Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-01117/USCOURTS-cand-4_09-cv-01117-29/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’ 

RENEWED MOTION TO 

COMPEL ARBITRATION 

AND STAY ACTION 

 Defendants AT&T Mobility LLC, New Cingular Wireless PCS LLC, 

and New Cingular Wireless Services, Inc. (collectively, ATTM) have 

filed a renewed motion to compel arbitration of Plaintiff Steven 

McArdle’s claims.1 Plaintiff opposes the motion. Having 

considered the parties’ papers and oral argument on the matter, 

the Court GRANTS Defendants’ motion. 

BACKGROUND 

 ATTM is a cellular telephone service provider. It owns New 

Cingular Wireless PCS LLC and New Cingular Wireless Services, Inc. 

McArdle is a customer of ATTM who asserts claims, on behalf of 

himself and all others similarly situated, under California law 

 1 In a separately filed order, the Court granted Defendants’ 

unopposed motion to compel arbitration of Kenneth Thelian’s claims 

in the related case, Thelian v. AT&T Mobility LLC, No. 10-3440. 

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for false advertising, unfair business practices, fraud and 

violation of the Consumers Legal Remedies Act. 

 McArdle’s service agreement with ATTM contains a provision 

that requires the parties to the agreement to arbitrate “all 

disputes and claims” between them. The provision prohibits ATTM’s 

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. 

 Relying upon Discover Bank v. Superior Court, 36 Cal. 4th 148 

(2005), and Shroyer v. New Cingular Wireless Services, Inc., 498 

F.3d 976 (9th Cir. 2007), the Court entered an order dated 

September 14, 2009, finding that the class arbitration waiver was 

unconscionable. Moreover, because the class arbitration provision 

was expressly not severable from the other portions of the 

arbitration provision, the Court found that the arbitration 

provision as a whole was not enforceable. 

 ATTM filed an interlocutory appeal of the Court’s order and, 

when the United States Supreme Court granted certiorari in AT&T 

Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), this Court 

stayed the case pending the Supreme Court’s decision in that case. 

 Following the April 27, 2011 decision in Concepcion, in which 

the Supreme Court held that the Discover Bank rule was preempted 

by the Federal Arbitration Act, the Ninth Circuit reversed and 

remanded. See McArdle v. AT&T Mobility, 2012 U.S. App. LEXIS 

18517 (9th Cir.). The purpose of the remand was for this Court 

“to consider in the first instance McArdle’s arguments based on 

generally applicable contract defenses.” Id. at *2. 

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 On April 11, 2013, ATTM filed a renewed motion to compel 

arbitration and stay the action. 

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. Id. § 4. See Bridge Fund Capital Corp. v. Fastbucks 

Franchise Corp., 622 F.3d 996, 1005 (9th Cir. 2010) (noting that 

the party seeking to compel arbitration bears the burden of 

proving the existence of a valid arbitration agreement by a 

preponderance of the evidence). The FAA further provides: 

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. § 4. “Unless the parties clearly and 

unmistakably provide otherwise, the question of whether the 

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parties agreed to arbitrate is to be decided by the court, not the 

arbitrator.” AT&T Technologies, Inc. v. Communications Workers of 

America, 475 U.S. 643, 649 (1986) (citations omitted). 

 The FAA reflects a “liberal federal policy favoring 

arbitration agreements.” Concepcion, 131 S. Ct. at 1745 

(citations and internal quotation marks omitted). A district 

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

(1) there is 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)). 

 The FAA “permits agreements to arbitrate to be invalidated by 

‘generally applicable contract defenses, such as fraud, duress, or 

unconscionability,’ but not by defenses that apply only to 

arbitration or that derive their meaning from the fact that an 

agreement to arbitrate is at issue.” Concepcion, 131 S. Ct. at 

1746. The party opposing arbitration bears the burden of proving 

that the arbitration provision is unconscionable. ArguellesRomero v. Superior Court, 184 Cal. App. 4th 825, 836 (2010). 

DISCUSSION 

I. Broughton-Cruz Doctrine 

 McArdle first argues that arbitration is foreclosed by 

California’s Broughton-Cruz rule which prohibits arbitration of 

public injunctive relief claims under the Consumer Legal Remedies 

Act (CLRA), Cal. Civ. Code § 1750 et seq., and the Unfair 

Competition Law (UCL), Cal. Bus. and Prof. Code § 17200 et seq., 

because such claims are “designed to prevent further harm to the 

public at large rather than to redress or prevent injury to a 

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plaintiff.” Cruz v. PacifiCare Health Systems, Inc., 30 Cal. 4th 

303, 316 (2003); see also Broughton v. Cigna Healthplans of 

California, 21 Cal. 4th 1066 (1999). 

 ATTM argues that the Broughton-Cruz doctrine is not a 

generally applicable contract defense because it applies only to 

certain types of cases and only to arbitration. Accordingly, ATTM 

argues, the Court lacks authority to consider McArdle’s BroughtonCruz argument because that argument exceeds the scope of the Ninth 

Circuit’s mandate. See Mendez-Guttierrez v. Gonzalez, 444 F.3d 

1168, 1172 (9th Cir. 2006) (“[A] district court is limited by this 

court’s remand in situations where the scope of the remand is 

clear.”). 

 McArdle responds that the Court could find that the 

arbitration provision is unenforceable because it violates the 

public policy set out in the Broughton-Cruz doctrine. In support 

of this argument, McArdle cites Fisher v. DCH Temecula Imports 

LLC, 187 Cal. App. 4th 601, 617 (2010), which holds that there is 

a “generally available contract defense” in California that 

“private contracts that violate public policy are unenforceable.” 

 The Broughton court relied on the United States Supreme 

Court’s holding that “not . . . all controversies implicating 

statutory rights are suitable for arbitration.” 21 Cal. 4th at 

1075 (quoting Mitsubishi Motors v. Soler Chrysler-Plymouth, 473 

U.S. 614, 627 (1985).2 The Broughton court held that the issue of 

 2 As discussed more fully below, both the majority and the 

dissent in American Express Co. v. Italian Colors Restaurant, 133 

S. Ct. 2304 (2013), made clear that Mitsubishi Motors applies only 

to federal statutory claims. This further calls into question the 

continuing viability of the Broughton-Cruz rule. 

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suitability “turns on congressional intent, which can be 

discovered in the text of the statute in question, its legislative 

history or in an inherent conflict between arbitration and the 

statute’s underlying purposes.” 21 Cal. 4th at 1075 (citing 

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991)) 

(internal quotation marks omitted). The Broughton court went on 

to hold that “two factors taken in combination” evidenced an 

inherent conflict “between arbitration and the underlying purpose 

of the CLRA’s injunctive relief remedy.” 21 Cal. 4th at 1082. 

The two factors were that the relief sought was “for the benefit 

of the general public rather than the party bringing the action” 

and that “the judicial forum [had] significant institutional 

advantages over arbitration in administering a public injunctive 

remedy.” Id. In Cruz, the California Supreme Court held that 

Broughton remained good law in the wake of intervening United 

States Supreme Court decisions and extended its holding to public 

injunctive relief claims under the UCL. 30 Cal. 4th at 311-16. 

 The Broughton-Cruz doctrine applies only to arbitration 

agreements and only to certain claims brought pursuant to the CLRA 

and UCL. Although the Broughton-Cruz doctrine is based on public 

policy concerns, it is not a generally applicable contract defense 

as contemplated by the FAA. See Concepcion, 131 S. Ct. at 1746-47 

(holding that, even though the Discover Bank rule finds “its 

origins in California’s unconscionability doctrine and 

California’s policy against exculpation,” it is not a generally 

applicable contract defense). Because the Broughton-Cruz rule is 

not a generally applicable contract defense, it does not survive 

Concepcion. 

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 McArdle argues that the Ninth Circuit’s en banc opinion in 

Kilgore v. Key Bank, 718 F.3d 1052 (9th Cir. 2013) (Kilgore II), 

“preserved the viability of” the Broughton-Cruz doctrine. 

Opposition at 8. This argument is based on the fact that the 

panel opinion in Kilgore v. Key Bank, 673 F.3d 947 (9th Cir. 2010) 

(Kilgore I), held that the Broughton-Cruz doctrine was preempted 

by the FAA in light of Concepcion. McArdle notes that the en banc 

decision did not reach the preemption issue and contends that this 

indicates that the Broughton-Cruz rule survives Concepcion. In 

fact, the en banc court held, “Even assuming the continued 

viability of the Broughton-Cruz rule, Plaintiffs’ claims do not 

fall within its purview.” Kilgore II, 718 F.3d at 1060. Kilgore 

II expressly did not decide the continued viability of the 

Broughton-Cruz rule. For the reasons stated above, the Court 

finds that the Broughton-Cruz rule is preempted by the FAA in 

light of Concepcion. 

II. Bar to Public Injunctive Relief 

 McArdle next argues that the arbitration agreement is 

unenforceable because it “purports to bar customers from seeking 

public injunctive relief in any forum.” Opposition at 15. The 

arbitration agreement provides, “The arbitrator may award 

declaratory or injunctive relief only in favor of the individual 

party seeking relief and only to the extent necessary to provide 

relief warranted by that party’s individual claim.” Figueroa 

Dec., Ex. 2, ¶ 2.2(6). McArdle argues that this waiver of the 

right to seek public injunctive relief under the CLRA and UCL is 

unconscionable because it undermines the purposes of the statutes, 

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which provide that individuals may seek public injunctive relief. 

See Cal. Bus. & Prof. Code § 17203; Cal. Civ. Code § 1780(a)(2). 

 In other words, McArdle argues, even if Concepcion permits 

ATTM to compel arbitration of his CLRA and UCL claims, ATTM cannot 

preclude the arbitrator from awarding public injunctive relief. 

However, this argument relies on the United States Supreme Court’s 

decision in Mitsubishi Motors for the proposition that “by 

agreeing to arbitrate a statutory claim, a party does not forego 

the substantive rights afforded by statute; it only submits to 

their resolution in an arbitral, rather than a judicial forum.” 

473 U.S. at 628. Some courts have limited this “effective 

vindication” rule, applying it only to federal statutory rights, 

while others extended the rule to state statutory rights, such as 

the rights McArdle asserts in this case. However, in a recent 

Supreme Court case, American Express Co. v. Italian Colors 

Restaurant, the majority strongly suggested that the effective 

vindication rule applies only to federal statutory rights, 

repeatedly referring to federal rights or the pursuit of federal 

remedies. See, e.g., 133 S. Ct. at 2310 n.2 (discussing 

“potential deprivation of a claimant’s right to pursue federal 

remedies”); id. at 2311 (discussing “‘effective vindication’ of a 

federal right”). The dissenting justices in American Express 

stated the point even more clearly in their effort to distinguish 

the case they were considering from Concepcion. 

And if that is not enough, [Concepcion] involved a state 

law, and therefore could not possibly implicate the 

effective-vindication rule. When a state rule allegedly 

conflicts with the FAA, we apply standard preemption 

principles, asking whether the state law frustrates the 

FAA’s purposes and objectives. If the state rule does 

so—as the Court found in [Concepcion]—the Supremacy 

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Clause requires its invalidation. We have no earthly 

interest (quite the contrary) in vindicating that law. 

Our effective-vindication rule comes into play only when 

the FAA is alleged to conflict with another federal law, 

like the Sherman Act here. 

American Express, 133 S. Ct. at 2320 (Kagan, J. dissenting). 

 Moreover, the other cases McArdle cites are distinguishable. 

McArdle relies on Bridge Fund Capital Corp. v. Fastbucks Franchise 

Corp., 622 F.3d 996 (9th Cir. 2010), for the proposition that a 

waiver of a statutory right to injunctive relief is substantively 

unconscionable and accordingly unenforceable. In Bridge Fund, the 

Ninth Circuit affirmed the district court’s finding that class 

action and injunctive relief waivers in the arbitration provision 

of a franchise contract were unconscionable and unenforceable. 

However, Bridge Fund relied in large part on a California Court of 

Appeal case which held that such waivers were unenforceable by 

applying the California Supreme Court’s decision in Discover Bank 

to the California Franchise Investment Law. Bridge Fund, 622 F.3d 

at 1004 (citing Independent Ass’n of Mailbox Center Owners, Inc. 

v. Superior Court, 133 Cal. App. 4th 396 (2005)). As discussed 

above, the Discover Bank rule is preempted by the FAA. 

 McArdle also relies on a line of cases in which courts have 

found that representative action waivers cannot apply to 

California Private Attorney General Act (PAGA) claims. However, 

McArdle fails to address a key difference between, on the one 

hand, the CLRA and UCL, which permit an individual to seek public 

injunctive relief and, on the other, PAGA, which allows an 

individual to seek penalties under the Labor Code in an action 

brought “on behalf of himself or herself and other current or 

former employees.” Cal. Lab. Code § 2699. The courts that have 

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found representative action waivers unconscionable in PAGA cases 

have specifically noted this limitation. See, e.g., Urbino v. 

Orkin Servs. of Cal, 882 F. Supp. 2d 1152, 1167 (C.D. Cal. 2011) 

(noting that a court that found such waivers enforceable under 

Concepcion “failed to take into account that there are no separate 

individual claims in a PAGA action”), rev’d on other grounds, 2013 

U.S. App. LEXIS 16718 (9th Cir.); Brown v. Ralph’s Grocery Co., 

197 Cal. App. 4th 489, 503 (2011). The Court finds that these 

cases are not applicable here. 

CONCLUSION 

 For the reasons stated above, the Court GRANTS ATTM’s motion 

to compel arbitration and stay the action. (Docket No. 222) The 

case is stayed pending arbitration, which must be diligently 

pursued.3 Nothing contained in this order shall be considered a 

dismissal or disposition of this action, and, should further 

proceedings become necessary or desirable, any party may move to 

restore the case to the Court’s calendar. 

IT IS SO ORDERED. 

Dated: 

CLAUDIA WILKEN 

United States District Judge 

 3 There appears to be no further reason at this time to 

maintain the file as open for statistical purposes, and the Clerk 

is instructed to submit a JS-6 Form to the Administrative Office. 

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