Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-01117/USCOURTS-cand-4_09-cv-01117-6/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 DENYING

DEFENDANTS’ MOTION

TO COMPEL

ARBITRATION AND

GRANTING IN PART AND

DENYING IN PART

PLAINTIFF’S MOTION

TO STRIKE PORTIONS

OF THE ANSWER

Plaintiff Steven McArdle charges Defendants AT&T Mobility LLC,

New Cingular Wireless PCS LLC and New Cingular Wireless Services,

Inc. with unlawfully imposing certain fees in connection with

providing cellular telephone services. Defendants now move for an

order compelling Plaintiff to submit his claims to binding

arbitration pursuant to the terms of a service agreement between

the parties. Plaintiff opposes the motion and moves to strike a

number of defenses from the answer. The matters were heard on

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September 3, 2009. Having considered oral argument and all of the

papers submitted by the parties, the Court denies Defendants’

motion and grants Plaintiff’s motion in part and denies it in part.

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’s.

According to the complaint, Defendants impose the following

charges, among others, on customers who turn on their phones

outside the United States: 1) a charge every time their telephone

rings to alert them of an incoming call, even if the call is not

answered; 2) a charge every time a notification is sent to their

telephone alerting them that a voicemail message has been left,

even if the message is not retrieved; and 3) an international data

transfer fee, imposed in connection with sending text, video or

picture messages, above and beyond the higher rate that already

applies to sending such messages from abroad. Plaintiff asserts

that these charges are not disclosed to customers.

Plaintiff incurred approximately fourteen dollars’ worth of

these “international roaming fees” when he used his phone in Italy. 

He now asserts 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

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terms, the prohibition on class arbitration is not severable from

the rest of the arbitration provision.

DISCUSSION

I. Motion to Compel Arbitration

A. Legal Standard

Under the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq.,

written agreements that controversies between the parties shall be

settled by arbitration are valid, irrevocable, and enforceable. 

9 U.S.C. § 2. A party aggrieved by the refusal of another to

arbitrate under a written arbitration agreement may petition the

district court which would, save for the arbitration agreement,

have jurisdiction over that action, for an order directing that

arbitration proceed as provided for in the agreement. 9 U.S.C.

§ 4. The FAA further provides that:

If any suit or proceeding be brought in any of the courts

of the United States upon any issue referable to

arbitration under an agreement in writing for such

arbitration, the court in which such suit is pending,

upon being satisfied that the issue involved in such suit

or proceeding is referable to arbitration under such an

agreement, 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.

If the court is satisfied “that the making of the arbitration

agreement or the failure to comply with the agreement is not in

issue, the court shall make an order directing the parties to

proceed to arbitration in accordance with the terms of the

agreement.” Id. The FAA reflects a “liberal federal policy

favoring arbitration agreements.” Gilmer v. Interstate/Johnson

Lane Corp., 500 U.S. 20, 25 (1991) (quoting Moses H. Cone Mem.

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Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). A district

court must compel arbitration under the FAA if it determines that:

1) there exists a valid agreement to arbitrate; and 2) the dispute

falls within its terms. Stern v. Cingular Wireless Corp., 453 F.

Supp. 2d 1138, 1143 (C.D. Cal. 2006) (citing Chiron Corp. v. Ortho

Diagnostic Sys., 207 F.3d 1126, 1130 (9th Cir. 2000)). Here, the

parties do not dispute that the present dispute falls within the

terms of the service agreement’s arbitration provision. The only

question is whether the arbitration provision is valid.

B. Unconscionability

The FAA provides that arbitration agreements “shall be valid,

irrevocable, and enforceable, save upon such grounds as exist at

law or in equity for the revocation of any contract.” 9 U.S.C.

§ 2. Under this provision, “general contract defenses such as

fraud, duress or unconscionability, grounded in state contract law,

may operate to invalidate arbitration agreements.” Circuit City

Stores v. Adams, 279 F.3d 889, 892 (9th Cir. 2002).

Under California law, “[i]f the court as a matter of law finds

the contract or any clause of the contract to have been

unconscionable at the time it was made the court may refuse to

enforce the contract, or it may enforce the remainder of the

contract without the unconscionable clause, or it may so limit the

application of any unconscionable clause as to avoid any

unconscionable result.” Cal. Civ. Code § 1670.5(a).

 Unconscionability has both a procedural and a substantive

component. Both components must be present before a court may

refuse to enforce a contract. Armendariz v. Found. Health

Psychcare Servs., 24 Cal. 4th 83, 114 (2000). However, they need

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not be present to the same degree; “the more substantively

oppressive the contract term, the less evidence of procedural

unconscionability is required to come to the conclusion that the

term is unenforceable, and vice versa.” Id.

 A contract is procedurally unconscionable if it is a contract

of adhesion. Circuit City, 279 F.3d at 893 (“The [arbitration

agreement] is procedurally unconscionable because it is a contract

of adhesion.”); see also Flores v. Transamerica Homefirst, Inc., 93

Cal. App. 4th 846, 853 (2002) (“A finding of a contract of adhesion

is essentially a finding of procedural unconscionability.”). A

contract of adhesion is a “standardized contract, which, imposed

and drafted by the party of superior bargaining strength, relegates

to the subscribing party only the opportunity to adhere to the

contract or reject it.” Armendariz, 24 Cal. 4th at 113 (quoting

Neal v. State Farm Ins. Co., 188 Cal. App. 2d 690, 694 (1961)). 

Defendants do not dispute that the service agreement at issue here

is a contract of adhesion, although they maintain that any

procedural unconscionability is “minimal.” Rather, Defendants

assert that any procedural unconscionability that may exist is not

sufficient to render the arbitration provision unenforceable

because the provision is not substantively unconscionable at all.

Substantive unconscionability focuses on the harshness and

one-sided nature of the terms of the contract. A & M Produce Co.

v. FMC Corp., 135 Cal. App. 3d 473, 486-87 (1982). In Discover

Bank v. Superior Court, 36 Cal. 4th 148 (2005), the California

Supreme Court noted that class action waivers are substantively

unconscionable “inasmuch as they may operate effectively as

exculpatory contract clauses,” because “[a]ll contracts which have

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for their object, directly or indirectly, to exempt anyone from

responsibility for his own fraud, or willful injury to the person

or property of another, or violation of law, whether willful or

negligent, are against the policy of the law.” Id. at 161 (quoting

Cal. Civ. Code § 1668). Addressing the interplay between

substantive and procedural unconscionability, the court stated

that, “at least under some circumstances, the law in California is

that class action waivers in consumer contracts of adhesion are

unenforceable, whether the consumer is being asked to waive the

right to class action litigation or the right to classwide

arbitration.” Id. at 153. The court explained the circumstances

in which such a waiver will be unconscionable:

We do not hold that all class action waivers are

necessarily unconscionable. But when the waiver is found

in a consumer contract of adhesion in a setting in which

disputes between the contracting parties predictably

involve small amounts of damages, and when it is alleged

that the party with the superior bargaining power has

carried out a scheme to deliberately cheat large numbers

of consumers out of individually small sums of money,

then, at least to the extent the obligation at issue is

governed by California law, the waiver becomes in

practice the exemption of the party from responsibility

for its own fraud, or willful injury to the person or

property of another. Under these circumstances, such

waivers are unconscionable under California law and

should not be enforced.

Id. at 162-63 (citation, internal quotation marks and alteration

marks omitted).

In Shroyer v. New Cingular Wireless Services, Inc., 498 F.3d

976 (9th Cir. 2007), the Ninth Circuit applied Discover Bank to a

previous version of the class arbitration waiver that is at issue

in this case. The court noted that:

California Courts of Appeal have construed Discover Bank

as providing for a three-part inquiry in order to

determine whether a class action waiver in a consumer

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contract is unconscionable. Under this three-part

inquiry, courts are required to determine: (1) whether

the agreement is a consumer contract of adhesion drafted

by a party that has superior bargaining power;

(2) whether the agreement occurs in a setting in which

disputes between the contracting parties predictably

involve small amounts of damages; and (3) whether it is

alleged that the party with the superior bargaining power

has carried out a scheme to deliberately cheat large

numbers of consumers out of individually small sums of

money.

Id. at 983 (citations and internal quotation marks omitted). The

court also noted, “Although there are most certainly circumstances

in which a class action waiver is unconscionable under California

law despite the fact that all three parts of the Discover Bank test

are not satisfied,” it is “unnecessary to explore those

circumstances” in cases where all three parts of the test are

satisfied. Id. Shroyer itself was one such case; the court

concluded that the class arbitration waiver satisfied all three

parts of the Discover Bank test, which rendered the arbitration

provision unenforceable because of a 

non-severability clause.

All three parts of the Discover Bank test are satisfied by the

class arbitration waiver in the present case as well. First, it is

undisputed that the service agreement is a consumer contract of

adhesion. Second, as Shroyer held, disputes between cellular

telephone service providers and their customers predictably involve

small amounts of damages. See id. at 984. The present case, in

which Plaintiff alleges that he suffered only fourteen dollars in

damages as a result of Defendants’ unlawful fees, exemplifies the

point. Third, Plaintiff alleges that Defendants have engaged in a

scheme whereby they charge international roaming fees that are

relatively small with respect to individual customers, but which

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nonetheless provide Defendants with tens of millions of dollars of

annual income. The class arbitration waiver is an inherent part of

this scheme because, while customers may be able to recover the

fees they were charged individually, most customers will not bother

with arbitration over such a small amount of money, and thus

Defendants will be able to keep the vast majority of their illgotten profits.

Notwithstanding the clarity of the holdings in Discover Bank

and Shroyer, Defendants argue that the arbitration provision in

Plaintiff’s service agreement is enforceable because it contains a

number of “pro-consumer” features. Defendants point to the

following features in particular: 1) customers are not required to

pay for the cost of arbitration for claims of up to $75,000; 2) if

the arbitrator awards the customer more than Defendants’ last

written settlement offer before an arbitrator was selected,

Defendants will pay the customer the greater of $10,000 or the

arbitral award; 3) if the arbitrator awards the customer more than

Defendants’ last written settlement offer, Defendants will pay the

customer’s attorney twice the amount of the attorney’s fees

incurred; 4) Defendants will refrain from seeking attorneys’ fees

from customers, even though they may be entitled to such fees under

applicable law; 5) either party may bring an action in small claims

court in lieu of initiating arbitration proceedings; 6) the

arbitrator can award the same remedies to individual customers that

a court could award; 7) arbitration is conducted under the American

Arbitration Association’s commercial dispute resolution procedures,

which are designed with consumers in mind; 8) arbitration takes

place in the county of the customer’s billing address; and 9) the

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customer has the option of having a hearing either in-person or by

telephone, or having no hearing at all.

The Court agrees with Defendants that these features are

desirable and increase the fairness of the arbitration process to

customers. Nonetheless, these features do not change the fact that

the class arbitration waiver is substantively unconscionable. In

Shroyer, Defendants also raised the consumer-friendly nature of the

previous version of the arbitration provision in an attempt to

avoid a finding of unconscionability:

Cingular contends that the class arbitration waiver at

issue here is not substantively unconscionable because,

unlike the waiver in Discover Bank, it does not operate

to “insulate a party from liability that otherwise would

be imposed under California law,” or exempt Cingular

“from responsibility for [its] own fraud, or willful

injury to the person or property of another.” 36 Cal.

4th at 161. The main difference, according to Cingular,

is that under its arbitration clause Cingular pays for

the full cost of arbitration -- so long as a claim is not

brought under circumstances that would result in

sanctions under the standard in Rule 11(b) of the Federal

Rules of Civil Procedure -- and plaintiffs who receive

awards that are equal to or greater than their demands

receive attorneys’ fees. As a result, Cingular asserts

that the arbitration clause does not deter customers from

arbitrating individual small-value claims and does not

insulate Cingular from liability.

498 F.3d at 986 (alteration in original). The Ninth Circuit

rejected Defendants’ argument:

Cingular’s attempt to distinguish Discover Bank based on

the availability of attorneys’ fees and arbitration costs

is without merit. The California Supreme Court in

Discover Bank rejected “the rationale . . . that the

potential availability of attorney fees to the prevailing

party in arbitration or litigation ameliorates the

problem posed by such class action waivers.” 36 Cal. 4th

at 162 (citations omitted). As the court reasoned,

“[t]here is no indication . . . that, in the case of

small individual recovery, attorney fees are an adequate

substitute for the class action or arbitration

mechanism.” Id. This rationale applies with equal force

to arbitration costs, which are almost always far less

than attorneys’ fees. Contrary to Cingular’s contention,

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the court was concerned that when the potential for

individual gain is small, very few plaintiffs, if any,

will pursue individual arbitration or litigation, which

greatly reduces the aggregate liability a company faces

when it has exacted small sums from millions of

consumers. See id. at 158-62. It did not suggest that a

waiver is unconscionable only when or because a plaintiff

in arbitration may experience a net loss (including

attorneys’ fees and costs).

498 F.3d at 986 (footnote omitted; alterations in original).

In Defendants’ view, the revised arbitration provision

resolves the problems identified in Shroyer because customers can,

under certain circumstances, recover $10,000 from arbitration even

if their actual damages were much smaller. Accordingly, Defendants

argue, there is an adequate incentive even for customers with small

claims to pursue arbitration. This argument is unpersuasive. 

Defendants’ customers are only entitled to $10,000 if the

arbitrator awards them more than Defendants’ last written

settlement offer before the arbitrator was selected. Thus,

Defendants can eliminate the incentive to arbitrate small claims

merely by offering to refund the charges on an individual basis. 

In addition, it is far from clear that Defendants’ customers are

generally aware of the details of the arbitration procedures. 

Without knowledge of the potential for a $10,000 recovery, there is

no incentive for customers to pursue arbitration. More

importantly, the fact remains that many customers, if not most, are

not likely to dispute the charges in the first place, whether

informally or through arbitration. Defendants have established a

system whereby they can continue to keep the profits from their

allegedly unlawful charges so long as they offer to refund the

charges to the few customers who dispute them. In this way, the

unavailability of class arbitration “greatly reduces the aggregate

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liability” faced by Defendants for their exaction of “small sums

from millions of consumers.” Shroyer, 498 F.3d at 986.

The Court concludes that the class arbitration waiver is

unconscionable. Because it is expressly not severable from the

other portions of the arbitration provision, the arbitration

provision is not enforceable. The Court notes that at least five

other district courts within the Ninth Circuit have reviewed the

exact arbitration provision at issue here and have reached this

same conclusion. See Coopwood v. AT&T Mobility LLC, No. CV 08-3683

(C.D. Cal. Aug. 14, 2009); Stiener v. Apple Computer, Inc., 556 F.

Supp. 2d 1016 (N.D. Cal. 2008); In re Apple & AT & TM Antitrust

Litig., 596 F. Supp. 2d 1288 (N.D. Cal. 2008); Laster v. T-Mobile

USA, Inc., 2008 WL 5216255 (S.D. Cal.); Kaltwasser v. Cingular

Wireless LLC, 543 F. Supp. 2d 1124 (N.D. Cal. 2008).

C. Preemption

1. Express preemption

Defendants argue that, even if the class waiver is

unconscionable under California law, a finding that the arbitration

provision is unenforceable due to unconscionability would be

expressly preempted by the FAA because such a finding would

impermissibly “impose[] prerequisites to enforcement of an

arbitration agreement that are not applicable to contracts

generally.” Preston v. Ferrer, ___ U.S. ___, 128 S. Ct. 978, 985

(2008). As Defendants note, “state law, whether of legislative or

judicial origin,” is not preempted by § 2 of the FAA “if that law

arose to govern issues concerning the validity, revocability, and

enforceability of contracts generally,” whereas a “state-law

principle that takes its meaning precisely from the fact that a

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contract to arbitrate is at issue does not comport with this

requirement of § 2” and is preempted. Perry v. Thomas, 482 U.S.

483, 492 n. 9 (1987).

Defendants’ express preemption argument has been rejected

numerous times:

The California Supreme Court in Discover Bank soundly

rejected this very same express preemption argument that

Cingular now makes, 36 Cal. 4th at 163-66, and we have

done so in two prior decisions that held that class

action waivers were unconscionable under California law

and applied the same generally applicable California

unconscionability principles as the California court in

Discover Bank. Ingle v. Circuit City Stores, Inc., 328

F.3d 1165, 1176 n.15 (9th Cir. 2003); Ting v. AT&T, 319

F.3d 1126, 1150 n.15 (9th Cir. 2003). The rule announced

in Discover Bank is simply a refinement of the

unconscionability analysis applicable to contracts

generally in California, as discussed in Armendariz v.

Foundation Health Psychcare Services, Inc., 24 Cal. 4th

83 (2000). As we explained in Ingle, “the Armendariz

court applied ordinary principles of contract law in

evaluating the arbitration agreement in that case” and

its analysis “was fully consistent with federal law.” 

328 F.3d at 1170 n. 3; see also Am. Online, Inc. v.

Super. Ct., 90 Cal. App. 4th 1, 17-18 (2001) (refusing to

enforce forum selection clause that effectively waived

class action relief under the California Consumers Legal

Remedies Act).

Shroyer, 498 F.3d at 987 (citation format altered). As the Ninth

Circuit explained in Ting:

Because unconscionability is a generally applicable

contract defense, it may be applied to invalidate an

arbitration agreement without contravening § 2 of the

FAA. See Doctor’s Assocs., Inc. v. Casarotto, 517 U.S.

681, 687 (1996). We recognize . . . that the FAA

preempts state laws of limited applicability . . . but we

follow well-settled Supreme Court precedent in rejecting

the proposition that unconscionability is one of those

laws. See id. at 686-87 (stating that the Act “declares

that state law may be applied if that law arose to govern

issues concerning validity, revocability, and

enforceability of contracts generally,” and holding that

“generally applicable contract defenses, such as fraud,

duress or unconscionability, may be applied to invalidate

arbitration agreements without contravening” the FAA)

(emphasis added).

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319 F.3d at 1150 n. 15.

Defendants offer no persuasive basis for distinguishing

Shroyer and the other cases that have rejected their express

preemption argument. They state only that it would take “far more

than a mere ‘refinement’ of California’s unconscionability standard

. . . to justify refusing to enforce ATTM’s revised arbitration

provision, which was not before the Shroyer court.” Mot. at 18

(emphasis in original). Rather, they argue, any finding of

unconscionability would be a “total distortion of” and “is

manifestly not” California law. Id. at 18-19. The Court is not

persuaded that its conclusion regarding unconscionability, which

flows directly from the California Supreme Court’s decision in

Discover Bank, is a total distortion of California law.

Ingle, Ting, Shroyer and Discover Bank foreclose Defendants’

express preemption argument.

2. Conflict Preemption

“Conflict preemption, a form of implied preemption, exists if

compliance with both federal and state law is impossible, or where

state law stands as an obstacle to the accomplishment and execution

of the full purposes and objectives of Congress.” Shroyer, 498

F.3d at 988 (internal quotation marks omitted). However, mere

“tension between federal and state law is not enough to establish

conflict preemption.” Id. (internal quotation marks omitted). 

Rather, conflict preemption will exist “only in those situations

where conflicts will necessarily arise.” Id. (internal quotation

marks omitted).

Defendants argue that, even if the class arbitration waiver is

unconscionable, and even if a finding of unenforceability due to

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unconscionability is not expressly preempted, such a finding is

nonetheless impliedly preempted because it conflicts with the FAA’s

purpose of favoring arbitration agreements.

In Shroyer, Defendants raised the same argument that “a broad

reading of Discover Bank that invalidates [their] allegedly

consumer-friendly arbitration clause would stand as an obstacle to

the accomplishment and execution of the full purposes and objective

of Congress in enacting the [FAA] and would be preempted under the

doctrine of conflict preemption.” 498 F.3d at 988 (internal

quotation marks omitted). And, like the other arguments Defendants

advance in support of their motion, the Ninth Circuit rejected this

one as well.

Defendants apparently concede that their conflict preemption

argument fails under Shroyer, but they argue that the Supreme

Court’s subsequent decision in Preston implicitly overruled Shroyer

on this point. In Preston, the Court considered whether the

California Labor Commissioner could, consistent with the FAA,

determine that a contract which contained an arbitration provision

was invalid and unenforceable under the California Talent Agencies

Act. The Labor Commissioner had primary jurisdiction over the

Talent Agencies Act claim. The Supreme Court held that, “when

parties agree to arbitrate all questions arising under a contract,

state laws lodging primary jurisdiction in another forum, whether

judicial or administrative, are superseded by the FAA.” 128 S. Ct.

at 981. Thus, the validity of the contract was for the arbitrator,

not the Labor Commissioner, to decide.

Preston’s holding has no bearing on the issue of conflict

preemption presented on this motion. In support of their argument

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United States District Court

For the Northern District of California

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that Preston overruled Shroyer, Defendants point only to the

Supreme Court’s rejection of the argument that allowing the Labor

Commissioner to determine the validity of the contract in the first

instance would merely postpone arbitration until after the

Commissioner exercised her primary jurisdiction, and therefore did

not conflict with the goals of the FAA. In doing so, the Court

noted that arbitration, “if it ever occurred following the Labor

Commissioner’s decision, would likely be long delayed, in

contravention of Congress’ intent to move the parties to an

arbitrable dispute out of court and into arbitration as quickly and

easily as possible.’” 128 S. Ct. at 986 (internal quotation marks

omitted). Defendants extrapolate from this remark that

invalidating an arbitration provision that does not permit

arbitration on a class-wide basis would conflict with the FAA’s

preference for speedy resolution of controversies, because

resolving disputes through class arbitration would take much longer

than resolving disputes on an individual basis. The Court finds no

support for this argument in Preston. If Defendants were correct,

then class arbitration itself would be preempted by the FAA. This

is clearly not the case.

Moreover, the Court is bound by Shroyer unless Preston has

“undercut the theory or reasoning underlying” Shroyer such that the

two cases “are clearly irreconcilable.” Miller v. Gammie, 335 F.3d

889, 900 (9th Cir. 2003). If Preston has any application to the

present case, it is a tenuous one. In no event is Preston clearly

irreconcilable with Shroyer, which ruled on the precise arguments

that Defendants raise.

The Court concludes that Defendants’ conflict preemption

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United States District Court

For the Northern District of California

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argument is foreclosed by Shroyer.

II. Motion to Strike

Plaintiffs move to strike several of Defendants' affirmative

defenses pursuant to Federal Rule of Civil Procedure 12(f). Under

Rule 12(f), the Court may strike from a pleading “any insufficient

defense or any redundant, immaterial, impertinent or scandalous

matter.” The purpose of a Rule 12(f) motion is to avoid spending

time and money litigating spurious issues. See Fantasy, Inc. v.

Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other

grounds, 510 U.S. 517 (1994). A defense is insufficient if it

fails to give the plaintiff fair notice of the nature of the

defense. See Wyshak v. City Nat’l Bank, 607 F.2d 824, 827 (9th

Cir. 1979). Matter is immaterial if it has no essential or

important relationship to the claim for relief pleaded. 

See Fogerty, 984 F.2d at 1527. Matter is impertinent if it does

not pertain and is not necessary to the issues in question in the

case. See id.

Although the Ninth Circuit has not ruled on the proper use of

a Rule 12(f) motion to strike an affirmative defense, three other

circuits have ruled that the motion is disfavored and should only

be granted if the asserted defense is clearly insufficient as a

matter of law under any set of facts the defendant might allege. 

As the Second Circuit has explained:

A motion to strike an affirmative defense . . . for legal

insufficiency is not favored and will not be granted “unless

it appears to a certainty that plaintiffs would succeed

despite any state of the facts which could be proved in

support of the defense.” Moreover, even when the facts are

not disputed, several courts have noted that a “motion to

strike for insufficiency was never intended to furnish an

opportunity for the determination of disputed and substantial

questions of law.”. . . This is particularly so when, as here,

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United States District Court

For the Northern District of California

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there has been no significant discovery.

Even when the defense presents a purely legal question, the

courts are very reluctant to determine disputed or substantial

issues of law on a motion to strike; these questions quite

properly are viewed as determinable only after discovery and a

hearing on the merits. To do otherwise would be to run the

risk of offering an advisory opinion on an abstract and

hypothetical set of facts. 

See William Z. Salcer, Panfeld, Edelman v. Envicon Equities Corp.,

744 F.2d 935, 939 (2d Cir. 1984) (citation and quotation marks

omitted); accord Lunsford v. United States, 570 F.2d 221, 229-30

(8th Cir. 1977)(court should deny motion to dismiss a defense as

insufficient as a matter of law if complete development of the

factual record might avoid the need to decide an unresolved

question of law); Augustus v. Board of Public Instruction, 306 F.2d

862, 868 (5th Cir. 1962)(court should grant motion to strike only

if the pleading has no possible relation to the controversy);

Moore's Federal Practice 3d, § 12.37[1], [4] (Rule 12(f) motions

are general disfavored and motions to strike defenses should be

denied if sufficiency of defense depends on disputed issues of fact

or questions of law). 

B. Defendants’ Second Affirmative Defense

Plaintiff moves to strike Defendants' second affirmative

defense. Defendants’ second affirmative defense asserts that the

service agreement’s arbitration provision precludes this lawsuit. 

Because the Court finds the arbitration clause unenforceable, the

Court strikes this affirmative defense. 

C. Defendants’ Sixth Affirmative Defense

Plaintiff also moves to strike the reference to the Federal

Arbitration Act in Defendants' sixth affirmative defense. 

Defendants' sixth affirmative defense asserts that Plaintiff “fails

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United States District Court

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to state facts sufficient to constitute a cause of action created

by or recognized under any California statute, regulation or common

law, because state-law causes of action as alleged in the First

Amended Complaint have been preempted in their entirety by federal

law, including the Federal Arbitration Act and the Federal

Communications Act and orders of the Federal Communications

Commission.” Above, the Court found that the Federal Arbitration

Act does not preempt the application of California’s

unconscionability doctrine to the class arbitration waiver. 

Accordingly, the Court strikes the reference to the Federal

Arbitration Act in the sixth affirmative defense. 

D. Defendants’ First, Twenty-Fourth, Twenty-Fifth, TwentySixth, Twenty-Seventh, Twenty-Eighth, Twenty-Ninth and

Thirty-First Affirmative Defenses

Plaintiff moves to strike Defendants’ first (failure to state

a cause of action), twenty-fourth (no ascertainable class), twentyfifth (predominance), twenty-sixth (no community of interest),

twenty-seventh (typicality), twenty-eighth (superiority), twentyninth (adequate representation) and thirty-first (lack of standing)

affirmative defenses as immaterial and impertinent. However, they

pertain to and will be necessary to the questions that will arise

in later stages of litigation, and will best be adjudicated then. 

Accordingly, Plaintiff’s motion to strike these defenses is denied.

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 E. Defendants’ First, Fourth, Sixth, Seventh, Twelfth,

Thirteenth, Sixteenth, Seventeenth, Eighteenth, Twentieth,

Twenty-First, Twenty-Fourth, Twenty-Fifth, Twenty-Sixth,

Twenty-Seventh, Twenty-Eight and Twenty-Ninth 

Affirmative Defenses

Plaintiff moves to strike Defendants’ first (failure to state

a claim), fourth (laches), fifth (business judgment), sixth

(preemption), seventh (primary/exclusive jurisdiction), twelfth

(failure to mitigate damages), fifteenth (justification or

privilege), sixteenth (estoppel), seventeenth (statute of

limitations), eighteenth (waiver), twentieth (intervening acts

and/or omissions), twenty-first (comparative fault or offset) and 

twenty-fourth through twenty-ninth affirmative defenses as

insufficiently plead. However, the Federal Rules of Civil

Procedure require only that a defendant “state in short and plain

terms” its defenses. Fed. R. Civ. P. 8(b). Defendants have

complied with this requirement. Accordingly, Plaintiff’s motion to

strike these defenses is denied. These defenses are apparently

plead as boilerplate in an abundance of caution. The Court trusts

that Defendants will dismiss them voluntarily prior to summary

judgment motion practice if they do not discover evidence to

support them. 

CONCLUSION

For the foregoing reasons, Defendants’ motion to compel

arbitration (Docket No. 47) is DENIED. Plaintiff’s motion to

strike portions of the answer (Docket No. 40) is GRANTED IN PART

and DENIED IN PART. Defendants’ motion to stay discovery and their

obligation to respond to Plaintiff’s motion to strike (Docket No.

43) is DENIED, given that the Court is denying Defendants’ motion

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United States District Court

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to compel arbitration and that Defendants have already responded to

Plaintiff’s motion to strike. Defendants must respond to any

outstanding discovery no later than twenty days from the date of

this order unless, prior to that date, Defendants have obtained a

stay from the Ninth Circuit. 

The Court also DENIES Defendants’ motion to stay this order

pending appeal. (Docket No. 67.) Because the Court cannot predict

when the Court of Appeals will rule in the related cases pending

before it, the Court will not indefinitely delay the progress of

this case. It is unlikely to proceed as far as trial before the

Ninth Circuit rules and the merits discovery at least would be done

even if the case were ultimately arbitrated. 

The Court notes that, although it gave Plaintiff leave to file

an amended complaint, Plaintiff never e-filed the proposed amended

complaint. Plaintiff must correct this error by e-filing the

amended complaint within three days of the date of this order.

IT IS SO ORDERED.

Dated: September 14, 2009 

CLAUDIA WILKEN

United States District Judge

Case 4:09-cv-01117-CW Document 74 Filed 09/14/09 Page 20 of 20