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HONORABLE RICARDO S. MARTINEZ 

UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF WASHINGTON AT SEATTLE 

CONEFF, et al., 

Plaintiffs, 

v. 

AT&T CORP., et al., 

Defendants. 

Case No. C06-0944 RSM 

REPLY MEMORANDUM IN 

SUPPORT OF DEFENDANTS’ 

AMENDED MOTION TO COMPEL 

ARBITRATION PURSUANT TO 

THE FEDERAL ARBITRATION 

ACT AND TO DISMISS ACTION 

 Noted for Consideration: March 11, 2009 

 

 (Oral Argument Requested)

REPLY IN SUPPORT OF DEFENDANTS’ 

AMENDED MOTION TO COMPEL ARBITRATION 

(C06-0944 RSM) 

 

KIPLING LAW GROUP PLLC

3601 FREMONT AVE N, SUITE 414 

SEATTLE, WASHINGTON 98103 

telephone (206) 545-0345 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 1 of 45
1 TABLE OF CONTENTS 

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TABLE OF AUTHORITIES .........................................................................................................iii 

I. THE LAW OF THE PLAINTIFFS’ HOME STATES GOVERNS PLAINTIFFS’ 

CHALLENGES TO THEIR AGREEMENTS TO ARBITRATE...................................... 1 

A. Plaintiffs’ Local Law Would Apply Even Without A Choice-Of-Law 

Clause...................................................................................................................... 2 

B. Washington Has Neither A Fundamental Public Policy Nor A Greater 

Interest Favoring Application Of Its Law To Out-Of-State Plaintiffs.................... 3 

II. PLAINTIFFS’ AGREEMENTS TO ARBITRATE ON AN INDIVIDUAL BASIS 

ARE ENFORCEABLE UNDER THE LAW OF THEIR HOME STATES...................... 5 

A. ATTM’s 2006 Arbitration Provision Governs This Dispute .................................. 6 

B. The Agreements Of The Washington Plaintiffs Are Fully Enforceable................. 7 

1. ATTM’s 2006 Arbitration Provision Is Not Substantively 

Unconscionable Under Washington Law ................................................... 7 

a. Plaintiffs mischaracterize Scott as a per se ban on 

agreements to arbitrate on an individual basis................................ 7 

b. ATTM’s 2006 provision encourages Washington 

consumers to resolve their claims in arbitration ............................. 8 

c. ATTM’s dispute-resolution system is not an inferior 

substitute for class actions ............................................................ 12 

2. The Washington Plaintiffs’ Arbitration Agreements Are Not 

Procedurally Unconscionable ................................................................... 14 

C. The Arbitration Agreements Are Enforceable Under The Laws Of The 

Eight Other States ................................................................................................. 15 

1. Alabama .................................................................................................... 16 

2. Arizona...................................................................................................... 16 

3. California .................................................................................................. 17 

4. Florida....................................................................................................... 18 

5. Illinois ....................................................................................................... 18 

REPLY IN SUPPORT OF DEFENDANTS’ 

AMENDED MOTION TO COMPEL ARBITRATION 

(C06-0944 RSM) 

Page i

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 2 of 45
1 6. Missouri .................................................................................................... 19 

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7. New Jersey................................................................................................ 20 

8. Virginia ..................................................................................................... 20 

III. THE FAA WOULD PREEMPT ANY STATE-LAW RULE THAT WOULD 

DEEM ATTM’S 2006 ARBITRATION CLAUSE UNCONSCIONABLE.................... 20 

A. Express Preemption .............................................................................................. 20 

B. Conflict Preemption.............................................................................................. 22 

Conclusion .................................................................................................................................... 23

REPLY IN SUPPORT OF DEFENDANTS’ 

AMENDED MOTION TO COMPEL ARBITRATION 

(C06-0944 RSM) 

Page ii

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 3 of 45
1 TABLE OF AUTHORITIES 

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Page(s) 

Cases 

Abrams v. Camera Warehouse, Inc., 

496 N.Y.S.2d 659 (Sup. Ct. 1985).............................................................................................5 

Abrams v. DeFelice, 

77 B.R. 376 (D. Conn. Bankr. 1987) .........................................................................................5 

Allied-Bruce Terminix Cos. v. Dobson, 

513 U.S. 265 (1995).................................................................................................................13 

Am. Software, Inc. v. Ali, 

54 Cal. Rptr. 2d 477 (Ct. App. 1996).........................................................................................7

Badie v. Bank of Am., 

79 Cal. Rptr. 2d 273 (Ct. App. 1998)...................................................................................6, 17 

Bass v. Carmax Auto Superstores, Inc., 

2008 WL 2705506 (W.D. Mo. Jul. 9, 2008)............................................................................20 

Bilbrey v. Cingular Wireless, LLC, 

164 P.3d 131 (Okla. 2007).........................................................................................................6

Blitz v. AT&T Wireless Servs., Inc., 

2005 WL 6177327 (Mo. Cir. Ct. Nov. 28, 2005) ....................................................................19 

Blue Cross Blue Shield v. Rigas, 

923 So. 2d 1077 (Ala. 2005)....................................................................................................16 

BMW of N. Am., Inc. v. Gore, 

517 U.S. 559 (1996)...................................................................................................................5 

Bowers v. Transamerica Title Ins. Co., 

675 P.2d 193 (Wash. 1983)......................................................................................................11 

Boyes v. Greenwich Boat Works, Inc., 

27 F. Supp. 2d 543 (D.N.J. 1998) ..............................................................................................5 

Brewer v. Dodson Aviation, 

447 F. Supp. 2d 1166 (W.D. Wash. 2006).................................................................................3 

Carbajal v. H & R Block Tax Servs., Inc., 

372 F.3d 903 (7th Cir. 2004) ...................................................................................................21 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

Page iii 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 4 of 45
Carideo v. Dell, Inc., 

520 F. Supp. 2d 1241 (W.D. Wash. 2007)....................................................................... passim

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Carnegie v. H&R Block, Inc., 

687 N.Y.S.2d 528 (Sup. Ct. 1999).............................................................................................6 

Cline v. H.E. Butt Grocery Co., 

79 F. Supp. 2d 730 (S.D. Tex. 1999) .......................................................................................12 

Coady v. Cross Country Bank, 

729 N.W.2d 732 (Wis. Ct. App. 2007) ......................................................................................4 

Cooper v. QC Fin. Servs., Inc., 

503 F. Supp. 2d 1266 (D. Ariz. 2007) .....................................................................................16

Copeland v. Marshall, 

641 F.2d 880 (D.C. Cir. 1980).................................................................................................11

Cox v. Lewiston Grain Growers, Inc., 

936 P.2d 1191 (Wash. Ct. App. 1997).......................................................................................4 

Crandall v. AT&T Mobility, LLC, 

2008 WL 2796752 (S.D. Ill. July 18, 2008) ............................................................................19 

Cruz v. Cingular Wireless LLC, 

2008 WL 4279690 (M.D. Fla. Sept. 15, 2008)............................................................10, 12, 18 

Dale v. Comcast Corp., 

498 F.3d 1216 (11th Cir. 2007) .................................................................................................3 

Davidson v. Cingular Wireless LLC, 

2007 WL 896349 (E.D. Ark. Mar. 23, 2007) ............................................................................6 

Davis v. Dell, Inc., 

2007 WL 4623030 (D.N.J. Dec. 28, 2007)..............................................................................20 

Diamond Multimedia Sys., Inc. v. Super. Ct., 

968 P.2d 539 (Cal. 1999) ...........................................................................................................5 

Discover Bank v. Super. Ct., 

113 P.3d 1100 (Cal. 2005) .................................................................................................17, 18 

Dix v. ICT Group, Inc., 

161 P.3d 1016 (Wash. 2007)......................................................................................................4 

Doctors’ Assocs., Inc. v. Casarotto, 

517 U.S. 681 (1996).................................................................................................................15 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

Page iv 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 5 of 45
Doerhoff v. Gen. Growth Props., Inc., 

2006 WL 3210502 (W.D. Mo. Nov. 6, 2006)..........................................................................19 

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Easter v. CompuCredit Corp., 

2009 WL 499384 (W.D. Ark. Feb. 27, 2009)..........................................................................13 

Enderlin v. XM Satellite Radio Holdings, Inc., 

2008 WL 830262 (E.D. Ark. Mar. 25, 2008) ............................................................................6 

Farrar v. Hobby, 

506 U.S. 103 (1992).................................................................................................................11 

Fonte v. AT&T Wireless Services, Inc., 

903 So. 2d 1019 (Fla. Dist. Ct. App. 2005) .............................................................................18 

Francis v. AT&T Mobility LLC, 

2009 WL 416063 (E.D. Mich. Feb. 18, 2009)...............................................................9, 10, 11 

Gentry v. Super. Ct., 

165 P.3d 556 (Cal. 2007) .........................................................................................................17 

Gilmer v. Interstate/Johnson Lane Corp., 

500 U.S. 20 (1991)...................................................................................................................22 

Goetsch v. Shell Oil Co., 

197 F.R.D. 574 (W.D.N.C. 2000)..............................................................................................6 

Granite Equip. Leasing Corp. v. Hutton, 

525 P.2d 223 (Wash. 1974)........................................................................................................4 

Green Tree Fin. Corp.-Ala. v. Randolph, 

531 U.S. 79 (2000)...................................................................................................................11 

Green Tree Fin. Corp. v. Bazzle, 

539 U.S. 444 (2003).................................................................................................................22 

Gregory v. Sprint Spectrum L.P., 

2006 WL 2497781 (Cal. Ct. App. Aug. 30, 2006).....................................................................6 

Guiterrez v. State Line Nissan, Inc., 

2008 WL 3155896 (W.D. Mo. Aug. 4, 2008)..........................................................................20 

Harrington v. Pulte Home Corp., 

119 P.3d 1044 (Ariz. Ct. App. 2005).......................................................................................16 

Homa v. Am. Express Co., 

2009 WL 440912 (3d Cir. Feb. 24, 2009)................................................................................20 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

Page v 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 6 of 45
H&R Block, Inc. v. Haese, 

82 S.W.3d 331 (Tex. App. 2000)...............................................................................................6 

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Huang v. Wash. Mut. Bank, 

2008 WL 4102918 (W.D. Wash. Aug. 25, 2008)....................................................................14 

In re Badger Mountain Irrigation Dist. Sec. Litig., 

143 F.R.D. 693 (W.D. Wash. 1992) ......................................................................................3, 5 

In re Currency Conversion Fee Antitrust Litig., 

361 F. Supp. 2d 237 (S.D.N.Y. 2005)........................................................................................6

In re Detwiler, 

2008 WL 5213704 (9th Cir. Dec. 9, 2008)............................................................................1, 2 

In re Jamster Mktg. Litig., 

2008 WL 4858506 (S.D. Cal. Nov. 10, 2008) .....................................................................4, 19 

In re Pizza Time Theatre Secs. Litig., 

113 F.R.D. 15 (N.D. Cal. 1986).................................................................................................5 

In re Verisign, Inc., Derivative Litig., 

531 F. Supp. 2d 1173 (N.D. Cal. 2007) .....................................................................................6 

In re Worlds of Wonder Secs. Litig., 

1990 WL 61951 (N.D. Cal. Mar. 23, 1990)...............................................................................5 

Ito Int’l Corp. v. Prescott, 

921 P.2d 566 (Wash. Ct. App. 1996).........................................................................................3 

Jenkins v. First Am. Cash Advance of Ga., LLC, 

400 F.3d 868 (11th Cir. 2005) ...................................................................................................3

Johnson v. Spider Staging Corp., 

555 P.2d 997 (Wash. 1976)........................................................................................................3 

Jones v. The Chubb Inst., 

2007 WL 2892683 (D.N.J. Sept. 28, 2007) .............................................................................20 

Kaltwasser v. Cingular Wireless LLC, 

543 F. Supp. 2d 1124 (N.D. Cal. 2008) ...................................................................................17 

Kates v. Chad Franklin Nat’l Auto Sales N., LLC, 

2008 WL 5145942 (W.D. Mo. Dec. 1, 2008)..........................................................................20 

Kelley v. Microsoft Corp., 

251 F.R.D. 544 (W.D. Wash. 2008) ..........................................................................................3 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

Page vi 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 7 of 45
Keyes v. Bollinger, 

640 P.2d 1077 (Wash. Ct. App. 1982).....................................................................................11 

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Kinkel v. Cingular Wireless LLC, 

857 N.E.2d 250 (Ill. 2006).............................................................................................7, 18, 19 

Klussman v. Cross Country Bank, 

36 Cal. Rptr. 3d 728 (Ct. App. 2005).........................................................................................4 

La Torre v. BFS Retail & Commercial Operations, LLC, 

2008 WL 5156301 (S.D. Fla. Dec. 8, 2008)............................................................................18 

Lange v. Penn Mut. Life Ins. Co., 

843 F.2d 1175 (9th Cir. 1988) ...................................................................................................3 

Laster v. T-Mobile USA, Inc., 

2008 WL 5216255 (S.D. Cal. Aug. 11, 2008) ................................................................. passim

Leeman v. Cook’s Pest Control, 

902 So. 2d 641 (Ala. 2004)......................................................................................................16 

Leonard v. Terminix Int’l Co., 

854 So. 2d 529 (Ala. 2002)......................................................................................................16 

Livadas v. Bradshaw, 

512 U.S. 107 (1994).................................................................................................................23 

Lowden v. T-Mobile USA, Inc., 

512 F.3d 1213 (9th Cir.) ................................................................................................7, 21, 22 

Lozano v. AT&T Wireless Servs., Inc., 

504 F.3d 718 (9th Cir. 2007) .....................................................................................................5 

Luna v. Household Fin. Corp., 

236 F. Supp. 2d 1166 (W.D. Wash. 2002).................................................................................7 

McGinnis v. T-Mobile USA, Inc., 

2008 WL 2858492 (W.D. Wash. July 22, 2008) .......................................................................4 

McKee v. AT&T Corp., 

191 P.3d 845 (Wash. 2008).............................................................................................. passim

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 

473 U.S. 614 (1985)...........................................................................................................22, 23

Moody v. Sears, Roebuck & Co., 

2007 WL 2582193 (N.C. Super. Ct. May 7, 2007)..................................................................13 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

Page vii 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 8 of 45
Morris v. Redwood Empire Bancorp., 

27 Cal. Rptr. 3d 797 (Ct. App. 2005).........................................................................................7

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Muhammad v. County Bank of Rehoboth Beach, Del., 

912 A.2d 88 (N.J. 2006)...........................................................................................................20 

PacifiCare Health Sys., Inc. v. Book, 

538 U.S. 401 (2003).................................................................................................................11 

Palamara v. Kings Family Rests., 

2008 WL 1818453 (W.D. Pa. Apr. 22, 2008)..........................................................................13 

Perry v. Thomas, 

492 U.S. 483 (1987).................................................................................................................21 

Philip Morris USA v. Williams, 

549 U.S. 346 (2007)...................................................................................................................5 

Pleasants v. Am. Express Co., 

541 F.3d 853 (8th Cir. 2008) .............................................................................................12, 20 

Powertel, Inc. v. Bexley, 

743 So. 2d 570 (Fla. Dist. Ct. App. 1999) ...............................................................................18 

Preston v. Ferrer, 

128 S. Ct. 978 (2008).............................................................................................20, 21, 22, 23 

Riensche v. Cingular Wireless LLC, 

2006 WL 3827477 (W.D. Wash. Dec. 27, 2006) ......................................................................7 

Rollins, Inc. v. Garrett, 

176 F. App’x 968 (11th Cir. 2006) ..........................................................................................18 

S.D.S. Autos, Inc. v. Chrzanowski, 

976 So. 2d 600 (Fla. Ct. App. 2007)........................................................................................18 

Salter v. Citigroup, Inc., 

No. 03-16268 (11th Cir. Apr. 27, 2004) ..................................................................................18 

Sammy Enters. v. O.P.E.N. Am., Inc., 

2008 WL 2010357 (Wash. Ct. App. May 12, 2008)................................................................12 

Schnall v. AT&T Wireless Servs., Inc., 

161 P.3d 395 (Wash. Ct. App. 2007).....................................................................................3, 4 

Scott v. Cingular Wireless LLC, 

161 P.3d 1000 (Wash. 2007)......................................................................................7, 8, 12, 14 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

Page viii 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 9 of 45
Shroyer v. New Cingular Wireless Services, Inc., 

498 F.3d 976 (9th Cir. 2007) .......................................................................................17, 21, 22 

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Southwell v. Widing Transp., Inc., 

676 P.2d 477 (Wash. 1984)........................................................................................................3

State ex rel. Corbin v. Pickrell, 

667 P.2d 1304 (Ariz. 1983)........................................................................................................5 

State Farm Mut. Auto Ins. Co. v. Campbell, 

538 U.S. 408 (2003)...................................................................................................................5 

Stern v. Cingular Wireless Corp., 

453 F. Supp. 2d 1138 (C.D. Cal. 2006) .....................................................................................7 

Stiener v. Apple Computer, Inc., 

556 F. Supp. 2d 1016 (N.D. Cal. 2008) ...................................................................................17 

Strawn v. AT&T Mobility, Inc., 

2009 WL 154433 (S.D.W. Va. Jan. 20, 2009).........................................................................21 

Ting v. AT&T, 

319 F.3d 1126 (9th Cir. 2003) .................................................................................................21 

Vaden v. Discover Bank, 

2009 WL 578636 (U.S. 2009)....................................................................................................9

Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 

489 U.S. 468 (1989)...........................................................................................................21, 22 

Watson Wyatt & Co. v. SBC Holdings, Inc., 

513 F.3d 646 (6th Cir. 2008) .....................................................................................................6 

West v. Henderson, 

278 Cal. Rptr. 570 (Ct. App. 1991) .........................................................................................12 

Whitney v. Alltel Commc’ns, Inc., 

173 S.W.3d 300 (Mo. Ct. App. 2005)......................................................................................19 

Williams v. State, 

885 P.2d 845 (Wash. Ct. App. 1994).........................................................................................3 

Woods v. QC Fin. Servs., Inc., 

2008 WL 5454124 (Mo. Ct. App. Dec. 23, 2008)...................................................................20 

Yeagley v. Wells Fargo & Co., 

2008 WL 171083 (N.D. Cal. Jan. 19, 2008)............................................................................13 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

Page ix 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 10 of 45
Zuver v. Airtouch Commc’ns, Inc., 

103 P.3d 753 (Wash. 2004)................................................................................................13, 14

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STATUTES 

9 U.S.C. § 2................................................................................................................................6, 15 

OTHER AUTHORITIES 

Am. Arbitration Ass’n, Analysis of the American Arbitration Association’s Consumer 

Arbitration Caseload, at http://www.adr.org/si.asp?id=5027....................................................8 

Admin. Office of U.S. Courts, 2007 Judicial Facts and Figures, 

at http://www.uscourts.gov/judicialfactsfigures/2007.hmtl.......................................................8 

Lindsay R. Androski, Comment, A Contested Merger: The Intersection of Class Actions 

and Mandatory Arbitration Clauses, 2003 U. CHI. LEGAL F. 631...........................................10 

Christopher R. Drahozal, Arbitration Costs and Contingent Fee Contracts, 

59 VAND. L. REV. 729 (2006) ..................................................................................................21 

Meredith W. Nissen, Class Action Arbitrations, 

11 DISP. RESOL. MAG. 19 (Summer 2005)...............................................................................22 

RESTATEMENT (SECOND) OF CONFLICT OF LAWS (1971) .........................................................1, 2, 5 

Searle Civil Justice Inst., Nw. U. Sch. of L., Consumer Arbitration (Mar. 2009), 

available at http://www.searlearbitration.org/p/full_report.pdf ................................................8 

Thomas E. Willging & Shannon R. Wheatman, Attorney Choice of Forum in Class 

Action Litigation: What Difference Does it Make?, 

81 NOTRE DAME L. REV. 591 (2006) .......................................................................................12 

United States District Court—Judicial Caseload Profile, 

at http://www.uscourts.gov/cgi-bin/cmsd2006.pl......................................................................8 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 11 of 45
Plaintiffs do not (and could not) dispute that they agreed to resolve their disputes with 

ATTM or its predecessors through arbitration on an individual basis. Instead, they challenge the 

enforceability of their arbitration agreements. As we explain, those arguments fail for several 

reasons. Most important, in contending that Washington law applies to the unconscionability 

challenges of the non-Washington plaintiffs, Plaintiffs ignore the plain language of their 

contracts. Those contracts select the law where the customer lives—a choice of law that, under 

relevant Washington conflicts-of-laws principles, is fully enforceable. Plaintiffs’ effort to avoid 

that eminently fair choice-of-law provision centers largely on their assumption that the “tort” 

conflicts-of-law principles rather than the “contract” principles govern—an assumption that this 

Court has already rejected. Second, any attack on ATTM’s arbitration provision under the 

contract law of the Plaintiffs’ home states would fail, particularly in view of the exceptionally 

pro-consumer terms of ATTM’s arbitration agreement. Last, if the law of any of those states 

were construed to render ATTM’s arbitration provision unenforceable, that state law would be 

preempted by the Federal Arbitration Act (“FAA”), as recent Supreme Court authority confirms. 

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I. THE LAW OF THE PLAINTIFFS’ HOME STATES GOVERNS PLAINTIFFS’ 

CHALLENGES TO THEIR AGREEMENTS TO ARBITRATE. 

Plaintiffs’ contracts select the law of their nine home states. Mem. in Supp. of Arb. Mot. 

(“Mem.”) 8. Plaintiffs nonetheless contend that Washington law governs even the nonWashington plaintiffs’ unconscionability challenges. They are wrong. Under Washington’s 

choice-of-law principles, a contractual “choice-of-law provision” must be enforced “unless all 

three of the following conditions are met: (1) ‘without the provision, Washington’” law 

otherwise “‘would apply’ under section 188 of the Restatement”; (2) “‘the chosen state’s law 

violates a fundamental public policy of’” the state whose law would otherwise apply; “and (3) 

‘[the other state’s] interest in the determination of the issue materially outweighs the chosen 

state’s interest.’” In re Detwiler, 2008 WL 5213704, at *1 (9th Cir. Dec. 9, 2008) (quoting 

McKee v. AT&T Corp., 191 P.3d 845, 851 (Wash. 2008)). Plaintiffs cannot meet these 

conditions. As we discuss in Section A, for non-Washington plaintiffs, Section 188 would point 

to the home state of each plaintiff. As such, there is no need to consider the second and third 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 12 of 45
requirements. As we discuss in Section B, however, assuming arguendo that Washington law 

would otherwise apply, it would not violate a fundamental policy of Washington to apply the 

unconscionability law of plaintiffs’ home states; nor does Washington have a materially greater 

interest in applying its law to the non-Washington plaintiffs. 

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A. Plaintiffs’ Local Law Would Apply Even Without A Choice-Of-Law Clause. 

Plaintiffs’ contention falters at the first step because, even without a contractual choice of 

law, Washington would apply the law of Plaintiffs’ home states to all non-Washington plaintiffs. 

Section 188(1) of the Restatement, which Washington follows, provides that the law of the state 

with the “most significant relationship to the transaction and the parties” governs “issue[s] in 

contract,” such as Plaintiffs’ unconscionability challenge. Although Plaintiffs point to Section 

6(2) of the Restatement (Opp. 24–27), Section 188(2) specifies the precise factors to be 

considered: “(a) the place of contracting, (b) the place of negotiation of the contract, (c) the place 

of performance, (d) the location of the subject matter of the contract, and (e) the domicile, 

residence, nationality, place of incorporation and place of business of the parties.” Moreover, 

Section 188(3) confirms that even when only the “place of negotiating the contract and the place 

of performance” are the same, “the local law of [that] state will usually be applied.” 

The Section 188 factors require application of the law of each plaintiff’s home state, 

which was “the place of contracting, * * * negotiation * * * [and] performance, the location of 

the subject matter, and the residence of one of the parties.” McKee, 191 P.3d at 852. By 

contrast, Washington’s “only tie to this litigation is that it is the state of incorporation” of AT&T 

Wireless Services (AWS), a factor McKee held insufficient to overcome the others. Id. Thus, 

applying McKee, the Ninth Circuit held that Florida law governed the arbitration clause in a 

Florida customer’s T-Mobile contract, even though T-Mobile “is headquartered in Washington.” 

Detwiler, 2008 WL 5213704, at *1. Here, the case for Washington law is even weaker than in 

Detwiler, because (i) ATTM was and is a Delaware LLC with its principal place of business in 

Georgia; (ii) Washington has no tie at all to ATTM’s arbitration provision; and (iii) many of the 

plaintiffs accepted ATTM’s (then Cingular’s) arbitration clause when switching from AWS. 

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In suggesting that Washington law would apply in the absence of a choice-of-law clause 

(Opp. 24–27), Plaintiffs chiefly rely on pre-McKee case law relevant only to tort suits.1 But as 

this Court has already held, “principles relating to actions in tort” are the “wrong choice-of-law 

principles” for Plaintiffs’ challenge to their arbitration agreements. Order, Dkt. #101, at 4.2 

Even if those tort principles were applicable, they would not point to Washington. If, as 

Plaintiffs allege, Cingular degraded AWS’s network in order to force customers to switch to 

Cingular’s network, that alleged conduct would have emanated from Cingular’s headquarters in 

Atlanta. Under Georgia law, ATTM’s arbitration provisions are fully enforceable.3

B. Washington Has Neither A Fundamental Public Policy Nor A Greater 

Interest Favoring Application Of Its Law To Out-Of-State Plaintiffs. 

Even if Washington law would apply in the absence of a choice-of-law provision, the 

choice-of-law clauses in the non-Washington plaintiffs’ contracts must be enforced because 

doing so would not violate a fundamental policy of Washington and because Washington does 

not have a materially greater interest than that of the states in which the plaintiffs reside. 

1. No fundamental Washington policy would be violated. As discussed below (at 7–

15), even if Washington law were applicable to all plaintiffs, ATTM’s arbitration provision is 

fully enforceable. But assuming arguendo that the provision were unenforceable under 

Washington law, that would not preclude the application of the law of the home states of the 

1

 See Johnson v. Spider Staging Corp., 555 P.2d 997, 1000 (Wash. 1976) (invoking “general principles 

which apply to a tort choice-of-law problem”); Schnall v. AT&T Wireless Servs., Inc., 161 P.3d 395, 402 (Wash. Ct. 

App. 2007) (considering “tort claims” outside the coverage of a choice-of-law clause); see also Kelley v. Microsoft 

Corp., 251 F.R.D. 544, 551 (W.D. Wash. 2008) (“general tort principles”); Brewer v. Dodson Aviation, 447 F. Supp. 

2d 1166, 1175–76 (W.D. Wash. 2006) (similar); In re Badger Mountain Irrigation Dist. Sec. Litig., 143 F.R.D. 693, 

699–700 (W.D. Wash. 1992) (citing Southwell v. Widing Transp., Inc., 676 P.2d 477, 479–80 (Wash. 1984), a tort 

conflict-of-law decision). Other decisions that Plaintiffs cite do not apply Washington’s conflicts rules. See, e.g., 

Lange v. Penn Mut. Life Ins. Co., 843 F.2d 1175, 1178–81 (9th Cir. 1988) (applying Arizona’s rule for tort suits). 

2

 Plaintiffs also cite a Washington securities-fraud case they say applies Washington law to “‘encourage 

Washington residents involved in business transactions to behave responsibly.’” Opp. 25 (quoting Ito Int’l Corp. v. 

Prescott, 921 P.2d 566, 571 (Wash. Ct. App. 1996)). Yet in Ito, the defendant’s location was far from the only 

Restatement factor pointing to Washington: The largest purchaser was a Washington corporation, the subject of the 

transaction was a building in Seattle, and the out-of-state purchasers were solicited through “selling and marketing 

activity occurr[ing] in Seattle,” including a “cocktail party” in Seattle. 921 P.2d at 571. In any event, it is not clear 

which conflict-of-laws rule (tort or contract) the court was applying, as at least two decisions it cited (Williams v. 

State, 885 P.2d 845 (Wash. Ct. App. 1994), and Badger Mountain) involved the tort rule. 

3

 When, as here, “‘the opportunity to recover attorneys’ fees is available’” in arbitration, an agreement to 

arbitrate on an individual basis does “‘not have the practical effect of immunizing’” a defendant and is not 

“substantively unconscionable” under Georgia law. Dale v. Comcast Corp., 498 F.3d 1216, 1222 (11th Cir. 2007) 

(quoting Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 878 (11th Cir. 2005)). 

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non-Washington plaintiffs. No fundamental Washington policy bars individual arbitration of 

non-residents’ claims. Washington’s public policy is violated only “when a citizen’s ability to 

assert a private right of action is significantly impaired.” Dix v. ICT Group, Inc., 161 P.3d 1016, 

1024 (Wash. 2007) (emphasis added). In fact, McKee emphasized that Dix invalidated a contract 

invoked “against Washington citizens.” 191 P.3d at 852.4 

Plaintiffs invoke a purported Washington policy of deterring Washington businesses from 

engaging in “misconduct.” Opp. 18–19 (citing Schnall v. AT&T Wireless Servs., Inc., 161 P.3d 

395 (Wash. Ct. App. 2007)). But any such policy is inapplicable to ATTM, which is not a 

Washington entity. See page 2, supra. And as Judge Zilly has observed, Schnall applied 

conflict-of-law principles for “tort” rather than “contract law” questions, such as whether an 

“arbitration clause is valid.” McGinnis v. T-Mobile USA, Inc., 2008 WL 2858492, at *3 (W.D. 

Wash. July 22, 2008). Indeed, when Schnall analyzed what law applied to contract questions, it 

held that AWS’s choice-of-law clause “should be enforced as written because it chooses the law 

with which the customer is most familiar.” 161 P.3d at 404 & n.40 (emphasis added). 

2. No materially greater interest. Washington also does not have a materially greater 

interest than Plaintiffs’ home states in policing their arbitration agreements. Washington may 

have the primary interest in disputes involving its “consumers” (McKee, 191 P.3d at 852) or 

contracts “signed in * * * Washington” (Granite Equip. Leasing Corp. v. Hutton, 525 P.2d 223, 

226–27 (Wash. 1974); Cox v. Lewiston Grain Growers, Inc., 936 P.2d 1191, 1196 (Wash. Ct. 

App. 1997)). But by the same reasoning, other states have stronger interests in regulating their 

own consumers’ in-state agreements. As Judge Zilly held in McGinnis, Georgia’s “interest in 

determining the rights of its citizens in contracts with out-of-state actors outweighs whatever 

interest Washington has in regulating contracts its citizens enter into abroad.” 2008 WL 

2858492, at *3; see also In re Jamster Mktg. Litig., 2008 WL 4858506, at *3, *6 (S.D. Cal. Nov. 

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violate a fundamental policy of the forum state. Opp. 19–20. But none of those cases applied Washington law. 

Moreover, the majority of those cases involved plaintiffs who were residents of the forum state. See, e.g., Coady v. 

Cross Country Bank, 729 N.W.2d 732, 734 (Wis. Ct. App. 2007); Klussman v. Cross Country Bank, 36 Cal. Rptr. 3d 

728, 739 (Ct. App. 2005).

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 15 of 45
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10, 2008) (applying Section 187(2) of the Restatement and explaining that “plaintiffs fail to 

identify any legitimate and cognizable interest California has concerning transactions occurring 

outside its borders and involving non-California residents”). 

Plaintiffs suggest that the state whose law most favors class actions always triumphs, 

because allowing non-residents new opportunities to pursue class actions cannot offend their 

home states’ interests. Opp. 23. But a “basic principle of federalism” is that “each State may 

make its own reasoned judgment about what conduct is permitted or proscribed within its 

borders.” State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408, 422 (2003). “States need 

not, and in fact do not, provide [consumer] protection in a uniform manner.” BMW of N. Am., 

Inc. v. Gore, 517 U.S. 559, 569 (1996). Indeed, the Ninth Circuit has recognized that many 

states consider class-arbitration prohibitions to be fully enforceable, and for this reason explained 

that a nationwide class action could not possibly be certified unless the district court engaged in 

“a state-by-state review of contract conscionability jurisprudence.” Lozano v. AT&T Wireless 

Servs., Inc., 504 F.3d 718, 728 (9th Cir. 2007) (affirming district court’s denial of class 

certification). In short, Plaintiffs cannot “impose” Washington’s “policy choice” regarding the 

enforceability of arbitration agreements upon “States with different public policies.” Philip 

Morris USA v. Williams, 549 U.S. 346, 352–53 (2007) (internal quotation marks omitted).5

 

II. PLAINTIFFS’ AGREEMENTS TO ARBITRATE ON AN INDIVIDUAL BASIS 

ARE ENFORCEABLE UNDER THE LAW OF THEIR HOME STATES. 

Plaintiffs argue that the requirement that arbitration be conducted on an individual basis 

5

 Contrary to Plaintiff’s implication (Opp. 23), Boyes v. Greenwich Boat Works, Inc., 27 F. Supp. 2d 543 

(D.N.J. 1998), does not hold that the state with the most pro-class-action rule always has the materially greater 

interest. Unlike Plaintiffs’ contention here, the “differences” between the states’ laws in that case “d[id] not 

represent competing or conflicting resolutions of a particular policy issue.” Id. at 548. Moreover, the issue there 

was whether the laws of the two states—concerning the availability of treble damages and attorneys’ fees—even 

were in conflict, not whether a choice-of-law clause should be set aside. Id. Plaintiffs’ other cases (Opp. 21–23) are 

also far afield: They did not involve the enforceability of choice-of-law clauses, but rather addressed whether 

applying the forum’s law to absent class members was so arbitrary as to violate due process (In re Worlds of Wonder 

Secs. Litig., 1990 WL 61951, at *5 (N.D. Cal. Mar. 23, 1990)), whether state regulators could sue an in-state entity 

accused of defrauding out-of-staters (Abrams v. DeFelice, 77 B.R. 376, 380–81 (D. Conn. Bankr. 1987); State ex 

rel. Corbin v. Pickrell, 667 P.2d 1304, 1312 (Ariz. 1983)), whether the Commerce Clause barred a state from 

permitting non-residents to sue for in-state frauds (Diamond Multimedia Sys., Inc. v. Super. Ct., 968 P.2d 539, 556–

57 (Cal. 1999)), whether a statute should be construed as applying to out-of-state transactions (Abrams v. Camera 

Warehouse, Inc., 496 N.Y.S.2d 659, 660 (Sup. Ct. 1985)), and whether the forum state’s law applied to a fraud 

claim in the absence of a choice-of-law clause (Badger Mountain, 143 F.R.D. at 699–700; In re Pizza Time Theatre 

Secs. Litig., 113 F.R.D. 15, 18–19 (N.D. Cal. 1986)). 

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makes their arbitration agreements unconscionable. Opp. 29–39. But virtually all of the relevant 

states employ a high standard for invalidating contract provisions on unconscionability grounds. 

See Mem. 42 n.34. Under the standards applied by those states, the arbitration clause at issue 

here—ATTM’s 2006 clause—is far from unconscionable. 

A. ATTM’s 2006 Arbitration Provision Governs This Dispute. 

Plaintiffs concentrate virtually all of their fire on ATTM’s 2006 arbitration provision. 

They do drop a footnote, however, contending that the 2006 provision—which expressly covers 

“all disputes and claims between us,” “including * * * claims that arose before this or any prior 

Agreement * * * [and] claims that are currently the subject of purported class action litigation in 

which you are not a member of a certified class” (Berinhout Dec. Ex. 1, at 2 (boldface in 

original)—is inapplicable because (in their view) an arbitration clause that is revised after a 

lawsuit is “fil[ed]” cannot “retroactively apply.” Opp. 30 n.21. They are wrong, as a federal 

court in California explained in rejecting the same argument. See Laster v. T-Mobile USA, Inc., 

2008 WL 5216255 (S.D. Cal. Aug. 11, 2008), appeal pending, No. 08-56394 (9th Cir.). 

Under the FAA, agreements to arbitrate an “existing controversy” are “valid, irrevocable, 

and enforceable.” 9 U.S.C. § 2; see also, e.g., Watson Wyatt & Co. v. SBC Holdings, Inc., 513 

F.3d 646, 649–52 (6th Cir. 2008); In re Verisign, Inc., Derivative Litig., 531 F. Supp. 2d 1173, 

1224 (N.D. Cal. 2007). Many courts have enforced revisions to an arbitration provision made 

during litigation, so long as the terms of the agreement reflect that intent.6

 Plaintiffs rely on 

cases in which the contracts did not have arbitration clauses when the litigation began.7 But 

here, ATTM merely changed existing arbitration agreements to make them more favorable to its 

customers. See Laster, 2008 WL 5216255, at *6–7 (citing, e.g., Badie v. Bank of Am., 79 Cal. 

6

 See Laster, 2008 WL 5216255, at *5–*6; Enderlin v. XM Satellite Radio Holdings, Inc., 2008 WL 830262, 

at *7 (E.D. Ark. Mar. 25, 2008) (revisions to arbitration agreement made during the course of litigation govern that 

litigation); Davidson v. Cingular Wireless LLC, 2007 WL 896349, at *4 (E.D. Ark. Mar. 23, 2007) (ATTM’s 

revised 2006 clause applies to lawsuit filed in 2003); Goetsch v. Shell Oil Co., 197 F.R.D. 574, 577–79 (W.D.N.C. 

2000) (compelling individual arbitration based on terms of provision that had been revised to add a class waiver 

after the commencement of litigation); Gregory v. Sprint Spectrum L.P., 2006 WL 2497781, at *9 (Cal. Ct. App. 

Aug. 30, 2006) (unpublished) (suggesting that an arbitration provision would be enforced with respect “to litigation 

already pending” so long as “the provision * * * contain[ed] some language reflecting the parties’ intent to do so”). 

7

 See Opp. 30 n.21 (citing In re Currency Conversion Fee Antitrust Litig., 361 F. Supp. 2d 237 (S.D.N.Y. 

2005), Bilbrey v. Cingular Wireless, LLC, 164 P.3d 131 (Okla. 2007), H&R Block, Inc. v. Haese, 82 S.W.3d 331 

(Tex. App. 2000), and Carnegie v. H&R Block, Inc., 687 N.Y.S.2d 528 (Sup. Ct. 1999)). 

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Rptr. 2d 273, 283–84 (Ct. App. 1998)). In short, Plaintiffs’ attack on the applicability of the 

2006 clause—which they tellingly relegate to a footnote—should be rejected.8 

B. The Agreements Of The Washington Plaintiffs Are Fully Enforceable. 

1. ATTM’s 2006 Arbitration Provision Is Not Substantively 

Unconscionable Under Washington Law. 

a. Plaintiffs mischaracterize Scott as a per se ban on agreements 

to arbitrate on an individual basis. 

Relying chiefly on Scott v. Cingular Wireless LLC, 161 P.3d 1000 (Wash. 2007), which 

refused to enforce ATTM’s 2003 arbitration provision, Plaintiffs in effect argue that agreements 

to arbitrate on an individual basis are per se substantively unconscionable under Washington 

law. Opp. 29–35.9

 But far from creating a categorical bar against such agreements, the 

Washington Supreme Court has explained that it could “certainly conceive of situations where a 

class action waiver would not prevent a consumer from vindicating his or her substantive 

rights” and “would thus be enforceable.” Scott, 161 P.3d at 1009 n.7 (emphasis added); see also 

McKee, 191 P.3d at 852 (“We have held that some class action prohibitions may be 

conscionable.”). Accordingly, Judge Robart has held that Scott “adopted a case-specific 

approach,” and, under that approach, enforced Dell’s arbitration provision. Carideo v. Dell, Inc., 

520 F. Supp. 2d 1241, 1246–47 (W.D. Wash. 2007). ATTM’s 2006 provision, which is far more 

pro-consumer than the Dell provision upheld in Carideo, passes muster under Scott’s “case8

 Plaintiffs also cite Kinkel v. Cingular Wireless LLC, 857 N.E.2d 250 (Ill. 2006), and Stern v. Cingular 

Wireless Corp., 453 F. Supp. 2d 1138 (C.D. Cal. 2006). The Kinkel court held that under Illinois law, Cingular’s 

then-current arbitration provision did not apply to a former customer whose contract had been terminated. 857 

N.E.2d at 259. Here, the Illinois plaintiffs were current customers when they received the 2006 provision. 

Berinhout Dec., Dkt. #134 ¶ 50. The Stern court misapplied the California rule that unconscionability should be 

assessed as of “‘the moment when [the contract] is entered into by both parties’” (453 F. Supp. 2d at 1144 (quoting 

Am. Software, Inc. v. Ali, 54 Cal. Rptr. 2d 477, 480–81 (Ct. App. 1996))), which directs courts evaluating the 

fairness of a bargain not to use hindsight paternalistically in determining whether a particular deal was a good one. 

See Morris v. Redwood Empire Bancorp., 27 Cal. Rptr. 3d 797, 810 (Ct. App. 2005) (“Although Morris’s 

transaction with National ultimately provided no value to him, unconscionability is determined as of the time the 

contract was entered into, not in light of subsequent events.”); see also Mem. 18 n.18. Stern is also inapplicable to 

those plaintiffs who switched to Cingular (or are not subject to California law). 

9

 Plaintiffs also cite Lowden v. T-Mobile USA, Inc., 512 F.3d 1213 (9th Cir.), cert. denied, 129 S. Ct. 45 

(2008); Riensche v. Cingular Wireless LLC, 2006 WL 3827477 (W.D. Wash. Dec. 27, 2006); and Luna v. 

Household Finance Corp., 236 F. Supp. 2d 1166 (W.D. Wash. 2002). Riensche and Luna were superseded by 

Scott’s articulation of Washington law. Those decisions and Lowden also involved arbitration provisions that were 

less pro-consumer than ATTM’s 2006 provision. None of those provisions offered enhanced remedies in individual 

arbitration. Moreover, in Luna, the plaintiffs were “financially strapped,” and the arbitration fees imposed on them 

were “likely drastically to exceed the costs of pursuing the claim in court.” 236 F. Supp. 2d at 1179, 1182. 

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specific” standard.10

b. ATTM’s 2006 provision encourages Washington consumers to 

resolve their claims in arbitration. 

Under ATTM’s 2006 provision, the Washington plaintiffs (Frerker and the Shulmans) 

can readily “vindicat[e]” their “substantive rights” in individual arbitration. Scott, 161 P.3d at 

1009 n.7. The provision does not “deny” customers “any meaningful remedy” (id. at 1008). To 

the contrary, ATTM’s provision enhances the available remedies by providing that, if a 

Washington customer does better than ATTM’s last settlement offer, he or she will receive 

$5,000 and double attorneys’ fees in lieu of any smaller award. Thousands of citizens sue in 

Washington’s small claims court each year to recover amounts that are less than $5,000, even 

though doing so requires greater effort than invoking ATTM’s flexible arbitration procedures. 

Mem. 13. In view of the potential for a $5,000 minimum payment, the Washington plaintiffs 

would be worse off serving as class representatives, who typically receive payments of only 

$1,000 or $2,000 for shepherding a case through settlement as fiduciaries for the class.11 

In addition to the potential to receive a $5,000 minimum payment, arbitration generally is 

much quicker than litigation,12 and consumers tend to prevail more often in arbitration than in 

court.13 Moreover, ATTM customers are particularly likely to obtain full redress with minimal 

effort. As one federal court has recognized, the 2006 clause “prompt[s] ATTM to accept 

10 The Dell arbitration provision Judge Robart enforced in Carideo required the customer to pay arbitration 

fees up to “the cost of filing in state court, which in Seattle means a cap of $200,” although Dell offered to pay all 

arbitration fees that “exceed the initial $25 filing fee.” 520 F. Supp. 2d at 1248. By contrast, customers arbitrate for 

free under ATTM’s 2006 provision and also may recover special premiums no court could award. 

11 See Mem. 13 (citing study). Plaintiffs’ proffered experts on the market for consumer legal services 

testified that these incentive payments—often much less than ATTM’s premium—are “fair compensation for the 

added burden of being a class representative.” Blinn Dep. 130:8–15; see also Plutzik Dep. 90:9–16 ($5,000 is “fair 

and reasonable”). 

12 American Arbitration Association (“AAA”) consumer arbitrations proceed to an award in an average of 

four to six months. AAA, Analysis of the American Arbitration Association’s Consumer Arbitration Caseload, at 

http://www.adr.org/si.asp?id=5027. By contrast, federal civil cases average 23.2 months before reaching trial. 

United States District Court—Judicial Caseload Profile, at http://www.uscourts.gov/cgi-bin/cmsd2006.pl. Class 

actions take even longer to reach a final resolution, as this case exemplifies. 

13 A recent study shows that consumers prevail and win some relief in 53.3% of AAA arbitration that they 

file. Searle Civil Justice Inst., Nw. U. Sch. of L., Consumer Arbitration xiii (Mar. 2009), available at http://

www.searlearbitration.org/p/full_report.pdf. In court, by contrast, virtually all consumer actions that are not settled 

or withdrawn are dismissed, with only 1.3% to 4.1% of federal civil cases ever reaching trial, much less a verdict for 

the plaintiff, in the last five years. See Admin. Office of U.S. Courts, 2007 Judicial Facts and Figures tbl. 4.10, at 

http://www.uscourts.gov/judicialfactsfigures/2007/Table410.pdf. 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 19 of 45
liability” before arbitration—“even for claims of questionable merit and for claims it does not 

owe”—to avoid the risk of having to pay the premiums and arbitration costs. Laster, 2008 WL 

5216255, at *11 (emphasis in original). Accord Francis v. AT&T Mobility LLC, 2009 WL 

416063, at *9 (E.D. Mich. Feb. 18, 2009) (plaintiff’s “assertion that AT&T’s right to make the 

final pre-arbitration settlement offer renders the premium recovery * * * illusory ignor[e]s the 

goal of informally resolving billing disputes before they reach arbitration”). 

For this reason, Plaintiffs miss the mark in objecting that few disputes proceed to a final 

award. Opp. 34. As one court has explained,“[i]f ATTM resolves its customers’ claims through 

prompt payment, and does so for fear of being subjected to its contract-based * * * Premium, the 

Premium has served a noble purpose, even if no customer ever actually receives it.” Laster, 

2008 WL 5216255, at *11. In practice, this incentive works: ATTM dispenses over a hundred 

million dollars per month in credits—amounting to over $1 billion a year—to resolve customer 

complaints without the need for arbitration. Mem. 6. Plaintiffs dismiss these disputes as 

involving “‘billing system error[s]’ rather than the complex claims” they assert. Opp. 32. But as 

the record shows, credits can be granted for any factor “caus[ing] the customer’s bill to be 

incorrect,” in cases of “misunderstanding, miscommunication, or unexpected charge[s],” or if the 

customer “dispute[s] roaming or overage charges.” Simon Dec. (Dkt. #153) Ex. C. A customer 

who complains about alleged dropped calls or poor service can get relief. 

Plaintiffs also are mistaken in contending that their claims are so “complex” that 

consumers are not likely to realize that they have claims and will have difficulty attracting 

counsel. Opp. 32. Judge Robart rejected the same arguments in Carideo. See 552 F. Supp. 2d at 

1247–49. Plaintiffs allege that call quality worsened following the merger, forcing them to 

switch to Cingular. A claim for degraded service—like the malfunctioning laptop in Carideo—

would be apparent to any user. Even if it might be expensive to prove an individual claim in 

court, arbitration is a different kettle of fish. “A big part of arbitration is avoiding the procedural 

niceties of formal litigation.” Vaden v. Discover Bank, 2009 WL 578636, at *15 (U.S. 2009) 

(Roberts, C.J, concurring in part and dissenting in part). Because of the informality of the 

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process, arbitrators are less likely to impose the kinds of evidentiary burdens that characterize 

judicial dispute resolution.14 Moreover, contrary to plaintiffs’ implicit assumption, it would be 

economically irrational for ATTM to deploy vast resources to resist an individual claim in 

arbitration.15 Precisely because an individual arbitration is not a high-stakes class action, 

ATTM’s incentives are to try to resolve it quickly and cheaply without raising every possible 

defense. Indeed, ATTM has powerful incentives to resolve claims like these before arbitration to 

avoid paying the costs of arbitration and the premiums that would ensue if the customer were 

awarded more than ATTM’s last settlement offer. See Francis, 2009 WL 416063, at *9; Laster, 

2008 WL 521655, at *11.

In addition, the availability of statutory attorneys’ fees—and potentially double attorneys’ 

fees—provides adequate incentives for attorneys to represent Washington consumers in 

arbitration. The very “same successful consumer attorney relied upon by the plaintiffs in Scott” 

testified that his threshold for taking an individual claim was “$5,000” (Carideo, 520 F. Supp. 2d 

at 1248)—the amount of ATTM’s premium for Washington customers. See also Maier Dep. 

43:13–45:24 (same threshold). Many attorneys, particularly the “less-established” ones who 

Judge Robart found would be willing to pursue claims under Dell’s less pro-consumer provision 

(Carideo, 520 F. Supp. 2d at 1249), may lower their thresholds for ATTM customers, given the 

ease of arbitration and the chance of earning double their fee. ATTM presented declarations 

from several attorneys (including two from Washington) who testified that they or their firms 

would represent ATTM customers under these terms. See Adolph Dec., Dkt. #59 ¶ 3; Leyh Dec., 

14 Cf. Francis, 2009 WL 416063, at *7–*8 (rejecting plaintiff’s contention that he must incur “the ‘seven 

figure’ cost of discovery” into “AT&T’s technical ability to determine the geographic source of wireless phone 

calls” to arbitrate a claim that he had been improperly charged for domestic calls at an international rate because he 

could use “his monthly itemized bills, and presumably his knowledge of where he and his wife were located when 

they sent or received the disputed calls” to identify the allegedly improper charges); Carideo, 520 F. Supp. 2d at 

1247 (rejecting argument that product-defect claim was too expensive to prove in individual arbitration because “a 

claimant might cost-effectively print out the many complaints about a particular model posted on Dell’s online 

community forum and submit those as proof of the defect to the decision-maker”). 

15 As another district court has explained, ATTM’s provision “does not require * * * confidentiality * * *, 

thereby allowing consumers the option of disseminating * * * information [about their claims] in the manner of their 

choosing” (Cruz v. Cingular Wireless LLC, 2008 WL 4279690, at *4 (M.D. Fla. Sept. 15, 2008), appeal pending, 

No. 08-16080-CC (11th Cir.). Consumers could use this information to “initiat[e] a multitude of arbitration claims,” 

forcing “the business * * * to pay separate fees for each arbitrated claim” as well as statutory attorneys’ fees to 

prevailing claimants. Lindsay R. Androski, Comment, A Contested Merger: The Intersection of Class Actions and 

Mandatory Arbitration Clauses, 2003 U. CHI. LEGAL F. 631, 659. 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 21 of 45
Dkt. #58 ¶ 4; see also, e.g., Bissell Dec., Dkt. #71 ¶ 9; Halle Dec., Dkt. #56 ¶ 4; Pittman Dec., 

Dkt. #71 ¶ 11; Sauter Dec., Dkt. #71 ¶ 12. Although Plaintiffs found attorneys who disagree, 

those attorneys mistakenly assumed that individual arbitration entails the same “sophisticated 

litigation” that characterizes high-stakes class-action litigation. Fons Dec., Dkt. #141 ¶ 12; see 

also Blinn Dec., Dkt. #137 ¶ 43; Rossman Dec., Dkt. #152 ¶ 22; Fahlgren Dec., Dkt. #140 ¶ 6; 

Mansfield Dec., Dkt. #150 ¶ 6; Hartzell Dec., Dkt. #143 ¶ 25; Hoerner Dec., Dkt. #145 ¶ 13; 

Kalnitz Dec., Dkt. #147 ¶¶ 7, 11–12; Maier Dec., Dkt. #149 ¶¶ 12–13. They also failed to 

understand that an award of statutory attorneys’ fees or the contractual double-fee award would 

not be reduced merely because it exceeds the customer’s claim. See, e.g., Hartzell Dec., Dkt. 

#143 ¶ 27; Maier Dec., Dkt. #149 ¶ 18; Fahlgren Dec., Dkt. #140 ¶ 4.16 

Plaintiffs’ attorney declarants also discounted the premium features of ATTM’s 

provision, speculating that ATTM would “game the premiums” by offering to settle for more 

than the demand. E.g., Hartzell Dec. ¶ 29; Fahlgren Dec. ¶¶ 6–7; Maier Dec., Dkt. #150 ¶¶ 22–

26. But they overlook the possibility of obtaining attorneys’ fees during the settlement process. 

Because ATTM must pay $1,700 in arbitration fees whenever a customer seeks a hearing (Mem. 

25 n.25), ATTM has immediate reason to settle the dispute for any lesser amount, which in most 

cases would leave a healthy margin for the attorney’s time. See, e.g., Maier Dec. ¶¶ 17–18 

(estimating four hours). Moreover, as one court has found, “ATTM has an incentive to include 

reasonable attorney’s fees in its settlement offers, and has a policy of doing so.” Laster, 2008 

WL 5216255, at *10 n.7. If ATTM does not offer fees and the arbitrator later awards them, the 

plaintiff is eligible for the premium.17 In any event, Plaintiffs’ complaint that it is too easy for 

 

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16 Under both Washington’s Consumer Protection Act and federal law, “reasonable” attorneys’ fees need not 

be proportionate to the amount at stake. Keyes v. Bollinger, 640 P.2d 1077, 1084–85 (Wash. Ct. App. 1982); accord 

Farrar v. Hobby, 506 U.S. 103, 113 (1992). Instead, fees are calculated on an hourly “lodestar” basis, with a 

“contingency adjustment” “to compensate for the possibility” that “litigation would be unsuccessful” and “no fee 

would be obtained.” Bowers v. Transamerica Title Ins. Co., 675 P.2d 193, 204 (Wash. 1983) (quoting Copeland v. 

Marshall, 641 F.2d 880, 893 (D.C. Cir. 1980)). ATTM’s agreement to pay twice the fees “reasonably accrued” 

(Mem. 5) would be governed by these standards. See also Berinhout Fact Dep. 118:10–20. 

17 Courts “should not, on * * * ‘mere speculation’ that an arbitrator might interpret” an agreement “in a 

manner that casts [its] enforceability into doubt,” refuse to refer the question to an arbitrator. PacifiCare Health 

Sys., Inc. v. Book, 538 U.S. 401, 406–07 (2003). Rather, “the proper course is to compel arbitration.” Id. at 407; see 

also Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 90–92 (2000) (compelling arbitration despite claim of 

“prohibitive costs” because plaintiff did not show a “likelihood of incurring such costs”); Francis, 2009 WL 

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ATTM’s customers to obtain make-whole relief turns the unconscionability inquiry on its head. 

c. ATTM’s dispute-resolution system is not an inferior substitute 

for class actions. 

Because ATTM’s 2006 arbitration provision is not unconscionable as to the Washington 

Plaintiffs, Plaintiffs shift the focus elsewhere, arguing that, absent a class adjudication, the 

challenged conduct “could continue as to” ATTM’s other customers. Opp. 33.18 This argument 

that class proceedings are indispensable cannot be squared with Scott, which disavowed a per se 

rule against class waivers. See page 7, supra. In Washington, unconscionability turns on “the 

facts of the particular case” (Scott, 161 P.3d at 1009 n.7), not “hypothetical” situations (Sammy 

Enters. v. O.P.E.N. Am., Inc., 2008 WL 2010357, at *7 (Wash. Ct. App. May 12, 2008)).19 

Even if the interests of non-parties such as absent class members were relevant, they “do 

not fare as well” as those who arbitrate under ATTM’s provision. Laster, 2008 WL 5216255, at 

*11. Plaintiffs assume that class actions make all class members whole at no cost (Opp. 43–44), 

but the truth is far from that. About four-fifths of class actions are not certified; of the remaining 

20%, the overwhelming majority settle, often for pennies on the dollar (with further reductions 

for class counsel’s fees). Thomas E. Willging & Shannon R. Wheatman, Attorney Choice of 

Forum in Class Action Litigation: What Difference Does it Make?, 81 NOTRE DAME L. REV. 591, 

635–36, 638 (2006); see also Mem. 16 & n.16. 

Moreover, the evidence shows that few class members actually benefit from class actions. 

In some cases—including ones involving Plaintiffs’ attorney declarants—fewer than 5% of class 

members ultimately received any recovery at all from class settlements. See Ranlett Dec. ¶¶ 18–

416063, at *7–*8 (plaintiff’s “reference to the ‘seven figure’ cost of discovery” to vindicate claim on individual 

basis did not “meet [his] burden” to “show[] the likelihood of incurring” such “prohibitively expensive” costs). 18 This assertion is pure speculation, and misguided speculation at that. Contrary to Plaintiffs’ contention, 

few unlawful practices could long survive a wave of arbitrations for which ATTM would bear all of the costs. 

When (as here) arbitration is not confidential, an “enterprising attorney” can “use prior, successful arbitration 

awards when bringing new claims that require identical presentations of proof, as well as make known to potential 

clients her many victories.” Carideo, 520 F. Supp. 2d at 1247; accord Cruz, 2008 WL 4279690, at *4 (“[T]he Court 

disagrees with plaintiffs’ assertion that absent * * * a Rule 23 type notice, AT&T will be able to continue its alleged 

illegal practices,” because the “agreement does not require consumers to execute a confidentiality agreement, 

thereby allowing consumers the option of disseminating the information in the manner of their choosing.”). 

19 Accord Pleasants v. Am. Express Co., 541 F.3d 853, 859 (8th Cir. 2008) (under Missouri law, “whether 

other consumers have elected to arbitrate claims under other contracts is not material”); Cline v. H.E. Butt Grocery 

Co., 79 F. Supp. 2d 730, 733 (S.D. Tex. 1999) (rejecting unconscionability challenge because “[p]laintiff offers no 

information as to * * * his ability to pay”) (emphasis added); West v. Henderson, 278 Cal. Rptr. 570, 576 (Ct. App. 

1991) (contract was not unconscionable merely because it might be unfair in other, “hypothetical situation[s]”). 

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20. This figure is in line with other estimates of class action “take rates.”20 And some cases 

yielded even lower recovery rates. For example, in one class action, only 0.67% of class 

members received a payout. Id. ¶ 11 (citing DeLoach v. Shaver Auto Center (Cal. Super. Ct. San 

Bernardino Cty., filed Oct. 17, 2003)). In another, only 0.70% of class members received any 

benefit. Id. ¶ 13 (citing Luna v. Corona Cars, Inc. (Cal. Super. Ct. Riverside Cty. Oct. 30, 

2007)). And in a third case, the take rate was zero because every filed claim was rejected—

meaning that only the plaintiffs’ counsel recovered under the settlement. Id. ¶ 12 (citing 

Gutierrez v. Center Chevrolet (Cal. Super. Ct. San Bernardino Cty. Oct. 10, 2007)). In short, the 

vast majority of consumers take absolutely nothing from such settlements. 

This is not to say that all class actions always lack value. But to the individual consumer, 

it often seems that way. Indeed, most small consumer claims are not amenable to class 

treatment. They are too fact-bound, and do not involve questions common to a class. See, e.g.,

Rossman Dep. 112:22–113:4, 113:23–114:3 (describing fraud claims and suits for actual 

damages as less amenable to class treatment). Without ATTM’s arbitration provision, these 

customers would be without recourse.

21 Faced with the choice between subsidized individual 

arbitration and class actions from which very few people obtain any recovery at all, “[a] 

reasonable consumer may well prefer” ATTM’s arbitration provision. Laster, 2008 WL 

5216255, at *12.22 And, for the reasons we have discussed, arbitration under ATTM’s provision 

20 See Mem. 14 n.12; see also, e.g., Palamara v. Kings Family Rests., 2008 WL 1818453, at *2 (W.D. Pa. 

Apr. 22, 2008) (“approximately 165 class members” out of 291,000 “had obtained a voucher” under the settlement, 

yielding a take rate of under 0.06%); Yeagley v. Wells Fargo & Co., 2008 WL 171083, at *2 (N.D. Cal. Jan. 19, 

2008) (“less than one percent of the class chose to participate in the settlement”); Moody v. Sears, Roebuck & Co., 

2007 WL 2582193, at *5 (N.C. Super. Ct. May 7, 2007) (“only 337 valid claims were filed out of a possible class of 

1,500,000,” yielding a take rate of just over 0.02%), rev’d, 664 S.E.2d 569 (N.C. Ct. App. 2008). 

21 See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 281 (1995) (without arbitration, “the typical 

consumer who has only a small damage claim (who seeks, say, the value of only a defective refrigerator or 

television set)” would be left “without any remedy but a court remedy, the costs and delays of which could eat up 

the value of an eventual small recovery”). 

22 The 2006 arbitration provision offers real benefits to both sides and is not “one-sided.” Opp. 35. It obliges 

ATTM to engage in binding arbitration, to pay for the proceedings, and to pay a minimum of $5,000, plus double 

attorneys’ fees, if the arbitral award exceeds its last settlement offer. Plaintiffs ignore these obligations, arguing that 

ATTM rarely brings class actions against its customers, and so is not constrained by a class waiver. Opp. 35. But 

Washington does not require contracting parties to bear exact mirror-image obligations. Zuver v. Airtouch 

Commc’ns, Inc., 103 P.3d 753, 767 n.16 (Wash. 2004). For example, customers do not need to provide ATTM with 

phone service. In any event, the FAA would preempt any requirement that all obligations in an arbitration provision 

be perfectly mutual. See, e.g., Easter v. CompuCredit Corp., 2009 WL 499384, at *3 (W.D. Ark. Feb. 27, 2009). 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 24 of 45
constitutes a “situation[] where a class action waiver would not prevent a consumer from 

vindicating his or her substantive rights.” Scott, 161 P.3d at 1009 n.7. Accordingly, it is not 

substantively unconscionable under Washington law. 

2. The Washington Plaintiffs’ Arbitration Agreements Are Not 

Procedurally Unconscionable. 

Plaintiffs argue that their arbitration agreements are procedurally unconscionable under 

Washington law for four reasons: (1) the arbitration clause was non-negotiable; (2) AWS had 

greater “bargaining power”; (3) “90 percent” of other wireless carriers now require individual 

arbitration; and (4) the arbitration clause was inadequately disclosed. Opp. 37–39. 

The Washington Supreme Court has squarely rejected Plaintiffs’ first two arguments. 

Zuver held that “adhesion contract[s]” are “not necessarily * * * procedurally unconscionable” 

and “that unequal bargaining power * * * will not, standing alone, justify a finding of procedural 

unconscionability.” 103 P.3d at 760–61. Instead, the “key inquiry” is “whether” Plaintiffs 

“lacked meaningful choice.” Id. at 761. The court held that giving an employee 15 days to 

consider an agreement that included an arbitration provision was sufficient to avoid procedural 

unconscionability. See id. A fortiori, the 30 days in which Plaintiffs here could cancel without 

penalty were more than sufficient. See also Huang v. Wash. Mut. Bank, 2008 WL 4102918, at 

*4 (W.D. Wash. Aug. 25, 2008) (finding one month “adequate”). Moreover, although Plaintiffs 

object that “90 percent” of other carriers now require individual arbitration, they do not deny that 

when Frerker and the Shulmans activated service years ago, other carriers did not. See Mem. 39. 

Plaintiffs’ final argument (Opp. 38), which is based on the declaration of marketing 

professor Michael Kamins, is that AWS communicated its arbitration clause so as to reduce “the 

probability that the average consumer would * * * cognitively process it.” Kamins Dec., Dkt. 

#148 ¶ 16.23 But Frerker’s AWS Welcome Guides notified her at the top of the second or third 

 

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23 In places, Dr. Kamins strains credibility to the breaking point in order to support the arguments of his 

sponsors. For example, he contends that AWS concealed the requirement that arbitration be conducted on an 

individual basis, by virtue of being “the nation’s most admired telecommunications company” (Kamins Dec. ¶ 9) 

and by placing the tag line “Welcome to the Freedom of Wireless” on some Welcome Guides, which he reads to 

signal “that rights of redress would not be restricted in the service contract” (id. ¶ 8). On this logic, presumably, the 

“freedom of wireless” would also mean that customers would not have to pay anything for their service—an equally 

inane proposition. Unsurprisingly, Dr. Kamins confirmed that he performed no studies or surveys to support his 

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page that she was accepting the terms of service unless she cancelled within 30 days. Hennessy 

Dec., Dkt. #61 Ex. 8, at 3; Ex. 19, at 2. The first page of those terms and conditions of service in 

Frerker’s and the Shulmans’ Welcome Guides identified the arbitration provision in a list of key 

provisions, and the arbitration provision itself, which is in the same size font as the other terms, 

is captioned in boldface. Id. Ex. 8, at 32; Ex. 10, at 9; Ex. 19, at 60. Dr. Kamins nonetheless 

objected that the arbitration clause should have been at the beginning of the booklet and in a 

larger font. Kamins Dec. ¶ 8. And he also believes that store employees should be required to 

tell customers about the arbitration provision in particular. Kamins Dep. 116:6–20.24 But 

Washington’s procedural unconscionability law does not require an arbitration provision to be 

more prominent than other terms—much less to the extent Dr. Kamins demands. Indeed, the 

FAA would preempt any such “special prominence” requirement. E.g., Doctors’ Assocs., Inc. v. 

Casarotto, 517 U.S. 681, 684, 687 (1996) (a “State’s law [that] conditions the enforceability of 

arbitration agreements on” disclosing the arbitration requirement in “underlined capital letters on 

the first page of the contract” “directly conflicts with § 2 of the FAA[.]”). 

C. The Arbitration Agreements Are Enforceable Under The Laws Of The Eight 

Other States. 

Plaintiffs do not meaningfully challenge our detailed showing that agreements of the 

sixteen non-Washington plaintiffs are enforceable under the laws of their eight home states. 

Mem. 9–37. Instead, they cite a few cases in footnotes (Opp. 35–36 nn.23–35)—many of which 

we already have discussed—and request another round of briefing if the Court declines to apply 

Washington law (Opp. 28 n.19). That request should be rejected. This Court authorized 

overlength briefing specifically so that the parties could address the “many different states’ 

unorthodox opinions. Kamins Dep. 76:3–14. Dr. Kamins criticizes Cingular’s contracts on similar grounds, 

although Plaintiffs do not argue in their opposition that their arbitration agreements with Cingular are procedurally 

unconscionable. In any event, Dr. Kamins’ analysis of Cingular’s contracts involves glaring errors—overlooking, 

for example, the fact that customers signed Cingular contracts immediately above an acknowledgment that they 

agreed to Cingular’s terms of service, including “arbitration.” E.g., Hennessy Dec. Ex. 6. Indeed, Dr. Kamins 

explained that he thought it “surprising” that a consumer who signs under such a statement should “be excused from 

the terms of the contract because [he or she] didn’t read it.” Kamins Dep. 83:19–84:7. 

24 Dr. Kamins conceded that “[i]n terms of where [the arbitration provision] appears in the text of the 

subcomponent service agreement [within the AWS Welcome Guide], it is not buried.” Kamins Dep. 100:23–25. He 

also conceded that the first paragraph of Cingular’s Terms of Service booklet states that “[t]his agreement requires 

the use of arbitration to resolve disputes” and that many contract terms properly should precede the arbitration 

provision in that booklet. Id. 102:10–111:20. 

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positions.” Order, Dkt. #50, at 1–2. Plaintiffs have had a full and fair opportunity to do so. 

Moreover, to the extent Plaintiffs have addressed the laws of their various home states, they are 

mistaken in asserting that ATTM’s provision is unenforceable under those laws. 

1. Alabama. Plaintiffs cite only one Alabama decision. Opp. 36 n.25 (citing Leonard 

v. Terminix Int’l Co., 854 So. 2d 529 (Ala. 2002)). As we have explained (Mem. 10–11), the 

contract in Leonard required the plaintiffs to pay $1,000 in fees to arbitrate a claim worth $500 

and placed limitations on a consumer’s recovery. 854 So. 2d at 535–38. ATTM’s 2006 

provision has none of the specific terms that Leonard found objectionable, and is far more proconsumer than the two arbitration provisions the Alabama Supreme Court later upheld (and the 

seven provisions upheld by federal district courts in Alabama). See Mem. 11–12. Thus, it is not 

substantively unconscionable under Alabama law.25

2. Arizona. Plaintiffs cite a federal decision that invalidated a payday lender’s 

arbitration provision on the ground that it would “immunize[]” the lender from liability for a 

$100 claim. Opp. 36 n.26 (citing Cooper v. QC Fin. Servs., Inc., 503 F. Supp. 2d 1266, 1288–89 

(D. Ariz. 2007)). But Plaintiffs do not respond to our showing (Mem. 16–17) that ATTM’s 2006 

provision addresses that concern, entitling Arizona plaintiff Melendez to recover $5,000 and 

double attorneys’ fees in arbitration if he does better than ATTM’s settlement offer. Moreover, 

the provision is more pro-consumer than provisions that other courts have upheld under Arizona 

law—all of which lacked the premiums made available by ATTM’s provision. See Mem. 16–17 

(citing cases). Indeed, the Arizona Court of Appeals has upheld an arbitration agreement 

because the plaintiffs’ share of costs was only a small fraction of the amount in controversy and 

less than “the amount they would likely have to pay in litigation expenses if arbitration were not 

available.” See Harrington v. Pulte Home Corp., 119 P.3d 1044, 1056 (Ariz. Ct. App. 2005). 

25 Alabama law requires Knott to prove both procedural and substantive unconscionability. Blue Cross Blue 

Shield v. Rigas, 923 So. 2d 1077, 1087 (Ala. 2005). As noted, Knott cannot show substantive unconscionability; nor 

can he show procedural unconscionability. Unlike in Leonard, where the plaintiff could not have obtained the 

desired services from a competitor without agreeing to arbitrate (854 So. 2d at 538), Knott had a choice: At least 

three carriers in his area did not require individual arbitration when he first subscribed to AWS service. Mem. 10. 

Because Alabama requires that plaintiffs alleging procedural unconscionability have “actually ‘shop[ped] around’” 

for an alternative agreement (Leeman v. Cook’s Pest Control, 902 So. 2d 641, 647 (Ala. 2004)), this undisputed fact 

is fatal to any argument that Knott’s agreement is unconscionable under Alabama law. 

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Here, Melendez can arbitrate for free. As such, ATTM’s provision is not unconscionable. 

3. California. Plaintiffs cite a series of cases concerning AWS’s and ATTM’s 2003 

arbitration provisions, such as Shroyer v. New Cingular Wireless Services, Inc., 498 F.3d 976 

(9th Cir. 2007). See Opp. 35 n.23. But as we explained (Mem. 24–26), ATTM’s 2006 provision 

satisfies the requirement that Shroyer and the other cases imposed—that customers have a 

“potential for individual gain” in arbitration (498 F.3d at 986 (emphasis in original))—by 

providing that California customers who receive more in arbitration than ATTM’s last settlement 

offer will receive a minimum award of $7,500, plus double attorneys’ fees.26 

True, two federal district courts have held—in decisions currently on appeal—that 

ATTM’s 2006 provision is unconscionable under California law because it prohibits class 

arbitration. See Laster, 2008 WL 5216255, at *13–*14; Stiener v. Apple Computer, Inc., 556 F. 

Supp. 2d 1016 (N.D. Cal. 2008), appeal pending, No. 08-15612 (9th Cir.).27 But as the Laster 

court recognized, the Stiener court “did not address the effect of [ATTM’s] Premium as an 

incentive for individuals to pursue the informal claims process” that permits customers to obtain 

relief without going to the effort of arbitrating at all. Laster, 2008 WL 5216255, at *11 n.8 

(emphasis in original). Indeed, the Laster court found that “a reasonable customer may well 

prefer” ATTM’s provision to class actions. Id. at *12. The court further concluded that a 

consumer would have “sufficient incentive” to pursue claims for “small damages” and that the 

second prong of Discover Bank’s unconscionabilty test thus was not satisfied. Id. at *12–*14 

(citing Discover Bank v. Super. Ct., 113 P.3d 1100 (Cal. 2005)). The Laster court was correct to 

conclude that the second prong of Discover Bank had not been met, but it erred in nonetheless 

26 Plaintiffs also cite Gentry v. Superior Court, 165 P.3d 556, 563 (Cal. 2007), cert. denied, 128 S. Ct. 1743 

(2008), which involved unwaivable statutory rights, but Plaintiffs invoke no such rights here. Mem. 25 n.27. 

27 In addition, another federal district judge has held that, under California law, ATTM’s December 2006 

revision to one of its customer’s arbitration agreements is “procedurally unconscionable” and ineffective unless the 

customer affirmatively accepts it. See Kaltwasser v. Cingular Wireless LLC, 543 F. Supp. 2d 1124, 1130 n.5 (N.D. 

Cal. 2008), appeal pending, No. 08-15962 (9th Cir.). That court—in conflict with the Laster court—overlooked 

Badie, which holds that modifications made pursuant to change-in-terms clauses such as the ones in ATTM’s 

customer agreements are enforceable so long as they are “clearly related to a matter addressed in the original 

contract” and are “reasonable.” 79 Cal. Rptr. 2d at 281, 285. Both requirements are met here: The December 2006 

modifications “clearly related to” the original arbitration provisions in ATTM’s customers’ service agreements and 

are “reasonable” because they are entirely to the customers’ benefit. 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

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KIPLING LAW GROUP PLLC

3601 FREMONT AVE N, SUITE 414 

SEATTLE, WASHINGTON 98103 

telephone (206) 545-0345 

fax (206) 545-0350

Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 28 of 45
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declining to enforce ATTM’s provision on asserted public policy grounds.28

4. Florida. Plaintiffs cite two Florida decisions that turned on remedial restrictions not 

present here. See Mem. 28 n.29 (discussing S.D.S. Autos, Inc. v. Chrzanowski, 976 So. 2d 600 

(Fla. Ct. App. 2007), and Powertel, Inc. v. Bexley, 743 So. 2d 570 (Fla. Dist. Ct. App. 1999)). 

They also cite an unpublished Eleventh Circuit decision, Rollins, Inc. v. Garrett, 176 F. App’x 

968 (11th Cir. 2006), which simply cited Powertel to support the proposition that arbitrators have 

the power to construe an arbitration agreement that does not expressly forbid class arbitration to 

permit it. 176 F. App’x at 969.29 None of these decisions abrogates Fonte v. AT&T Wireless 

Services, Inc., 903 So. 2d 1019 (Fla. Dist. Ct. App. 2005), which upheld AWS’s arbitration 

clause. A fortiori, ATTM’s more pro-consumer 2003 and 2006 provisions are also enforceable. 

Indeed, a Florida federal court recently expressly held that ATTM’s 2006 provision is 

fully enforceable under Florida law. See Cruz v. Cingular Wireless, LLC, 2008 WL 4279690, at 

*3–*4 (M.D. Fla. Sept. 15, 2008), appeal pending, No. 08-16080-CC (11th Cir.). The court 

explained that “Florida courts have held” that Florida’s consumer-protection statute does not 

“‘confer a non-waivable right to class representation’” and rejected the very same arguments that 

Plaintiffs assert here—i.e., that the unavailability of class relief and “Rule 23 type notice” would 

“hinder[] the remedial purposes of” Florida’s consumer-protection statute. Id. at *3–*4. Under 

Fonte and Cruz, ATTM’s 2006 arbitration provision is fully enforceable.30

5. Illinois. Plaintiffs cite Kinkel v. Cingular Wireless LLC, 857 N.E.2d 250, 259 (Ill. 

2006), which invalidated a much earlier and less pro-consumer version of ATTM’s arbitration 

provision than any version at issue here. Id. at 275. As we previously discussed (Mem. 29-32), 

28 The Laster court erroneously believed that ATTM was required by Discover Bank’s third prong to prove 

that arbitration would deter misconduct as effectively as class actions. 2008 WL 5216255, at *13–*14. But 

Discover Bank’s test is conjunctive, not disjunctive. The court also improperly placed the burden of proof on 

ATTM. Moreover, California law does not require equivalence with class actions (and cannot do so consistent with 

the FAA). ATTM has made all of these arguments in the pending appeal. 

29 In any event, in an unpublished decision that actually considers the question at issue here, the Eleventh 

Circuit held that “[a]n arbitration agreement precluding a class-wide remedy is not unconscionable” under Florida 

law. Salter v. Citigroup, Inc., No. 03-16268, slip op. at 5 (11th Cir. Apr. 27, 2004) (attached). 

30 Another court has since held that “the class action waiver provision” in an arbitration provision that is less 

pro-consumer than ATTM’s “is not substantively unconscionable” under Florida law. La Torre v. BFS Retail & 

Commercial Operations, LLC, 2008 WL 5156301, at *5 (S.D. Fla. Dec. 8, 2008). 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

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SEATTLE, WASHINGTON 98103 

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fax (206) 545-0350

Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 29 of 45
Kinkel specifically relied on features not present in the 2003 and 2006 provisions that Gilker and 

Rudich received. See 857 N.E.2d at 266 (noting that “fee information” was not apparent from 

the agreement); id. at 275 (objecting to a $125 arbitration fee and a confidentiality clause). 

Moreover, two federal courts have held that the arbitration provisions of AWS and TMobile, both of which require individual arbitration, are enforceable under Kinkel because they 

cap the consumer’s costs for arbitrating claims of under $1,000 at $25. See Crandall v. AT&T 

Mobility, LLC, 2008 WL 2796752, at *4–*5 (S.D. Ill. July 18, 2008) (AWS); accord In re 

Jamster, 2008 WL 4858506, at *5–*6 (T-Mobile). Here, Gilker and Rudich may arbitrate for 

free. Indeed, the Crandall court held that, as a matter of Illinois law, the mere “inability to 

pursue the[] claims on a class-wide basis” does not entitle consumers “to throw out the 

[arbitration] clause as being inherently unfair.” 2008 WL 2796752, at *5. Rather, Plaintiffs 

must prove that the “expenses that they necessarily and definitely would incur” on an individual 

basis “would make arbitration prohibitive.” Id. That Gilker and Rudich cannot do, because they 

may arbitrate for free, would be entitled to statutory attorneys’ fees if they prevail on their claim, 

and would receive a minimum payment of $10,000, plus double attorneys’ fees if the arbitrator 

awards them more than ATTM’s last settlement offer. See Mem. 33. 

6. Missouri. Plaintiffs rely upon two cases. Opp. 36 n.30 (citing Whitney v. Alltel 

Commc’ns, Inc., 173 S.W.3d 300 (Mo. Ct. App. 2005); Doerhoff v. Gen. Growth Props., Inc., 

2006 WL 3210502 (W.D. Mo. Nov. 6, 2006)). Whitney involved an agreement that both 

required individual arbitration and limited remedies; as we have discussed (Mem. 34–35), 

Whitney was distinguished by a Missouri court that held ATTM’s 2003 clause enforceable under 

Missouri law. Blitz v. AT&T Wireless Servs., Inc., 2005 WL 6177327 (Mo. Cir. Ct. Nov. 28, 

2005). Doerhoff involved an agreement that saddled the consumer with all “filing, 

administrative, and hearing fees for any claim initiated.” Doerhoff, 2006 WL 3210502, at *6. 

But under ATTM’s provision, customers arbitrate for free. Mem. 4–5. The Eighth Circuit and 

Missouri federal district courts have repeatedly held that agreements to arbitrate on an individual 

basis are enforceable under Missouri law even without the special incentives included in 

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MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

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SEATTLE, WASHINGTON 98103 

telephone (206) 545-0345 

fax (206) 545-0350

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ATTM’s 2006 provision. See Pleasants v. Am. Express Co., 541 F.3d 853, 857–59 (8th Cir. 

2008) (“Enforcing the agreement under the circumstances of this case * * * does not lead to an 

unconscionable result” because the consumer’s “total recovery” in arbitration, where remedies 

are “not limit[ed]” by the agreement, “would likely exceed the cost of pursuing her claim.”).31

7. New Jersey. The only New Jersey decision that Plaintiffs cite (Opp. 36 n.31) is 

Muhammad v. County Bank of Rehoboth Beach, Del., 912 A.2d 88 (N.J. 2006), which we 

addressed in our opening memorandum (at 34–36). Two federal courts have recognized that 

Muhammad permits agreement to arbitrate on an individual basis when claims are on the scale of 

the $5,000 minimum payment provided for under ATTM’s 2006 provision. See Davis v. Dell, 

Inc., 2007 WL 4623030, at *7 (D.N.J. Dec. 28, 2007) ($1,000 to $3,000); Jones v. The Chubb 

Inst., 2007 WL 2892683, at *4 (D.N.J. Sept. 28, 2007) (damages of $6,551.26).32

8. Virginia. Plaintiffs do not contend that a requirement that arbitration be conducted 

on an individual basis is unconscionable under Virginia law. 

III. THE FAA WOULD PREEMPT ANY STATE-LAW RULE THAT WOULD DEEM 

ATTM’S 2006 ARBITRATION CLAUSE UNCONSCIONABLE. 

Plaintiffs largely miss the point of our express-preemption arguments. Moreover, they 

overlook the Supreme Court’s recent decision in Preston v. Ferrer, 128 S. Ct. 978 (2008), which 

supersedes the Ninth Circuit decisions rejecting ATTM’s conflict-preemption argument. 

A. Express Preemption. 

Plaintiffs contend that, in three cases, the Ninth Circuit has rejected our argument that the 

FAA expressly preempts any state-law holding that the 2006 arbitration provision is 

31 See also, e.g., Kates v. Chad Franklin Nat’l Auto Sales N., LLC, 2008 WL 5145942, at *5 (W.D. Mo. Dec. 

1, 2008); Guiterrez v. State Line Nissan, Inc., 2008 WL 3155896, at *3–4 (W.D. Mo. Aug. 4, 2008); Bass v. Carmax 

Auto Superstores, Inc., 2008 WL 2705506, at *3 (W.D. Mo. Jul. 9, 2008). One Missouri court has held 

unconscionable a requirement of individual arbitration in a payday loan contract, based on a “sharpened inquiry” 

inspired by the “dire personal economic circumstances” that compelled borrowers to assent to arbitration. Woods v. 

QC Fin. Servs., Inc., 2008 WL 5454124, at *5 (Mo. Ct. App. Dec. 23, 2008). Here, because Franks was not under a 

“great deal of economic compulsion” to obtain phone service (id.), he must show greater substantive 

unconscionability to invalidate ATTM’s 2006 provision. He cannot do so: The special incentives made available 

by that provision—which the payday lender’s provision lacked—prevent ATTM from using individual arbitration to 

“deliberately cheat large numbers of consumers out of individually small sums of money.” Id. at *7. 

32 The Third Circuit has suggested that an agreement to arbitrate on an individual basis is unenforceable under 

Muhammad if the individual consumers’ claims are of such “low monetary value” and of a “nature” that the 

consumers lack “adequate incentive” to pursue them in individual arbitration. Homa v. Am. Express Co., 2009 WL 

440912, at * 3 n.1, *6 & n.2 (3d Cir. Feb. 24, 2009). Here, by contrast, the New Jersey plaintiff Krausse stands to 

recover $5,000 and double attorneys’ fees if she bests ATTM’s settlement offer in arbitration. 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

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SEATTLE, WASHINGTON 98103 

telephone (206) 545-0345 

fax (206) 545-0350

Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 31 of 45
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unconscionable. Opp. 39. But as we explained (Mem. 42-43), each of those decisions involved 

less pro-consumer arbitration clauses. Lowden v. T-Mobile USA, Inc., 512 F.3d 1213, 1221 (9th 

Cir.), cert. denied, 129 S. Ct. 45 (2008); Shroyer, 498 F.3d at 988; Ting v. AT&T, 319 F.3d 1126, 

1150 n.15 (9th Cir. 2003). Even if those rulings were simply “refinement[s]” (Shroyer, 498 F.3d 

at 987) of California’s generally applicable “shock-the-conscience” standard for 

unconscionability (Mem. 43), the same cannot be said of a ruling that ATTM’s 2006 provision is 

unconscionable. ATTM’s 2006 provision is uniquely pro-consumer. Cf. Strawn v. AT&T 

Mobility, Inc., 2009 WL 154433, at *5 n.6 (S.D.W. Va. Jan. 20, 2009) (describing ATTM’s 

provision as “unusually consumer-centered”). To say that such a provision “shocks the 

conscience” is to drain the term of any meaning. Even if, as Plaintiffs say, the provision were 

less effective in resolving complex class disputes, it provides a superior method of addressing the 

much more common individualized disputes. As one California federal judge has observed, “a 

reasonable customer may well prefer” such a trade-off. Laster, 2008 WL 5216255, at *12. 

Accordingly, any state-law ruling that the 2006 provision is unconscionable impermissibly 

distorts the relevant states’ generally applicable unconscionability standards.33

Plaintiffs also assert that FAA preemption does not apply because they are challenging 

ATTM’s class waiver, not the arbitration requirement itself. Opp. 40. But the “lack of class 

relief,” like the lack of a jury, is a “unique characteristic[] of the arbitration process.” 

Christopher R. Drahozal, Arbitration Costs and Contingent Fee Contracts, 59 VAND. L. REV. 

729, 776 (2006). To hold that it is unconscionable to conduct arbitration on an individual basis 

(or without a jury) would “just repackage[] the tired assertion that arbitration should be 

disparaged as second-class adjudication.” Carbajal v. H & R Block Tax Servs., Inc., 372 F.3d 

903, 906 (7th Cir. 2004). True, other kinds of contract terms, such as forum-selection clauses, 

may sometimes operate to bar class relief. Opp. 41 n.41. But as a practical matter, a rule against 

33 Plaintiffs misread (Opp. 40) the Court’s statement that the FAA “has no express preemptive provision.” 

Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 477 (1989). The Court was merely 

noting that the FAA permits generally applicable contract defenses, including unconscionability. The Court has 

clarified that Section 2 does preempt state laws (including unconscionability) that single out arbitration clauses for 

suspect status. See, e.g., Perry v. Thomas, 492 U.S. 483, 492 n.9 (1987); see also Preston, 128 S. Ct. at 983 (“The 

FAA’s displacement of conflicting state law is now well-established * * *.”) (internal quotation marks omitted). 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

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SEATTLE, WASHINGTON 98103 

telephone (206) 545-0345 

fax (206) 545-0350

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class waivers is a proxy for a rule against arbitration agreements, just as a rule against jury 

waivers might apply equally to courts and arbitration but would still be preempted by the FAA. 

Finally, Plaintiffs argue that there can be no preemption because the Supreme Court 

“determined” in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), “that class actions 

are not incompatible with arbitration.” Opp. 41.34 But the issue Bazzle confronted was whether 

parties may agree to class arbitration. See 539 U.S. at 454 (remanding for arbitrator to decide 

whether the agreement authorized class procedures). The FAA does not prevent parties from 

agreeing to cumbersome or self-defeating arbitration procedures if they wish. See Volt, 489 U.S. 

at 478). By contrast, the issue here is whether states may refuse to enforce the many arbitration 

agreements that intentionally preclude one such cumbersome procedure—class-wide 

adjudication. Such a rule is as hostile to arbitration—and just as preempted by the FAA—as a 

requirement that arbitration clauses offer the full panoply of discovery procedures available in 

court. Cf. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 31 (1991) (“[T]hat the 

discovery allowed in arbitration is more limited than in the federal courts” is part and parcel of 

agreement to “‘trade[] the procedures and opportunity for review of the courtroom for the 

simplicity, informality, and expedition of arbitration.’”) (quoting Mitsubishi Motors Corp. v. 

Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)). 

B. Conflict Preemption. 

We previously preserved an argument that the Ninth Circuit had rejected (see Shroyer, 

498 F.3d at 987–93; Lowden, 512 F.3d at 1219–22)—that requiring arbitration agreements to 

include class procedures conflicts with the purposes of the FAA. Mem. 41. Since then, the 

Supreme Court’s decision in Preston has superseded Shroyer and Lowden. 

In Preston, the Supreme Court held that the FAA preempted a California statute granting 

primary jurisdiction in certain disputes to the state’s Labor Commissioner. 128 S. Ct. at 981. In 

34 Plaintiffs point out that a number of class arbitrations are pending before the AAA (Opp. 41 n.42), but that 

is only because Bazzle unexpectedly gave arbitrators the authority to decide whether an arbitration agreement that is 

silent on class arbitration permits it. See Meredith W. Nissen, Class Action Arbitrations, 11 DISP. RESOL. MAG. 19, 

19 (Summer 2005). In response to Bazzle, businesses have hastened to include express, non-severable class waivers 

in their arbitration provisions. Moreover, at least one major company—Comcast—has abandoned arbitration in its 

contracts with its millions of California customers. See http://www.comcast.net/terms/subscriber/. The threat to the 

FAA posed by state-law rules restricting individual arbitration is thus very real. 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 33 of 45
an effort to salvage the statute, the respondent described the law as an exhaustion requirement, 

which “merely postpon[ed] arbitration until after the Labor Commissioner has exercised her 

primary jurisdiction.” Id. at 985. He argued that the delay imposed by “[r]equiring initial 

reference of the parties’ dispute to the Labor Commissioner” would apply equally to arbitration 

and litigation, and that such equal treatment was consistent with the FAA. Id. at 986. 

The Court disagreed, explaining that “[a] prime objective of an agreement to arbitrate is 

to achieve ‘streamlined proceedings and expeditious results.’” Id. (quoting Mitsubishi, 473 U.S. 

at 633). This objective “would be frustrated” by the California statute because “[r]equiring 

initial reference of the parties’ dispute to the Labor Commissioner would, at the least, hinder 

speedy resolution of the controversy.” Id. 

Similar reasoning applies here. Engrafting class proceedings onto individual arbitration 

would surely “hinder speedy resolution” of Plaintiffs’ individual disputes. Certification 

proceedings alone are far more onerous and time-consuming than the simple exhaustion 

requirement rejected in Preston. Even worse, insisting on class treatment would force 

companies to abandon arbitration altogether. Few businesses could afford the risk of class 

arbitration, which lacks the safety valve of judicial review of an erroneous—yet potentially 

massive—class-wide award. Nothing could more clearly “frustrate the purpose” of the FAA. 

Livadas v. Bradshaw, 512 U.S. 107, 116 (1994). 

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CONCLUSION

The Court should compel Plaintiffs to pursue their claims in individual arbitration or 

small claims court and dismiss this consolidated action. 

s/ Michael E. Kipling 

Michael E. Kipling, WSBA #7677 

KIPLING LAW GROUP PLLC 

3601 Fremont Avenue N., Suite 414 

Seattle, WA 98103 

206.545.0346 (direct line) 

206.545.0350 (fax) 

E-mail: kipling@kiplinglawgroup.com 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

Page 23 

KIPLING LAW GROUP PLLC

3601 FREMONT AVE N, SUITE 414 

SEATTLE, WASHINGTON 98103 

telephone (206) 545-0345 

fax (206) 545-0350

Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 34 of 45
1 William F Cronin, WSBA #8667 

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CORR CRONIN MICHELSON BAUMGARDNER 

 & PREECE 

1001 Fourth Avenue, Suite 3900 

Seattle, WA 98154-1051 

206.625.8600 ( 

206.625.0900 (fax) 

E-mail: wcronin@corrcronin.com 

Evan M. Tager (admitted pro hac vice) 

Archis A. Parasharami (admitted pro hac vice) 

Kevin S. Ranlett 

MAYER BROWN LLP 

1909 K Street, NW 

Washington, DC 20006 

202.263.3000 

202.263.3300 (fax) 

E-mail: etager@mayerbrown.com

E-mail: aparasharami@mayerbrown.com

Counsel for Defendants

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 35 of 45
1 CERTIFICATE OF SERVICE

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I hereby certify that on the 11th day of March, 2009, I electronically filed the foregoing 

with the Clerk of the Court using the CM/ECF system which will send notification of such filing 

to the following: 

• Leslie A. Bailey 

lbailey@tlpj.org 

• Stephen M. Garcia

sgarcia@lawgarcia.com 

• Karl P. Barth

kbarth@lmbllp.com 

• John W. Hathaway

jhathaway@seanet.com

• Lincoln C. Beauregard

lincolnb@connelly-law.com 

• Esther L. Klisura

eklisura@pswplaw.com 

• Neal S. Berinhout

NB2520@att.com 

• Archis A. Parasharami

aparasharami@mayerbrown.com

• F. Paul Bland, Jr.

pbland@tlpj.org 

• Pamela Pressley

pam@consumerwatchdog.org 

• Stephen L. Bulzomi

SBulzomi@MessinaLaw.com 

• Harvey Rosenfield

harvey@consumerwatchdog.org 

• Richard J. Burke

rich@richardjburke.com 

• Bruce L. Simon

bsimon@pswplaw.com 

• Kevin Coluccio

kc@stritmatter.com 

• Paul L. Stritmatter

pauls@stritmatter.com 

• John R. Connelly, Jr.

jconnelly@connelly-law.com 

• William M. Sweetnam

wms@sweetnamllc.com 

• William F. Cronin

wcronin@corrcronin.com 

• Evan M. Tager

etager@mayerbrown.com

• Ronald F. Webster

ron@ronwebsterlaw.com 

• Jeffrey P. Foote

jfoote@footelaw.com 

DATED this 11th day of March, 2009. 

s/ Michael E. Kipling 

Michael E. Kipling, WSBA #7677 

KIPLING LAW GROUP PLLC 

3601 Fremont Avenue N., Suite 414 

Seattle, WA 98103 

206.545.0346 (direct line) 

206.545.0350 (fax) 

E-mail: kipling@kiplinglawgroup.com 

Counsel for Defendants 

REPLY IN SUPPORT OF DEFENDANTS’ AMENDED 

MOTION TO COMPEL ARBITRATION (C06-0944 RSM) 

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Case 2:06-cv-00944-RSM Document 198 Filed 05/27/2009 Page 36 of 45
Attachment 

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