Cohen v. CBR Systems, Inc. ( 2023 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 AMY COHEN, et al., Case No. 21-cv-06527-HSG 8 Plaintiffs, ORDER DENYING PLAINTIFFS’ MOTION FOR ORDER TO 9 v. CONSOLIDATE ARBITRATIONS 10 CBR SYSTEMS, INC., et al., Re: Dkt. No. 80 11 Defendants. 12 13 Pending before the Court is Plaintiffs’ motion for an order to consolidate arbitrations. Dkt. 14 No. 80. The Court finds this matter appropriate for disposition without oral argument and the 15 matter is deemed submitted. See Civil L.R. 7-1(b). For the reasons detailed below, the Court 16 DENIES Plaintiff’s motion. Dkt. No. 80. 17 I. BACKGROUND 18 This case involves a dispute over the annual fees for cord blood storage charged by 19 Defendants GI Partners and CBR Systems Inc. Dkt. No. 80 at 3. Plaintiffs allege that 20 “Defendants uniformly and deceptively misled consumers into contracting for cord blood storage 21 services by offering a fixed fee for storage years 2-18 when, in actuality, Defendants 22 surreptitiously increased the annual fee several times.” Id. Based on their service contracts, 23 Plaintiffs Koneru and Cohen understood their annual storage fee (for years 2-18) to be fixed at 24 $125, and Plaintiff Vaccarella understood hers to be fixed at $130. Id. at 4. Arguing that their 25 annual fees were not fixed as advertised, Plaintiffs brought numerous causes of action against 26 Defendants alleging breach of contract and deceptive marketing and billing practices. See Dkt. 27 No. 38 ¶¶ 155–374. 1 mandatory arbitration provision in the service contracts. Dkt. Nos. 46, 51. The Court found a 2 valid arbitration agreement, and accordingly granted Defendants’ motions to compel arbitration, 3 staying this case. Dkt. No. 72. In its ruling, the Court stated that “Plaintiffs’ individual claims are 4 being referred to individual arbitration because the contract is silent on the issue of class-wide 5 arbitration.” Id. at 11. 6 Since being referred to arbitration more than a year ago, the parties’ progress has been 7 halting. Plaintiffs “shared their intentions to arbitrate with AAA by January 3, 2023,” but 8 Defendants “failed to share their objection to using AAA as the arbitration forum until March 23, 9 2023.” Dkt. No. 85 at 5; see also Dkt. No. 84-2 at 7. Around that time, Defendants identified 10 JAMS as the only potential arbitration forum to which it would agree, Dkt. No. 84-2 at 7, but 11 conditioned their agreement to arbitration with JAMS on Plaintiffs’ “further acknowledgement 12 that JAMS cannot consolidate the arbitrations pursuant to rule 6(e) or otherwise.” Dkt. No. 84-2 13 at 2. Since Plaintiffs declined to make such an acknowledgment (and instead filed this motion), 14 arbitration through JAMS (or any other provider) still has not begun. 15 II. DISCUSSION 16 Plaintiffs now seek an order consolidating their claims into a single arbitration. Dkt No. 17 80. They argue that consolidation is appropriate because: (1) California law, which is explicitly 18 incorporated into their agreement, allows for consolidation of the Plaintiffs’ claims into a single 19 arbitration in these circumstances; and (2) consolidation will promote judicial economy and avoid 20 inconsistent results. Id. Defendants, meanwhile, argue that Plaintiffs’ motion impliedly (and 21 impermissibly) functions as a motion for reconsideration, and should not be entertained. Dkt. No. 22 84. Because the Court has not taken any position on the consolidation of individual claims (as 23 opposed to the referral of class claims), the Court disagrees with Defendants’ characterization of 24 Plaintiffs’ motion. Nevertheless, the Court declines to grant Plaintiffs’ requested relief because 25 consolidation is a procedural question for the arbitrator. 26 The Court finds Meadows v. Dickey’s Barbecue Restaurants Inc. instructive. No. 15-CV- 27 02139-JST, 2016 WL 7386138 (N.D. Cal. Dec. 21, 2016). There, a group of franchisees brought 1 arbitration on defendant’s motion. The plaintiffs filed a group arbitration demand with AAA, but 2 AAA informed plaintiffs that they needed to file individual arbitration demands unless all parties 3 consented or a court order dictated otherwise. The franchisees put their AAA matter in abeyance 4 to seek a consolidation order. But the court declined to grant one, explaining that courts 5 “presumptively decide gateway questions of arbitrability” but leave to the arbitrator those 6 ‘“procedural’ questions which grow out of the dispute and bear on its final disposition . . . .” Id. at 7 *2 (quoting John Wiley & Sons, Inc. v. Livingston, 84 S. Ct. 909, 918 (1964), and citing Howsam 8 v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84–85 (2002)). The court reasoned that, like the 9 availability of class arbitration, “consolidation is also a procedural issue for the arbitrator to 10 decide.” Id. (citing Certain Underwriters at Lloyds v. Cravens Dargan & Co., 197 Fed. Appx. 11 645 at *2 (9th Cir. 2006)). Notably, the Meadows court concluded that “Plaintiffs’ invocation of 12 California Code of Civil Procedure section 1281.3 does not compel a different result.” Id. at *3 13 (explaining that after Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 452–53 (2003), 14 “California courts have similarly held that consolidation is a procedural issue for the arbitrator to 15 decide—even where the party seeking consolidation relies on California Code of Civil Procedure 16 section 1281.3.”). 17 The Court finds that the same conclusion is warranted here. While Section 1281.3 et seq 18 was explicitly incorporated into the agreements at issue, and not just raised in the briefing as in 19 Meadows, the Court finds that this is a distinction without a difference. The agreement’s explicit 20 reference to the state law provisions governing consolidation of arbitration matters does not make 21 the question of consolidation any less procedural. Fundamentally, Plaintiffs have one vision for 22 how the individual claims should administratively proceed, and Defendants another. Even though 23 the Court understands that consolidation could achieve (in theory) administrative benefits like 24 time savings and consistency, and recognizes that its prior orders did not foreclose the possibility 25 of consolidation, it finds that this is a pure procedural question for the arbitrator to decide if and 26 when it is properly raised in the arbitration. 27 // 1 Il CONCLUSION 2 Plaintiffs’ motion for order to consolidate arbitrations is DENIED. 3 IT IS SO ORDERED. 4 |) Dated: 12/12/2023 > Atmel 5 Mbp. HAYWOOD S. GILLIAM, JR. 6 United States District Judge 7 8 9 10 11 a 12 13 14 15 16 = 17 Z 18 19 20 21 22 23 24 25 26 27 28