Court Opinion

ID: 4508286
Source: CourtListenerOpinion
Date Created: 2020-02-18 21:00:26.717344+00
Date Added: 2024-06-11T08:11:58.917809
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        FEB 18 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

MARCUS A. ROBERTS; et al.,                      No.    18-15593

                Plaintiffs-Appellees,           D.C. No. 3:15-cv-03418-EMC

 v.
                                                MEMORANDUM*
AT&T MOBILITY LLC,

                Defendant-Appellant.

                   Appeal from the United States District Court
                     for the Northern District of California
                   Edward M. Chen, District Judge, Presiding

               Submitted and Submission Deferred April 16, 2019**
                         Resubmitted February 18, 2020
                           San Francisco, California

Before: D.W. NELSON, FERNANDEZ, and BEA, Circuit Judges.

      Plaintiffs filed a class action lawsuit against Defendant AT&T Mobility LLC

(“AT&T”) alleging AT&T used deceptive and unfair trade practices by marketing

its mobile service data plans as “unlimited” when AT&T allegedly limited those

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
plans in several ways, including “throttling”—slowing down mobile data speeds

after the consumer uses an undisclosed, predetermined amount of mobile data.

Plaintiffs assert AT&T’s practice violates several California laws and seek, among

other remedies, public injunctive relief, which AT&T’s arbitration clause prohibits.

AT&T argues that the Federal Arbitration Act (“FAA”) preempts California’s

public policy in favor of public injunctive relief.

      The district court, in April 2016, compelled arbitration and we, in December

2017, affirmed, rejecting Plaintiffs’ argument that compelling arbitration violated

their First Amendment right to petition the government. Roberts v. AT&T Mobility

LLC, 877 F.3d 833 (9th Cir. 2017). Plaintiffs then asked the district court to

reconsider because of the California Supreme Court’s decision in McGill v.

Citibank, N.A., 2 Cal. 5th 945, 952 (2017), which held that an agreement, like

AT&T’s, that waives public injunctive relief in any forum is contrary to California

public policy and unenforceable. We refer to this as “the McGill rule.”

      Plaintiffs, in their motion for reconsideration, argued that McGill’s holding

provided the district court with a new, intervening basis to deny compelling

arbitration. The district court agreed with Plaintiffs and granted their motion to

reconsider and denied, in part, AT&T’s motion to compel arbitration. AT&T filed

this pending interlocutory appeal.

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      AT&T argues that the panel can resolve this appeal on a procedural issue—

that the district court abused its discretion in reconsidering its initial order

compelling arbitration. We disagree; the district court did not abuse its discretion.

And, we affirm.

      We review whether issues were properly raised in motions for

reconsideration for abuse of discretion. Hinton v. Pac. Enters., 5 F.3d 391, 395

(9th Cir. 1993). To reverse for abuse of discretion, we must be “convinced firmly

that the reviewed decision lies beyond the pale of reasonable justification under

the circumstances.” Boyd v. City & Cty. of San Francisco, 576 F.3d 938, 943 (9th

Cir. 2009) (quoting Harman v. Apfel, 211 F.3d 1172, 1175 (9th Cir. 2000)). We

review de novo a district court’s denial of a motion to compel arbitration. Kilgore

v. KeyBank, Nat’l Ass’n, 718 F.3d 1052, 1057 (9th Cir. 2013) (en banc). We also

review de novo a district court’s preemption analysis. AGG Enters. v. Washington

Cty., 281 F.3d 1324, 1327 (9th Cir. 2002).

      When reviewing district court decisions for abuse of discretion, we engage

in a two-step inquiry. United States v. Hinkson, 585 F.3d 1247, 1251, 1261 (9th

Cir. 2009) (en banc). The first step asks whether the district court identified and

applied the correct legal rule. Id. at 1263. If the district court identified and applied

the correct legal rule, the reviewing court must then decide whether the district

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court reached a result that is (1) illogical, (2) implausible, or (3) without support in

inferences that may be drawn from the record. Id.

       Here, the district court identified and applied the correct legal rule—a

district court should grant a motion for reconsideration only if the “district court is

presented with newly discovered evidence, committed clear error, or if there is an

intervening change in the controlling law.” Kona Enters., Inc. v. Estate of Bishop,

229 F.3d 877, 890 (9th Cir. 2000) (quoting 389 Orange St. Partners v. Arnold, 179

F.3d 656, 665 (9th Cir. 1999)). In other words, a motion for reconsideration “may

not be used to raise arguments or present evidence for the first time when they

could reasonably have been raised earlier in the litigation.” Id. (emphasis omitted).

The district court found that McGill changed the controlling law and that Plaintiffs

could not have reasonably raised McGill’s public injunctive relief issue earlier in

the litigation.

       AT&T advances two primary arguments as to why it believes Plaintiffs

waived their right to challenge AT&T’s arbitration provision on the basis that it

bars public injunctive relief. First, AT&T argues that principles of litigation

efficiency should have precluded the district court from granting Plaintiffs’

reconsideration motion. Second, it argues that McGill did not change controlling

law; rather, according to AT&T, McGill clarified existing law. In making these

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arguments, AT&T is relitigating the underlying reconsideration motion and pays

short shrift to the standard of review—abuse of discretion.

      The district court considered AT&T’s policy argument that “[l]itigation

would be endless if a party could serially litigate each conceivable objection to a

motion, with separate interlocutory appeals, as plaintiffs have done here.” The

district court reasoned that because the California Supreme Court decided McGill

while we were considering the district court’s first arbitration order, the district

court did not have jurisdiction to consider a new argument against arbitration until

we decided the first appeal. Once we issued a ruling in December 2017, Plaintiffs

filed their motion for reconsideration within a month. Plaintiffs, the district court

found, acted with reasonable diligence in bringing the McGill issue to the district

court’s attention.

      Similarly, unpersuaded by AT&T’s argument that Plaintiffs should have

raised the McGill issue in their first opposition to compel arbitration, the district

court reviewed the history of the legal issue—a public policy in favor of public

injunctive relief—under California law. First, the district court found that while

California’s public policy in favor of public injunctive relief had been raised in

other courts, including by Plaintiffs’ counsel, before Plaintiffs filed their first

opposition to AT&T’s motion to compel, no court had denied a motion to compel

arbitration based on that issue. The district court also cited our decision in

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Ferguson v. Corinthian Colleges, Inc., 733 F.3d 928 (9th Cir. 2013), which held

that the Broughton-Cruz rule, which AT&T argues is a precursor to the McGill

rule, is preempted by the FAA.

      It was reasonable, therefore, for the district court to conclude that Plaintiffs

should not be penalized for failing to pursue, in their first opposition to compel

arbitration, an argument that had been consistently rejected by federal courts,

including in similar cases brought by Plaintiffs’ counsel.

      The district court acknowledged AT&T’s argument was “not without basis,”

but it was nevertheless unpersuaded. Under an abuse of discretion standard, this is

the type of decision in which we should give the district court a substantial margin

to decide the issue one way or another. See Speiser, Krause & Madole P.C. v.

Ortiz, 271 F.3d 884, 887 (9th Cir. 2001). Even if we would have decided the issue

differently on initial consideration, the district court’s decision does not lie

“beyond the pale of reasonable justification.” Boyd, 576 F.3d at 943. Nor is it

illogical, implausible, or without support. Hinkson, 585 F.3d at 1263.

      Now to the merits. We recently held in Blair v. Rent-A-Ctr., Inc., a case with

similar factual and legal issues as this one, that the FAA does not preempt the

McGill rule. 928 F.3d 819 (9th Cir. 2019). We reasoned that because

the McGill rule is a generally applicable contract defense derived from long-

established California public policy in favor of public injunctive relief, the rule fell

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within the FAA’s saving clause at the first step of the preemption analysis. Id. at

828. Moreover, we held that the McGill rule does not mandate procedures that

interfere with arbitration, namely with arbitration’s informality. Id. at 830.

      The arbitration clause here, like the one in Blair, prohibits public injunctive

relief in any forum, including arbitration. As discussed previously, such a clause is

unenforceable in California under the McGill rule. Because we are bound by our

decision in Blair, we hold that AT&T’s arbitration agreement is unenforceable.

Accordingly, we affirm the district court’s order denying AT&T’s motion to

compel arbitration.

      AFFIRMED.

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