Hesse v. Sprint Corporation et al, No. 2:2006cv00592 - Document 267 (W.D. Wash. 2012)
Court Description: ORDER denying 262 Plaintiffs' Motion for Reconsideration by Judge James L. Robart.(MD)
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Hesse v. Sprint Corporation et al Doc. 267 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 CHRISTOPHER W. HESSE, et al., Plaintiffs, 11 v. 12 13 ORDER DENYING PLAINTIFFS’ MOTION FOR RECONSIDERATION SPRINT SPECTRUM L.P., et al. 14 CASE NO. C06-0592JLR Defendants. 15 16 I. INTRODUCTION Before the court is Plaintiffs’ motion for reconsideration (Dkt. # 262) of the 17 court’s January 9, 2012 order granting in part and denying in part Plaintiffs’ motion for 18 limited discovery prior to Defendants’ motion to compel arbitration (Dkt. # 261). On 19 January 20, 2012, the court directed Defendants to file a response to Plaintiffs’ motion 20 pursuant to Local Rule CR 7(h)(3). (Jan. 20, 2012 Order (Dkt. # 265) (citing Local Rules 21 W.D. Wash. CR 7(h)(3).) Defendant Sprint Spectrum L.P. d/b/a Sprint PCS (“Sprint”) 22 filed a memorandum in opposition to Plaintiffs’ motion for reconsideration on February ORDER- 1 Dockets.Justia.com 1 1, 2012. (Resp. (Dkt. # 266).) Having considered Plaintiffs’ motion and supporting 2 documents, as well as Defendants’ response, the court DENIES Plaintiffs’ motion for 3 consideration, but clarifies its prior order as described below. 4 5 II. BACKGROUND AND ANALYSIS On January 9, 2012, the court granted in part and denied in part Plaintiffs’ motion 6 seeking limited discovery prior to the court’s consideration of Defendants’ motion to 7 compel arbitration. (Jan. 9, 2012 Order (Dkt. # 261).) Plaintiffs seek reconsideration of 8 that portion of the court’s order denying discovery into whether and when Plaintiffs 9 entered into an agreement to arbitrate. (See generally Mot.) 1 The court denied this 10 aspect of Plaintiffs’ motion for discovery because, during the course of this long 11 litigation, Plaintiffs had previously conceded that their “relationship” with “Sprint is 12 governed by the Terms & Conditions of Service.” (See Jan. 9, 2012 Order (Dkt. # 261) at 13 5-6.) In so ruling, the court cited two briefs previously filed by Plaintiffs in which 14 Plaintiffs made this specific admission, as well as Sprint’s November 1, 2001 2 and 15 August 1, 2002 Term & Conditions. 3 (Id. at 6.) 16 17 1 In their motion for reconsideration, Plaintiffs also seek “clarification” that the court “has not yet decided which version of the Sprint [Terms & Conditions] may apply to plaintiffs.” (See 18 Mot. (Dkt. # 262) at 3.) The parties have not asked the court to resolve this issue, and therefore it has not. 19 2 In the January 9, 2012 order, the November 1, 2001 Terms & Conditions are inadvertently referred to as the “November 1, 2011 Terms & Conditions.” However, the citation 20 to the record noted by the court plainly refers to the November 1, 2001 Terms & Conditions. 21 (See Jan. 9, 2012 Order at 6 (citing Dkt. # 175-2 Ex. 1 at SPRINT-PCS-HO 000025).) 3 The court cited these two versions of the Terms & Conditions simply because they were 22 both relied upon by Plaintiffs in their motion for partial summary judgment, and both of these ORDER- 2 1 Significantly, both the November 1, 2001 and August 1, 2002 Terms & Conditions 2 contain broad arbitration clauses. (See Moore Decl. (Dkt. # 175-1) Ex. 1 (Nov. 1, 2001 3 Terms & Conditions) at SPRINT-PCS-HO 000033 (“Any claim, controversy or dispute . 4 . . related directly or indirectly to the services . . . shall be resolved by arbitration . . . .”), 5 Ex. 2 (Aug. 1, 2002 Terms & Conditions) at SPRINT-PCS-HO 000062 (“Any claim, 6 controversy or dispute of any kind between the customer and the company . . . shall be 7 resolved by final and binding arbitration . . . .”).) Nevertheless, in its motion to compel 8 arbitration, Sprint did not rely on the arbitration clauses contained within the Terms & 9 Conditions in effect at the time that Plaintiffs initially entered into their relationships with 10 Sprint, but rather on the arbitration clauses contained within the Terms & Conditions in 11 effect at the time Plaintiffs terminated their relationships with Sprint. (See Mot. to 12 Compel Arb. (Dkt. # 253) at 3-4, 6-7; Brenner Decl. (Dkt. # 177) Ex. 6 at SPRINT-PCS 13 HO 000118; Skok Decl. (Dkt. # 245) Ex. A at 1, 9.) The Terms & Conditions that Sprint 14 relied upon contain not only arbitration provisions, but class action waiver provisions as 15 well – which were absent in the earlier versions of the Terms & Conditions relied upon 16 by Plaintiffs. 4 (See Brenner Decl. Ex. 6 at SPRINT-PCS HO 000118; Skok Decl. Ex. A 17 at 1, 9.) 18 19 versions of the Terms & Conditions contain the following identical statements: “Your 20 agreement . . . with Sprint is made up of these Terms and Conditions (“Terms”) and the Service Plan that we agree to provide to you.” (See, e.g., Pl. Mot. for Part. S.J. (Dkt. # 175) at 2.) 21 4 As Plaintiffs point out class action waivers were absent in the November 1, 2001, May 1, 2002, June 1, 2003, November 24, 2003, and May 25, 2004 versions of the Terms & Conditions. 22 (See Mot. at 2 (citing Dkt. # 117 Exs. 2-4, 7-8).) ORDER- 3 1 Plaintiffs’ motion is directed in particular at their asserted need for discovery 2 concerning Sprint’s position that they are bound by a later Terms & Conditions 3 containing a class action waiver. (See Mot. at 3.) Plaintiffs have acknowledged that their 4 relationship with Sprint is governed by the Terms & Conditions of Service in effect at the 5 time they initially became customers of Sprint, and there is no dispute that this version of 6 the Terms & Conditions contains an arbitration clause. Implicit in Plaintiffs’ motion for 7 reconsideration is the idea that the court will necessarily need to decide in conjunction 8 with Sprint’s motion for arbitration which version of the Terms & Conditions is 9 applicable, whether it contains a class action waiver, and whether Plaintiffs have thereby 10 waived class arbitration. (See generally id.) Accordingly, the court must decide whether 11 this issue concerning class action waiver is relevant to its decision on arbitrability, and 12 therefore, whether it should reconsider its order denying discovery that Plaintiffs assert is 13 relevant to that issue. 14 The Supreme Court has provided guidance on this issue. In general, issues of 15 arbitrability are for the courts, while procedural issues are left to arbitrators. See, e.g., 16 First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). The Supreme Court 17 has explained that “questions of arbitrability” include “the kind of narrow circumstance 18 where contracting parties would likely expect a court to have decided the gateway matter 19 . . . .” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83-84 (2002). The Howsam 20 Court further explained that “‘procedural questions which grow out of the dispute and 21 bear on its final disposition’ are presumptively not for the judge, but for an arbitrator, to 22 decide.” Id. at 84 (quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 ORDER- 4 1 (1964) (italics in original)). The court, therefore, must determine if the issue of class 2 arbitration waiver is a “gateway” issue that it should decide or a procedural issue that 3 should be reserved for the arbitrator if the court ultimately orders arbitration. 4 In Green Tree Financial Corporation v. Bazzle, 539 U.S. 444 (2003), the parties 5 agreed to submit their dispute to an arbitrator, but disagreed whether class arbitration was 6 permitted under the agreement, which was silent on the issue. Id. at 447-48. A plurality 7 of the Supreme Court concluded that “whether the contracts forbid class arbitration . . . 8 concerns neither the validity of the arbitration clause nor its applicability to the 9 underlying dispute. . . .” Id. at 452. Thus, it was a procedural question concerning 10 “contract interpretation and arbitration procedures,” which “[a]rbitrators are well situated 11 to answer.” Id. at 453. Consequently, the plurality in Bazzle would reserve the issue of 12 class arbitration waiver for the arbitrator. 13 Even though Bazzle does not have the full weight of Supreme Court precedent, it 14 is nevertheless persuasive and instructive authority. Thalheimer v. City of San Diego, 15 645 F.3d 1109, 1127 n.5 (9th Cir. 2011) (“[W]e follow the [Supreme Court] plurality 16 opinion as persuasive authority, though ‘not a binding precedent.’” (quoting Texas v. 17 Brown, 460 U.S. 730, 737 (1983))). Many other courts have concluded likewise. See, 18 e.g., Scout.com, LLC v. Bucknuts, LLC, No. C07-1444 RSM, 2007 WL 4143229, at *5 19 (W.D. Wash. Nov. 16, 2007) (concluding that, in light of Bazzle, it was for the arbitrator 20 to decide the procedural issue of whether plaintiffs can arbitrate as a class, and collecting 21 similar cases); Vaughn v. Leeds, Morelli & Brown, P.C., 315 Fed. App’x 327, 329 (2d 22 Cir. 2009) (citing Bazzle and concluding that the district court properly compelled ORDER- 5 1 arbitration on question of the arbitrability of class claims); Guida v. Home Sav. of Am., 2 Inc., 793 F. Supp. 2d 611, 616-17 (E.D.N.Y. 2011) (citing Bazzle, “[t]he Court concludes 3 . . . that the ability of a class to arbitrate a dispute where the parties contest whether the 4 agreement to arbitrate is silent or ambiguous on the issue is a procedural question that is 5 for the arbitrator to decide”); JSC Surgutneftegaz v. President & Fellows of Harvard 6 Coll., 04 Civ 6069(RMB), 2007 WL 3019234, at *2 (S.D.N.Y. Oct. 11, 2007) (quoting 7 Bazzle and stating that “arbitrators are well situated to answer the question ‘whether 8 contracts forbid[] class arbitration’”); Smith v. The Cheesecake Factory Rests., Inc., No. 9 3:06-00829, 2010 WL 4789947, at *2 (M.D. Tenn. Nov. 16, 2010) (citing Bazzle and 10 stating that the “issue as to whether the parties agreed to class arbitration is to be resolved 11 by the arbitrator”). 5 12 13 5 In Stotl-Nielsen S.A. v. AnimalFeeds International Corporation, --- U.S. ---, 130 S. Ct. 14 1758 (2010), the court addressed Bazzle in dicta, stating: 15 16 [T]he parties appear to have believed that the judgment in Bazzle requires an arbitrator, not a court, to decide whether a contract permits class arbitration . . . . In fact, however, only the plurality decided that question. But we need not revisit that question here . . . . 17 Id. at 1772. Although the Stolt-Nielsen Court pointed out that Bazzle did not have the same precedential value as a majority opinion, the Court did not conclude that the Bazzle plurality was 18 incorrect on the issue of who decides whether a class can arbitrate a dispute. Stolt-Nielsen held 19 20 21 22 that “a party may not be compelled under the [Federal Arbitration Act] to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” Id. at 1775 (italics in original). The Supreme Court, however, emphasized that the parties had stipulated that the arbitration clause was silent on class arbitration and that they had reached no agreement on the arbitrability of class-wide claims. Id. at 1775-76 & n.10. Because the parties stipulated that they had reached no agreement, the Supreme Court had “no occasion to decide what contractual basis may support a finding that the parties agreed to authorize class-action arbitration.” Id. at 1776, n.10. Neither did the Stolt-Nielsen Court have occasion to decide the threshold issue of whether the court or the arbitrator should decide the arbitrability of class-wide ORDER- 6 1 In resolving the present issue, the court finds Vilches v. The Travelers Companies, 2 Inc., 413 Fed. App’x 487 (3d Cir. 2011), to be particularly instructive. In Vilches, the 3 parties were in disagreement regarding whether the arbitration agreement signed at the 4 beginning of the plaintiff’s employment or the revised arbitration policy that the 5 defendant introduced later in the employment relationship, and which contained a class 6 arbitration waiver, governed their dispute. Id. at 490. Despite the parties’ agreement to 7 arbitrate all employment disputes irrespective of which provision governed, the district 8 court addressed the question of class action waiver and found, based on correspondence 9 of the defendan,t that the defendant had provided sufficient notice of the revised policy, 10 and that the plaintiff’s electronic consent and continued employment constituted 11 agreement to the revised policy. Id. 12 The Third Circuit reversed the district court, stating that “the issue of whether [a 13 plaintiff] is bound by a disputed amendment to [an] existing [contract] falls within the 14 scope of this expansive agreement to arbitrate.” Id. at 491. The Third Circuit reasoned: 15 16 17 18 While the parties framed their arguments so as to invite the Court’s attention to the class action waiver issue – namely, whether the revised Arbitration Policy expressly prohibiting class arbitration governs the relationship between [defendant] and [plaintiff] – we conclude that “the relevant question here is what kind of arbitration proceeding the parties agreed to.” Bazzle, 539 U.S. at 452 . . . (emphasis in original). . . . Assuming binding arbitration of all employment disputes, the contested waiver provision solely affects the type of procedural arbitration 19 20 claims. See Yahoo! Inc. v. Iversen, No. 11-CV-03282-LHK, 2011 WL 4802840, at *2 (N.D. Cal. 21 Oct. 11, 2011); Guida, 793 F. Supp. 2d at 616 (“[W]hile Stolt-Nielsen pointed out that Bazzle did not have the same precedential value as an opinion by a majority of the Court, it did not indicate that the plurality opinion in Bazzle was incorrect on the issue of who decides whether a class can 22 arbitrate a dispute.”). ORDER- 7 1 2 3 4 5 6 7 8 9 mechanism applicable to this dispute. The Supreme Court has made clear that questions of contract interpretation aimed at discerning whether a particular procedural mechanism is authorized by a given arbitration agreement are matters for the arbitrator to decide. . . . Where contractual silence is implicated, “the arbitrator and not a court should decide whether a contract [was] indeed silent on the issue of class arbitration,” and “whether a contract with an arbitration clause forbids class arbitration.” Stolt– Nielsen S.A. v. AnimalFeeds Int’l Corp., --- U.S. ---, 130 S. Ct. 1758, 1771– 72, . . . (2010). The Policy originally in force made no mention of class action or class arbitration, and was entirely silent on whether the parties had a right to proceed through class or collective arbitration. In contrast, the amended Policy explicitly precludes class arbitration. Accordingly, we must “give effect to the contractual rights and expectations of the parties,” and refer the questions of whether class arbitration was agreed upon to the arbitrator. Stolt–Nielsen, 130 S.Ct. at 1774. 10 Vilches, 413 Fed. App’x at 492 (italics in original; some citations, quotations, and text 11 modifications omitted). 12 Similar to the parties in Vilches, the parties here are in dispute regarding whether 13 an earlier version of the Terms & Conditions, which contains an arbitration clause but is 14 silent as to class action waiver, or a later version of the Terms & Conditions, which 15 contains both an arbitration clause and a class action waiver, is applicable. As in Vilches, 16 this issue goes to the procedural mechanisms available at arbitration, and thus is a 17 procedural issue that should be left for the arbitrator to decide, assuming that arbitration 18 is ordered. Because this issue is appropriately reserved for the arbitrator should Sprint 19 prevail on its motion to compel arbitration, the court declines to reconsider its order 20 denying discovery that Plaintiffs assert would be relevant to this issue. 21 22 ORDER- 8 1 2 III. CONCLUSION Based on the foregoing, the court DENIES Plaintiffs’ motion for reconsideration 3 (Dkt. # 262). 4 Dated this 17th day of February, 2012. 5 7 A 8 JAMES L. ROBART United States District Judge 6 9 10 11 12 13 14 15 16 17 18 19 20 21 22 ORDER- 9
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