that when there is just one part of an agreement that's unconscionable it should almost always be severed having found that here plus the policies plus the severability agreement which the court didn't even mention we believe that the district court did abuse her discretion in not severing these exceptions the appropriate time to challenge the exceptions we believe would be if someone has brought a claim in court pursuant to the exceptions and then you could sever those in force the party in arbitration instead of here and claim that's in the heartland of the of the core arbitration agreement we believe that it