Marcus Roberts v. At&t Mobility LLC ( 2020 )

NOT FOR PUBLICATION FILED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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