OPINION

September 4, 201 3

WIGENTON. District Judge.

Before this Court is Defendant Sprint Spectrum L.P.’s motion to compel bilateral arbitration

and dismiss or stay all actions pursuant the Federal Arbitration Act, Federal Rule of Civil Procedure

12(b)(I), and 12(b)(6). This Court, having considered the parties’ supplemental submissions, decides

this matter without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons

stated below, this Court GRANTS Defendants’ motion to compel arbitration.

I. FACTUAL and PROCEDURAL BACKGROUND

Given the extensive procedural history of this case, only a brief recitation of the facts and

procedural posture is provided. This case involves Plaintiff’s Cameron Comstock, Arlene BaisaLockhart, Shalimar Guerra, Gene Lockhart, Matt Tiliman, Scott Tallal, and Craig Morris,

(collectively “Plaintiffs”) and their grievances against Defendant Sprint Spectrum L.P. (“Sprint”).

On July 15, 2011, Sprint moved to compel arbitration with Plaintiffs. (See Dkt. No. 37.) On March

12, 2012, this Court entered an opinion and order finding that Plaintiffs’ claims were subject to

arbitration and that the arbitration agreement (“Arbitration Agreement”) was valid in almost every

respect save for the issue of unconscionability. (See Dkt. No. 47-48.) The parties were ordered to

engage in limited discovery to permit this Court to determine whether the Arbitration Agreement,

was substantively unconscionable due to prohibitive costs. (See Id.)
“The final phrase of § 2 [of the Federal Arbitration Act (FAA”)j . . . permits arbitration

agreements to he declared unentbrceable ‘upon such grounds as exist at law or in equity for the

revocation of any contract. .4T&T Mobility LL(’ v. (‘oncepcion, 131 S. Ct. 1740, 1746 (2011)

(“Concepcion”). “This saving clause permits agreements to arbitrate to he invalidated by general1y

applicable contract defenses, such as fraud, duress. or unconscionahility.” lii. For an agreement to

he unconscionable, it must be found to he both procedurally and substantively unconscionable. See

Anikowiuk v. Tax Masters. 455 Fed. App’x. I 56, 159 (3d Cir. 2011). “In addressing a claim that an

arbitration clause is unconscionable, we apply the ordinary state law principles . . . of the involvedstate or territory.” N/no v..Jewelry Exchange, Inc., 609 F.3d 191, 200 (3d Cir. 2010).

This Court previously found that it was not clear under Caliibrnia law whether the Arbitration

Agreement was procedurally unconscionable. Consequently, this Court turned to the issue of

substantive unconscionahility to determine the validity of the Arbitration Agreement. Despite the

rule enunciated in N/no, the issue of substantive unconscionability in this case is governed by federallaw given the language in the Arbitration Agreement. 2See Parudu v. Superior Court, 1 76 Cal. App.

4th 1554, 1577 (Cal. Ct. App. 2009) (stating that, in that case, determination of substantive

unconscionability was governed by California pursuant to the language of the arbitration agreement).

This Court will focus on California law since only California Plaintiffs remain in this case. (See Dkt. Nos. 76, 87.) 2 The Arbitration Agreement states that the FAA governs the arbitration provision and “all questions of whether a dispute is subject to arbitration.” (Dkt. No. 3 7-6, DecI. of Stephanie Miller (“Miller DecI.”) Ex. A, p. 12.)

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not have a specific provision regarding costs would be unenforceable under the FAA if it made

arbitration “prohibitively expensive.” Green Tree Fin. Corp., 531 U.S. at 92. The Court further

stated that the party opposing arbitration was responsible for showing the likelihood of costs being“prohibitive.” Id.

Unlike the agreement in Green Tree, here the Arbitration Agreement is not silent as to

arbitration costs. Instead, the Arbitration Agreement contains a clear fee-splitting provision. (Miller

Dccl. Ex. A, p. 12.) The Arbitration Agreement states that the parties are jointly responsible for

arbitration costs; however, Sprint agrees to cover arbitration administrative and filing fees in excess

of $25 if the customer is seeking to recover less than $1000, or the cost of court tiling fees in theapplicable jurisdiction if the claim is for more than $1000. (See Id.)

The second instructive case on the issue of substantive unconscionability is Blair v. Scott, 283

F.3d 595 (3d Cir. 2002). In Blair, the Third Circuit addressed fee-splitting provisions in light of

Green Tree. The Blair court stated that the presence of fee-splitting alone is not enough to make an

arbitration agreement unconscionable. See Blair v. Scott Specialty Gases, 283 F.3d 595, 610 (3d Cir.2002). The Third Circuit further stated that for it to hold the mere existence of a fee-splitting

provision to be per se unconscionable ‘wou1d run counter to the strong federal preference forarbitration and the liberal policy regarding arbitration.” Id.

B/ui,’ established a test to determine whether a fee-splitting provision is prohibitive under

Green Tree. The test consisted of two separate parts. First, a court must look at the projected costs

that would apply according to the arbitration rules set forth in the agreement. See Blair, 283 F.3d at

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531 U.S. 607-08.

111. DISCUSSION

a. Projected (‘ost.s

Regarding projected costs, Plaintiffs argue that (he costs of individual arbitration would

be prohibitive because: (1) “Sprint’s failure to specify arbitral rules or a method for the selection of

[an] arbitrator causes increased costs:’ (2) “data on the administrative costs of arbitration under

Sprint’s agreement shows that those costs always exceed the amount in controversy,” (3) “the use of

experts in similar individual arbitrations shows that Plaintiffs would likely incur substantial expert

costs that [can] not be recovered,” and (4) Plaintiffs would incur substantial and prohibitive expenses

for attorneys’ fees and costs in arbitration. (See Dkt. No. 110, Pls.’ Br. 1.)

Regarding Plaintiffs’ first point, Plaintiffs state that “Sprint’s failure to specify arbitral rules

in advance imposes additional layers of cost and delay on the arbitration process, requiring courtaction and the attendant [expenses] . . . [to secure an arbitrator].” (See id. 2.) To support theirargument, Plaintiffs refer to evidence demonstrating that since 2010, twelve Sprint subscribers haveattempted to initiate individual arbitration with Sprint, but seven out of the twelve withdrew their

arbitration demands. (See id.)(citing Dkt. No. 109-I, Revised Supplemental Dccl. of Scott A. Bursor

(“Revised Bursor DecI.”) ¶J 22.) Of the five remaining arbitration demands, court action was required

for the appointment of an arbitrator in at least three. (See id,) Plaintiffs highlight that the filing fee in

federal court is $350. (See Revised Bursor Dccl. ¶ 30.)

This Court notes that the filing fee is currently $400.

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We will agree Ofl the arbitrator. and if we cannot agree, then the arbitrator will be

appointed by the court as provided by the FAA.

(Miller Dccl. Ex. A, at 12.) Plaintiffs’ reference to the three instances in which court action was

required to choose an arbitrator does not establish the filing fee in federal court as a projected cost.

Instead, it shows that there is a possibility that court action and thereby a filing fee may he required

in selecting an arbitrator. Notably, Sprint has provided documents showing that it has the practice

and policy of paying for arbitral costs when customers seek individual arbitration. (See Dkt. No. 95

Deel. of Pamela E. l3enton (“Benton Decl.”) ¶ 3.) Therefore, Plaintiffs’ first assertion of projected

costs pertaining to the logistics of the arbitral process is insufficient.

Regarding Plaintiffs’ second point, that costs of arbitration would exceed the amount in

controversy, this argument is misplaced as it does not set forth any projected costs. Plaintiffs repeat

this argument for the second part of the B/au test. Therefore. this Court addresses the merits of

Plaintiffs argument infra section 111 (b).

Regarding Plaintiffs’ third point, Plaintiffs argue that they will incur substantial expert fees

that they will not be able to recover. Plaintiffs are unable to provide any evidence pertaining to

arbitrations between Sprint and its customers. As a result, Plaintiffs refer to seven arbitrations

between AT&T and its subscribers, but primarily rely on one particular arbitration (‘AT&T

Arbitration’). Plaintiffs contend that the AT&T Arbitration is similar to theirs in that the Plaintiff in

the AT&T Arbitration was also challenging data charges. (See Revised Bursor Dccl. ¶4.) Plaintiffs

opine that since expert testimony was required in the AT&T Arbitration, the same would be requiredfor arbitration against Sprint. (See id.) Plaintiffs state that the expert fees in the AT&T Arbitration,

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subscriber, charges for data transactions not linked to usage by the subscriber, and the accuracy of

AT&T’s billing system in reflecting the details of data usage. (See’ Id. 1-4.) Sprint argues that given

the differences in the nature of the claims in the AT&T Arbitration and those at issue here, theexistence of and amount of expert fees in the AT&T arbitration are not comparable to this case.

Plaintiffs also rely on the AT&T Arbitration to argue that their attorneys’ fees and expenses

would exceed those in the AT&1 Arbitration. (See Id. “ 9, 1 8-20.) Plaintiffs’ explanation, however,

is conclusory. (See Revised Bursor Dccl. ¶ 20)(stating that based on Scott Bursor’s experience

individual arbitration by Plaintiffs against Sprint would exceed the attorneys’ fees and expenses in

the AT&T Arbitration.) Without more, Plaintiffs have failed to sufficiently demonstrate that theattorneys’ fees and expenses in the AT&T arbitration are a fair representation of projected attorneys’fees and expenses for arbitration against Sprint.

h. .4b11Th’ to Pay

Despite complying with this Court’s March 12, 2012 order requiring Plaintiffs to submit

an affidavit detailing their financial information, Plaintiffs argue that their finances should not be the

focus of this Court’s analysis, (See Pis.’ Br. 7) (citing Green Tree). Instead, Plaintiffs argue that thisCourt should focus on their ability to effectively vindicate their claims through individual arbitration.

(See Id.) Plaintiffs argue that the high costs associated with pursuing individual arbitration with

Sprint preclude them from effectively vindicating their claims. (See Dkt. No. 113, Letter Br. 2.)Additionally, Plaintiffs argue that they cannot effectively vindicate their claims against Sprint

because the arhitral costs will be greater than the best possible recovery. (See Pls.’ Br. 8.) In

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Colors Restaurant, 133 S.Ct. 2304, 2310 (2013) (quoting Mitsubishi Motors Corp. v. So/er ChiyslerPlymouth, Inc., 473 U.S. 614, 637, n. 19 (1985). ‘The exception finds its origin in the desire to

prevent prospective waiver of a party’s right to pursue statutory remedies[.]” Id, (quoting

Mitsubishi Motors Corp., 473 U.S. at 637, n.19) (emphasis added).

Here, Plaintiffs’ arguments fail for two reasons. First, regarding Plaintiff’s argument

concerning access to the arhitral forum, as previously mentioned, Sprint has proffered evidence

demonstrating that it has the practice and policy of’ paying for arhitral costs when customers seek

individual arbitration. (See Benton Dccl. ‘ 3.) Therefore. Plaintiffs’ ability to pursue their statutory

remedies through arbitration would not he hindered. Next, Plaintiffs’ second argument has already

been addressed by our highest court. The Supreme Court clarified in Italian Colors that “the fact thatit is not worth the expense involved in proving a statutory remedy does not constitute the elimination

of the right to pursue that remedy.” American Express Co., 133 S.Ct. at 2311 (emphasis added).

Accordingly, Plaintiffs’ effective vindication arguments are unavailing.

Given Plaintiffs’ inability to prove substantive unconscionability, this Court finds that

Sprint’s Arbitration Agreement is en fbrceable.

IV. CONCLUSION

For the foregoing reasons, this Court GRANTS Defendants’ motion to compel arbitration.

s/Susan D. Wigenton. U.S.D.J.

Orig: ClerkCc: Madeline Cox Arleo, U.S.M.J.

Parties

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