Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-01117/USCOURTS-cand-4_09-cv-01117-11/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

FOR LEAVE TO FILE A

MOTION FOR

RECONSIDERATION AND

MOTION TO STAY CLASS

CERTIFICATION

BRIEFING

(Docket Nos. 114 and

118)

In this action, Plaintiff Steven McArdle claims that

Defendants AT&T Mobility LLC, et al., charge their customers

international roaming fees without providing adequate disclosure. 

In July, 2009, Defendants moved to compel arbitration pursuant to

Plaintiff’s subscriber agreement. The Court denied Defendants’

motion, concluding that the agreement’s prohibition on class

arbitration is unconscionable. Because the prohibition is not

severable from the rest of the arbitration provision, the Court

deemed the entire provision unenforceable. Defendants appealed and

moved to stay this action pending their appeal. The Court denied

Defendants’ motion to stay. 

Defendants now move for leave to file a motion to reconsider

the Court’s order denying their motion to stay. In addition,

Defendants move to stay briefing on Plaintiff’s motion for class

certification pending the Court’s decision on their motion for

Case 4:09-cv-01117-CW Document 124 Filed 05/10/10 Page 1 of 4
United States District Court

For the Northern District of California

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leave. Defendants’ opposition to the class certification motion is

due May 14, 2010. 

Under Civil L.R. 7-9, a party may ask a court to reconsider an

interlocutory order if the party can show: 

(1) That at the time of the motion for leave, a material

difference in fact or law exists from that which was

presented to the Court before entry of the interlocutory

order for which reconsideration is sought. The party

also must show that in the exercise of reasonable

diligence the party applying for reconsideration did not

know such fact or law at the time of the interlocutory

order; or

(2) The emergence of new material facts or a change of

law occurring after the time of such order; or

(3) A manifest failure by the Court to consider material

facts or dispositive legal arguments which were presented

to the Court before such interlocutory order.

Defendants argue that the Supreme Court’s recent decision in

Stolt-Nielsen S.A. v. AnimalFeeds International Corp., ___ U.S.

___, 2010 WL 1655826, is a change of law that warrants granting

their motion for leave. There, an arbitration panel imposed class

arbitration on the parties, even though their agreement to

arbitrate had been “silent” on the issue. Id. at *4. The Court

held the panel’s decision in error, stating that the panel’s

“conclusion is fundamentally at war with the foundational FAA

principle that arbitration is a matter of consent.” Id. at *13. 

Although an arbitrator may presume implicit authorization “to adopt

such procedures as are necessary to give effect to the parties’

agreement,” class-action arbitration is not among them. Id. “This

is so because class-action arbitration changes the nature of

arbitration to such a degree that it cannot be presumed the parties

consented to it by simply agreeing to submit their disputes to an

arbitrator.” Id. 

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 The Ninth Circuit recently held that Shroyer continues to

control on this point. Laster v. AT&T Mobility LLC, 584 F.3d 849

(9th Cir. 2009). Defendants have filed a petition for certiorari

in Laster, upon which they expect the Supreme Court to rule on May

24. 

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Defendants assert that Stolt-Nielsen creates a substantial

question as to whether the “FAA would preempt any holding that

California law precludes enforcement of McArdle’s agreement to

arbitrate his disputes with” them on an individual basis. Mot. for

Leave at 4. The Court disagrees. The issue presented in StoltNielsen was “whether imposing class arbitration on parties whose

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

the Federal Arbitration Act (FAA).” 2010 WL 1655826, at *4. The

Supreme Court did not address FAA preemption. Nor did it overrule

its precedent upon which the Ninth Circuit relied in Shroyer v. New

Cingular Wireless Services, Inc., which held that California law on

unconscionability could render an arbitration clause unenforceable, 

498 F.3d 976, 986-87 (9th Cir. 2007).1

 Stolt-Nielsen is

distinguishable both on the facts and the law and, therefore, does

not require this Court to reconsider its order on Defendants’

motion to stay this action pending their appeal. 

Defendants also cite the Supreme Court’s action in American

Express Co. v. Italian Colors Restaurant, in which the Court

granted the petition for certiorari, summarily vacated the judgment

of the Second Circuit and remanded the case for further

consideration in light of Stolt-Nielsen. ___ U.S. ___, 2010 WL

1740528 (Mem.). In the underlying case, In re American Express

Merchants’ Litigation, the Second Circuit held unenforceable a

class action waiver in an arbitration agreement because “to do so

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would grant Amex de facto immunity from antitrust liability by

removing the plaintiffs’ only reasonably feasible means of

recovery.” 554 F.3d 300, 320 (2d Cir. 2009). It is true that the

action taken in Italian Colors reveals “a reasonable probability

that the decision below rests upon a premise that the lower court

would reject if given the opportunity for further consideration”

and “such a redetermination may determine the ultimate outcome of

the litigation.” Lawrence v. Chater, 516 U.S. 163, 167 (1996). 

However, like Stolt-Nielsen, Italian Colors did not address

preemption of state law providing generally applicable contract

defenses. Indeed, the Second Circuit expressly disavowed reliance

on a finding of unconscionability, stating that it relied “on a

vindication of statutory rights analysis.” In re Am. Express, 554

F.3d at 320. Although Stolt-Nielsen may raise a substantial

question as to whether such an analysis remains viable when

considering the enforceability of class action waivers in

arbitration agreements, it does not inexorably follow that the

application of state contract defenses is equally in doubt. 

Accordingly, the Court DENIES Defendants’ motion for leave to

file a motion to reconsider. (Docket No. 114.) Because the Court

has resolved Defendants’ motion for leave, Defendants’ motion to

stay class certification briefing is DENIED as moot. (Docket No.

118.) Defendants’ opposition to Plaintiff’s motion for class

certification is due May 14, 2010. 

IT IS SO ORDERED.

Dated: May 10, 2010 

CLAUDIA WILKEN

United States District Judge

Case 4:09-cv-01117-CW Document 124 Filed 05/10/10 Page 4 of 4