Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-01854/USCOURTS-casd-3_09-cv-01854-3/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SHANNON CARNEY,

Plaintiff,

CASE NO. 09CV1854 DMS (WVG)

ORDER GRANTING RENEWED

MOTION TO COMPEL

ARBITRATION AND STAY

PROCEEDINGS PENDING

ARBITRATION

[Docket No. 69]

vs.

VERIZON WIRELESS TELECOM, INC., et

al.,

Defendant.

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

Case 3:09-cv-01854-DMS-WVG Document 76 Filed 08/09/11 Page 1 of 7
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 The underlying facts of Concepcion are very similar to those of the present case. There, the

Concepcion plaintiffs alleged AT&T Mobility engaged in fraud and false advertising when it charged sales tax

on the full retail price of phones it advertised as free. The issue was whether the arbitration agreement between

the parties was enforceable under California law. Concepcion, 131 S.Ct. 1740. 

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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.

1

 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

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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. 

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

Agreement contains the arbitration clause in dispute, which provides: 

Dispute Resolution and Mandatory Arbitration

WE EACH AGREE TO SETTLE DISPUTES (EXCEPT CERTAIN SMALL

CLAIMS) ONLY BY ARBITRATION.... WE ALSO AGREE, TO THE

FULLEST EXTENT PERMITTED BY LAW, THAT: 

(1) THE FEDERAL ARBITRATION ACT APPLIES TO THIS AGREEMENT.

EXCEPT FOR QUALIFYING SMALL CLAIMS COURT CASES, ANY

CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS

AGREEMENT ... OR ANY PRODUCT OR SERVICE PROVIDED UNDER OR IN

CONNECTION WITH THIS AGREEMENT OR SUCH A PRIOR AGREEMENT ...

WILL BE SETTLED BY ONE OR MORE NEUTRAL ARBITRATORS....

(FAC Ex. 3) (capital and bold letters in original.) 

Verizon argues that Plaintiff’s claims against it relating to the allegedly improper sales tax

charged on Plaintiff’s phone purchases fall “squarely within the terms of her arbitration agreement.”

(Motion to Compel at 8, 9.) As the parties do not disagree about the existence of a valid, enforceable

arbitration agreement, the Court proceeds to the issue of whether the arbitration agreement

encompasses the current dispute. Samson, 637 F.3d at 923-24 (citation omitted). 

It is well-settled that federal policy favors arbitration. Chiron, 207 F.3d at 1131; First Options

of Chicago, Inc. v. Kaplan, 514 U.S. 938, 948 (1995). The Supreme Court affirmed this policy in

Concepcion, noting that the federal policy favoring arbitration agreements is a liberal one,

“notwithstanding any state policies to the contrary.” 130 S.Ct. at 1749 (citation omitted). In light of

this policy, the Supreme Court has instructed that “any doubts concerning the scope of arbitrable

issues should be resolved in favor of arbitration.” Moses H. Cone Mem’l Hosp., 460 U.S. at 24-25.

The Court concludes that the terms of the arbitration clause encompass Plaintiff’s dispute about

the sales tax charged on her cellular phone purchases. The dispute is clearly one that “relates to the

amount that Plaintiff paid for the products sold by Verizon Wireless ‘in connection with’ the Customer

Agreement, [and thus] is within the scope of the parties’ agreement to arbitrate.” (Mot. to Compel at

9.) Plaintiff’s argument that the cellular phones were not provided in connection with the Customer

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Agreement is without merit, as Plaintiff was able to purchase the phones at a discounted price because

she agreed to enter into a wireless service contract with Verizon for a specified period of time. 

Plaintiff points to her transaction with Verizon on July 23, 2008, as support for her argument.

She contends that because she purchased her phone at 1:18 p.m., and subsequently entered into the

Customer Agreement at 1:19 p.m., she owned the phone prior to agreeing to the Customer Agreement.

(Opp’n. at 6.) According to Plaintiff, “[a] phone already owned is not provided in connection with

the [Customer Agreement].” (Id.) But this argument ignores the realities of the transaction as well

as the allegations of Plaintiff’s complaint. Plaintiff, after receiving the phones at a discounted price,

was not free to leave without committing to Verizon’s wireless service agreement. (See FAC ¶ 34

(“As a condition for receiving the cell-phone at a discounted price, [Plaintiff] agreed to enter into a

wireless service[] agreement with Verizon for a two-year period.”)). Accordingly, the Court finds that

the Customer Agreement and arbitration clause apply to the present dispute.

Plaintiff next argues that several of Verizon’s documents refer to wireless service, but not to

cellular phones, and this indicates Verizon did not intend the terms of the Customer Agreement to

apply to the phones. Plaintiff notes that the Agreement she signed when purchasing the cellular

phones “lists all of [her] purchases except the phones – the Calling Plan ... Caller ID, a Plan/Feature

Brochure, and a Welcome Guide containing, among other things, the WSA.” (Opp’n. at 4.) Plaintiff

also notes that Verizon provided her with separate receipts for the phone purchases, and these receipts

did not contain any agreements. (Id. at 5.) As such, Plaintiff argues, Verizon deliberately omitted the

phones from the Agreement and receipts, and did not intend the Customer Agreement to apply to

phones. (Id.) Plaintiff’s interpretation of the Agreement, however, ignores its first sentence,

“I agree to the current Verizon Wireless Customer Agreement (CA) . . . .” (Diaz Decl., Exs. 1 & 2.)

By signing the Agreements, Plaintiff clearly agreed to abide by the Customer Agreement and the

arbitration provision contained therein. In addition, because the terms of the Customer Agreement

apply to the entire bundled transaction, the absence of a separate agreement on the receipts for the

phones is irrelevant. Nothing in the Agreements, Customer Agreements, arbitration clause, or receipts

excludes Plaintiff’s cellular phones from these agreements. 

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Finally, Plaintiff argues that because Verizon’s present motion directly contradicts a position

it took in an earlier pleading, “Verizon should ... be judicially estopped from arguing against itself.”

(Opp’n. at 9.) Specifically, Plaintiff points out that in Verizon’s Reply Brief in Support of its Motion

to Dismiss the FAC (“Reply Brief”), Verizon asserted: “Plaintiff continues to misconstrue the

documents attached to her FAC. All of these documents unambiguously concern disclosures and

charges on monthly cellular service bills, not on cellular phone purchases in either stand-alone or

bundled transactions.” (Opp’n. at 9 (quoting Verizon’s Reply Brief at 7).) 

Verizon argues that by this statement, it was only referring to those documents that were

attached to the FAC and which Plaintiff continued to misconstrue: the Customer Information

Overview, the CTIA Code, the Assurance of Voluntary Compliance, and the Federal Communication

Commission’s Proposed Rulemaking. (Reply at 10.) Plainly, Verizon’s stated position was that “[all

of] the documents attached to [Plaintiff’s] FAC” do not concern cellular phone purchases, and the

Customer Agreement was one of those documents. Elsewhere in its earlier filed pleading, Verizon

argued, “[m]erely because Plaintiff purchased her phone with service does not mean that the CIO (or

the Customer Agreement) has anything to do with the sales tax charged on phone purchases.” (Reply

Brief at 7.) That position clearly is inconsistent with Verizon’s current position – that the Customer

Agreement, and its arbitration clause, apply to disputes about the sales tax charged on cellular phone

purchases.

Judicial estoppel “generally prevents a party from prevailing in one phase of a case on an

argument and then relying on a contradictory argument to prevail in another phase.” New Hampshire

v. Maine, 532 U.S. 742, 749 (2001) (citing Pegram v. Herdrich, 530 U.S. 211, 227, n.8 (2000)). The

doctrine is an equitable one that is invoked by a court at its discretion, after consideration of three

factors. Id. First, the party’s two positions – as here – must be “clearly inconsistent” with each other.

Id. (citing United States v. Hook, 195 F.3d 299 306 (7th Cir. 1999)). Second, the court looks to

whether the party has “succeeded in persuading a court to accept that party’s earlier position, so that

judicial acceptance of an inconsistent position in a latter proceeding would create ‘the perception that

either the first or the second court was misled.’” Id. (quoting Edwards v. Aetna Life Ins. Co., 690 F.2d

595, 598 (6th Cir. 1982)). Finally, the court must consider whether the party against whom estoppel

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is sought would “derive an unfair advantage” if not estopped. In re Hoopai, 581 F.3d 1090, 1097 (9th

Cir. 2009) (citations omitted). 

/ / /

Applying these factors, the Court declines to invoke judicial estoppel because this Court was

not persuaded to accept Verizon’s earlier position, and thus Verizon did not benefit from its

inconsistent position. In the May 13, 2010 Order granting in part and denying in part Verizon’s

Motion to Dismiss the FAC (Doc. 57), the Court did not address whether the Customer Agreement

had anything to do with the sales tax charged on the purchase of phones. The Court only found, in

relevant part, that the Customer Information Overview “refers to the monthly service bill, not the bill

for the purchase of the phone.” (Order, Doc. 57 at 6.)

IV.

CONCLUSION

For these reasons, Verizon’s renewed motion to compel arbitration of Plaintiff’s claims against

it and to stay the proceedings pending arbitration is granted. The Clerk of Court shall administratively

close this case pending completion of the arbitration proceedings. 

IT IS SO ORDERED.

DATED: August 9, 2011

HON. DANA M. SABRAW

United States District Judge

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