Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-01117/USCOURTS-cand-4_09-cv-01117-15/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

STEVEN MCARDLE, an individual, on

behalf of himself, the general public

and those similarly situated,

Plaintiff,

 v.

AT&T MOBILITY LLC; NEW CINGULAR

WIRELESS PCS LLC; and NEW CINGULAR

WIRELESS SERVICES, INC.,

Defendants. /

No. C 09-1117 CW

ORDER GRANTING

DEFENDANTS’ MOTION

FOR RECONSIDERATION,

DENYING AS MOOT

DEFENDANTS’

ADMINISTRATIVE

MOTION FOR LEAVE TO

RESPOND AND GRANTING

DEFENDANTS’

ALTERNATIVE MOTION

TO STRIKE

(Docket Nos. 129 and

178)

Defendants AT&T Mobility LLC, et al., move for reconsideration

of the Court’s order denying their motion for a stay pending

appeal. Plaintiff opposes the motion. After briefing closed on

Defendants’ motion, Plaintiff filed a three-page brief, entitled

“Notice of Recent Authority,” regarding an order on a motion to

stay in Kaltwasser v. Cingular Wireless LLC, No. 07-0411 JF. 

Defendants move for leave to respond to this brief or, in the

alternative, for an order striking it. The motions were taken

under submission on the papers. Having considered the parties’

papers, the Court GRANTS Defendants’ motion for reconsideration and

STAYS this action. Defendants’ administrative motion for leave to

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respond is DENIED as moot; their alternative motion to strike is

GRANTED. 

BACKGROUND

AT&T Mobility is a cellular telephone service provider. 

It owns New Cingular Wireless PCS LLC and New Cingular

Wireless Services, Inc. Plaintiff is a customer of AT&T.

Plaintiff alleges that Defendants do not disclose various

charges assessed against customers who use their phones

outside the United States. He brings claims under California

law for false advertising, unfair business practices, fraud

and violation of the Consumers Legal Remedies Act. 

Plaintiff’s service agreement with Defendants contains an

arbitration provision that requires the parties to the

agreement to arbitrate “all disputes and claims” between them. 

The provision prohibits Defendants’ customers from pursuing

claims in arbitration on behalf of a class of individuals. 

According to its express terms, the prohibition on class

arbitration is not severable from the rest of the arbitration

provision.

On July 30, 2009, Defendants moved to compel arbitration. 

The Court denied their motion, concluding that Shroyer v. New

Cingular Wireless Services, Inc., 498 F.3d 976 (9th Cir.

2007), and Discover Bank v. Superior Court, 36 Cal. 4th 148

(2005), controlled the outcome of this case. In Shroyer, the

Ninth Circuit applied the three-part Discover Bank test to

determine whether a class action waiver in a consumer contract

is unconscionable under California law. 498 F.3d at 983. 

Applying that test here, the Court determined that the class

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action waiver provision in Plaintiff’s service agreement is

unconscionable. In doing so, the Court rejected Defendants’

arguments that the Federal Arbitration Act (FAA) expressly and

impliedly preempted generally applicable state

unconscionability law. Defendants moved for a stay of this

action pending their appeal of the Court’s decision not to

compel arbitration; the Court denied this motion. 

Defendants now seek reconsideration of their request for a

stay based on the United States Supreme Court’s decision to grant

the petition for certiorari in AT&T Mobility LLC v. Concepcion. 

___ S. Ct. ___, 2010 WL 303962 (Mem.). The question presented by

the certiorari petition is 

Whether the Federal Arbitration Act preempts States from

conditioning the enforcement of an arbitration agreement

on the availability of particular procedures -- here,

class-wide arbitration -- when those procedures are not

necessary to ensure that the parties to the arbitration

agreement are able to vindicate their claims.

Pet. for a Writ of Certiorari, AT&T Mobility LLC, 2010 WL 304265. 

In the underlying case, Laster v. AT&T Mobility LLC, the Ninth

Circuit affirmed the district court’s denial of AT&T’s motion to

compel arbitration. 584 F.3d 849, 859 (9th Cir. 2009). The court

based its decision in large part on Shroyer.

The Supreme Court’s action in Concepcion came after its

decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corp.,

130 S. Ct. 1758 (2010), which, in an earlier motion for

reconsideration, Defendants argued justified a reconsideration of

whether this action should be stayed. In Stolt-Nielsen, the Court

addressed “whether imposing class arbitration on parties whose

arbitration clauses are ‘silent’ on that issue is consistent with

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1 AnimalFeeds explained that all “the parties agree that when

a contract is silent on an issue there’s been no agreement that has

been reached on that issue.” Stolt-Nielsen, 130 S. Ct. at 1766. 

2 Although this order was designated not for citation, the

Kaltwasser court subsequently granted permission for it to be

cited. Kaltwasser, No. 07-0411 JF, slip op. at 2 (N.D. Cal. June

30, 2010). 

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the Federal Arbitration Act (FAA).” Id. at 1764. The issue arose

from an arbitration panel’s decision that the parties’ arbitration

clause permitted class arbitration, even though their agreement to

arbitrate had been “silent” on the issue.1 Id. The Court rejected

the arbitration panel’s imposition of class arbitration, stating

that the panel’s “conclusion is fundamentally at war with the

foundational FAA principle that arbitration is a matter of

consent.” Id. at 1775. 

Plaintiff currently has a motion for class certification

before the Court. The hearing on Plaintiff’s motion was set for

June 10, 2010, which the Court vacated in light of Defendants’

motion for reconsideration. On June 17, 2010, Plaintiff filed a

three-page “Notice of Recent Authority,” which provided argument

concerning a district court’s decision on an emergency motion to

stay in light of Concepcion. The decision cited by Plaintiff was

explicitly designated not for publication or citation. However,

the same district court issued a later order, in which it deferred

deciding on the plaintiff’s motion for class certification “pending

the ruling of the United States Supreme Court in AT&T Mobility LLC

v. Concepcion” or until it issued a further order. Kaltwasser,

2010 WL 2557379, at *3 (N.D. Cal.).2

DISCUSSION

Some jurisdictions hold that the trial court must stay

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proceedings while a denial of a motion to compel arbitration is

appealed. See, e.g., Bradford-Scott Data Corp. v. Physician

Computer Network, 128 F.3d 504, 505-06 (7th Cir. 1997); Ehleiter v.

Grapetree Shores, Inc., 482 F.3d 207, 215, n.6 (3rd Cir. 2007). 

However, the Ninth Circuit has held that a district court has

discretion to decide whether to grant a stay, reasoning that a

mandatory stay

would allow a defendant to stall a trial simply by bringing a

frivolous motion to compel arbitration. The system created by

the Federal Arbitration Act allows the district court to

evaluate the merits of the movant’s claim and if, for

instance, the court finds that the motion presents a

substantial question, to stay the proceedings pending an

appeal from its refusal to compel arbitration. See, e.g., Pearce v. E.F. Hutton Group, Inc., 828 F.2d 826, 829 (D.C.

Cir. 1987) (district court, after denying appellant’s motion

to compel arbitration, granted its motion for a stay pending

appeal because it found appellant’s claim raised issues of

first impression and that appellant would suffer substantial

harm if the action were not stayed); C.B.S. Employees Federal

Credit Union v. Donaldson, 716 F. Supp. 307 (W.D. Tenn. 1989)

(developing test to determine whether district court should

stay trial proceedings pending appeal from denial of motion to

stay proceedings pending arbitration). This is a proper

subject for the exercise of discretion by the trial court. 

Britton v. Co-op Banking Group, 916 F.2d 1405, 1412 (9th Cir.

1990). If the appeal is successful, any judgment rendered in the

trial court will be vacated and the parties will be required to

arbitrate the claim. Id. at 1410. 

Britton refers to two cases which provide guidance as to how a

trial court should exercise discretion regarding whether to grant a

stay pending an appeal. Id. at 1412. The one most relevant here

is C.B.S. Employees Federal Credit Union v. Donaldson, 716 F. Supp.

307, 309 (W.D. Tenn. 1989), in which the court determined that a

stay pending appeal of the denial of a motion to compel arbitration

falls under Federal Rule of Civil Procedure 62(c) and thus is

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subject to the four part test set out by the United States Supreme

Court in Hilton v. Braunskill, 481 U.S. 770, 776 (1987). C.B.S.,

716 F. Supp. at 309. 

In Golden Gate Restaurant Association v. City and County of

San Francisco, the Ninth Circuit explained how the Hilton test is

applied. 512 F.3d 1112, 1115-16 (9th Cir. 2008). A party seeking

a stay must show either (1) a strong likelihood of success on the

merits of its appeal and the possibility of irreparable harm, or

(2) that serious questions regarding the merits exist and the

balance of hardships tips sharply in its favor. Id. at 1115. 

These two alternatives “represent two points on a sliding scale in

which the required degree of irreparable harm increases as the

probability of success decreases.” Id. at 1116. (citation and

internal quotation marks omitted). A court must “consider where

the public interest lies separately from and in addition to whether

the applicant for stay will be irreparably injured absent a stay.” 

Id. (citation and internal quotation and alteration marks omitted).

Plaintiff acknowledges that the Supreme Court’s recent actions

have raised substantial questions regarding whether this case can

proceed as a class action, if at all. Because such questions

exist, a stay is warranted if the balance of hardships tips in

Defendants’ favor. 

Defendants contend that allowing litigation to proceed would

lead to additional costs, which may be unnecessary. They note

that, if the Court were to grant Plaintiff’s motion for class

certification, its decision could be vacated based on the outcome

in Concepcion. Thus, they argue, any litigation activity

concerning class certification, along with the expenses incurred as

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a result, could be in vain. In addition, Defendants contend that

discovery requests, requiring the expansive production of

documents, remain pending and that responding to them would entail

significant cost. For his part, Plaintiff does not argue that he

would be prejudiced by a stay. Instead, he suggests that the costs

of which Defendants complain are minimal and that the public

interest favors allowing this case to proceed because there is “a

risk of lost evidence” and Defendants may be “destroying call

detail records and billing data.” Opp’n at 6-7. 

The balance of hardships tips in Defendants’ favor. The

litigation expenses that Defendants would incur in defending this

action outweigh Plaintiff’s unsubstantiated fear concerning the

wrongful destruction of call records. Indeed, Defendants represent

that these records “are now being maintained indefinitely.” Reply

at 6. If evidence shows otherwise, Plaintiff may move for

appropriate relief under Federal Rule of Civil Procedure 37. Also,

it is not apparent that the financial burden of continuing to

litigate this action is as inconsequential as Plaintiff suggests;

he acknowledges that expert discovery and dispositive motion

practice remain ahead, which necessarily would increase Defendants’

costs. Because the viability of prosecuting this case as a class

action is in question, it is not apparent that Defendants should

bear this additional expense. In addition, the public interest in

the preservation of judicial resources weighs in favor of staying

this case.

Plaintiff cites the Court’s decision in Bradberry v. T-Mobile

USA to deny the defendant’s motion for a stay pending appeal. 2007

WL 2221076, at *5 (N.D. Cal.). The circumstances in Bradberry are

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distinguishable. The Court’s decision in Bradberry came before the

Supreme Court called Shroyer into question. Moreover, the

Bradberry defendant moved for a stay before significant discovery

had occurred. Thus, the Court denied the defendant’s motion

“without prejudice to refiling if discovery becomes burdensome or

if the trial date approaches.” Id. Here, substantial discovery

has already taken place. Based on the circumstances here, a stay

is warranted. 

Finally, the Court finds that Plaintiff violated the Civil

Local Rules by submitting his “Notice of Recent Authority.” Civil

Local Rule 7-3(d) permits the filing of a “Statement of Recent

Decision” without leave of the Court, so long as it is done

“without argument.” Because it was filed without leave,

Plaintiff’s three-page submission, which contained argument,

constitutes unauthorized briefing. Furthermore, Plaintiff cited a

decision by the Kaltwasser court that was designated not for

publication or citation. This contravenes Civil Local Rule 3-4(e). 

And, as noted above, that court issued a subsequent order taking

the position contrary to Plaintiff’s. Accordingly, the Court

strikes Plaintiff’s submission from the record. 

CONCLUSION

For the foregoing reasons, the Court GRANTS Defendants’ motion

for reconsideration (Docket No. 129), DEFERS deciding Plaintiff’s

motion for class certification and STAYS this action pending the

United States Supreme Court’s final action in Concepcion. Within

fourteen days of the date of that action, the parties shall file a

joint brief that offers a proposal on how the Court should proceed

in light of the decision in Concepcion. 

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The Court STAYS discovery and VACATES all current case

management dates. A further case management conference will be

held on December 14, 2010 at 2:00 p.m. 

Defendants’ administrative motion for leave to respond to

Plaintiff’s Notice of Recent Authority is DENIED as moot; their

alternative motion to strike Plaintiff’s notice is GRANTED. 

(Docket No. 178.) 

IT IS SO ORDERED.

Dated: July 20, 2010 

CLAUDIA WILKEN

United States District Judge

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