1 2 3 6 7 CALIFORNIA CRANE SCHOOL, INC., Case No. 21-cv-10001-HSG 8 Plaintiff, ORDER GRANTING MOTION TO COMPEL ARBITRATION AND 9 v. DENYING MOTION TO STAY PENDING ARBITRATION 10 GOOGLE LLC, et al., Re: Dkt. Nos. 32, 34 11 Defendants. 12 13 This is an antitrust lawsuit that alleges that Google LLC and Apple Inc. have entered into 14 an anticompetitive agreement not to compete in the internet search business. See Dkt. No. 39 15 (“FAC”) ¶ 2. Before the Court is Google LLC’s, Alphabet Inc.’s, XXVI Holdings Inc.’s, Sundar 16 Pichai’s, and Eric Schmidt’s (collectively, “Google” or “Google Defendants”) motion for an order 17 compelling arbitration and dismissing or staying Plaintiff California Crane School, Inc.’s 18 (“Plaintiff”) claims against the Google Defendants. Dkt. No. 32. (“Mot.”). That motion is fully 19 briefed. See Dkt. Nos. 43 (“Opp.”), 48 (“Reply”), 81 (“Sur-Reply”). Also pending is Apple Inc.’s 20 and Tim Cook’s (collectively, “Apple” or “Apple Defendants”) motion to stay this action in its 21 entirety pending resolution of any arbitration between Plaintiff and the Google Defendants. Dkt. 22 No. 34. The Court held a hearing on both motions on August 11, 2022. For the reasons provided 23 below, the Court GRANTS Google’s motion and DENIES Apple’s motion. 25 The operative Complaint alleges that Google and Apple violated Sections 1 and 2 of the 26 Sherman Act by engaging in an unlawful conspiracy to restrain trade in and monopolize the 27 internet search market. See FAC. Specifically, it alleges that Google and Apple entered into an 1 alleges that Plaintiff, a crane operator certification company, bought search advertisements on 2 Google and in so doing paid prices that were inflated by the allegedly illegal agreement between 3 Apple and Google. Id. ¶ 45. Plaintiff asserts the same claims against Google and Apple, and they 4 arise out of the same underlying facts. See id. ¶¶ 135-42. 5 The following facts have not been contested. When advertisers sign up to use Google’s 6 advertising platforms in the United States, they are shown Google’s Advertising Program Terms 7 (“TOS”) and are asked to expressly agree to the TOS. See Dkt. No. 32-1, Declaration of Courtney 8 Shadd ISO Google’s Motion to Compel Arbitration (“Shadd Decl.”) ¶ 3.1 An advertiser will not 9 be able to use Google’s services until after the TOS have been agreed to. Id. Plaintiff accepted 10 the TOS in 2017 and 2018. Id. ¶¶ 13-16. 11 The TOS states in its very first paragraph that it “require[s] the use of binding individual 12 arbitration to resolve disputes rather than jury trials or class actions.” Id., Exs. A & D. 13 Specifically, the TOS’s arbitration clause states that the parties “agree to arbitrate all disputes and 14 claims . . . that arise out of or relate in any way to” Plaintiff’s participation in Google’s advertising 15 programs and services. Id. § 13(A). The provision further states that the agreement to arbitrate “is 16 intended to be broadly interpreted and includes, for example . . . claims brought under any legal 17 theory.” Id. And the provision also expressly states that it applies to claims brought against 18 “Google,” “Google parent companies, and the respective officers [and] directors” of those entities. 19 Id. Google’s records do not reflect any attempts by Plaintiff to opt out of the arbitration provision 20 pursuant to Section 13(F) of the TOS. Shadd Decl. ¶¶ 10, 12, 15-16; see also id., Exs. A & D, § 21
22 1 The Google Defendants ask the Court take judicial notice of the TOS and related documents, including the opt-out website, and the website at which advertisers accepted or 23 declined the TOS. Mot. at 2. Plaintiff has not opposed this request. The Court agrees to take judicial notice of the existence of these documents, as they are not the subject of reasonable 24 dispute and their authenticity is not in question. See Fed. R. Evid. 201; Trudeau v. Google LLC, 349 F. Supp. 3d 869, 876 (N.D. Cal. 2018) (taking judicial notice of the “TOS, the opt-out 25 website, and the website at which advertisers accepted or declined the TOS,” because, inter alia, “they are not the subject of reasonable dispute and their authenticity is not in question” (citing 26 FED. R. EVID. 201)), aff’d, 816 F. App’x 68 (9th Cir. 2020). That said, the Court only takes judicial notice of the existence of the documents and is not bound by any specific fact findings and 27 legal conclusions set forth in them. 1 13(F) (explaining opt out process). 3 The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., sets forth a policy favoring 4 arbitration agreements and establishes that a written arbitration agreement is “valid, irrevocable, 5 and enforceable.” 9 U.S.C. § 2; Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018) (noting 6 federal policy favoring arbitration); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 7 U.S. 1, 24 (1983) (same). The FAA allows that a party “aggrieved by the alleged failure, neglect, 8 or refusal of another to arbitrate under a written agreement for arbitration may petition any United 9 States district court . . . for an order directing that . . . arbitration proceed in the manner provided 10 for in such agreement.” 9 U.S.C. § 4. This federal policy is “simply to ensure the enforceability, 11 according to their terms, of private agreements to arbitrate.” Volt Info. Sciences, Inc. v. Bd. of 12 Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 476 (1989). Courts must resolve any 13 “ambiguities as to the scope of the arbitration clause itself . . . in favor of arbitration.” Id. 14 When a party moves to compel arbitration, the court must determine (1) “whether a valid 15 arbitration agreement exists” and (2) “whether the agreement encompasses the dispute at issue.” 16 Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). The 17 agreement may also delegate gateway issues to an arbitrator, in which case the court’s role is 18 limited to determining whether there is clear and unmistakable evidence that the parties agreed to 19 arbitrate arbitrability. See Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). In either 20 instance, “before referring a dispute to an arbitrator, the court determines whether a valid 21 arbitration agreement exists.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 22 530 (2019) (citing 9 U.S.C. § 2). 24 A. Google’s Motion to Compel Arbitration 25 Google moves to compel arbitration of Plaintiff’s claims against it pursuant to an agreed- 26 upon arbitration clause in Google’s terms of service. On a motion to compel arbitration, this 27 Court’s role is simply to determine (1) whether a valid agreement to arbitrate exists and, if it does, 1 F.3d 1052, 1058 (9th Cir. 2013). Plaintiff’s primary argument in response to Google’s motion to 2 compel arbitration is that the so-called “McGill rule” renders the parties’ arbitration agreement 3 unenforceable.
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1 2 3 6 7 CALIFORNIA CRANE SCHOOL, INC., Case No. 21-cv-10001-HSG 8 Plaintiff, ORDER GRANTING MOTION TO COMPEL ARBITRATION AND 9 v. DENYING MOTION TO STAY PENDING ARBITRATION 10 GOOGLE LLC, et al., Re: Dkt. Nos. 32, 34 11 Defendants. 12 13 This is an antitrust lawsuit that alleges that Google LLC and Apple Inc. have entered into 14 an anticompetitive agreement not to compete in the internet search business. See Dkt. No. 39 15 (“FAC”) ¶ 2. Before the Court is Google LLC’s, Alphabet Inc.’s, XXVI Holdings Inc.’s, Sundar 16 Pichai’s, and Eric Schmidt’s (collectively, “Google” or “Google Defendants”) motion for an order 17 compelling arbitration and dismissing or staying Plaintiff California Crane School, Inc.’s 18 (“Plaintiff”) claims against the Google Defendants. Dkt. No. 32. (“Mot.”). That motion is fully 19 briefed. See Dkt. Nos. 43 (“Opp.”), 48 (“Reply”), 81 (“Sur-Reply”). Also pending is Apple Inc.’s 20 and Tim Cook’s (collectively, “Apple” or “Apple Defendants”) motion to stay this action in its 21 entirety pending resolution of any arbitration between Plaintiff and the Google Defendants. Dkt. 22 No. 34. The Court held a hearing on both motions on August 11, 2022. For the reasons provided 23 below, the Court GRANTS Google’s motion and DENIES Apple’s motion. 25 The operative Complaint alleges that Google and Apple violated Sections 1 and 2 of the 26 Sherman Act by engaging in an unlawful conspiracy to restrain trade in and monopolize the 27 internet search market. See FAC. Specifically, it alleges that Google and Apple entered into an 1 alleges that Plaintiff, a crane operator certification company, bought search advertisements on 2 Google and in so doing paid prices that were inflated by the allegedly illegal agreement between 3 Apple and Google. Id. ¶ 45. Plaintiff asserts the same claims against Google and Apple, and they 4 arise out of the same underlying facts. See id. ¶¶ 135-42. 5 The following facts have not been contested. When advertisers sign up to use Google’s 6 advertising platforms in the United States, they are shown Google’s Advertising Program Terms 7 (“TOS”) and are asked to expressly agree to the TOS. See Dkt. No. 32-1, Declaration of Courtney 8 Shadd ISO Google’s Motion to Compel Arbitration (“Shadd Decl.”) ¶ 3.1 An advertiser will not 9 be able to use Google’s services until after the TOS have been agreed to. Id. Plaintiff accepted 10 the TOS in 2017 and 2018. Id. ¶¶ 13-16. 11 The TOS states in its very first paragraph that it “require[s] the use of binding individual 12 arbitration to resolve disputes rather than jury trials or class actions.” Id., Exs. A & D. 13 Specifically, the TOS’s arbitration clause states that the parties “agree to arbitrate all disputes and 14 claims . . . that arise out of or relate in any way to” Plaintiff’s participation in Google’s advertising 15 programs and services. Id. § 13(A). The provision further states that the agreement to arbitrate “is 16 intended to be broadly interpreted and includes, for example . . . claims brought under any legal 17 theory.” Id. And the provision also expressly states that it applies to claims brought against 18 “Google,” “Google parent companies, and the respective officers [and] directors” of those entities. 19 Id. Google’s records do not reflect any attempts by Plaintiff to opt out of the arbitration provision 20 pursuant to Section 13(F) of the TOS. Shadd Decl. ¶¶ 10, 12, 15-16; see also id., Exs. A & D, § 21
22 1 The Google Defendants ask the Court take judicial notice of the TOS and related documents, including the opt-out website, and the website at which advertisers accepted or 23 declined the TOS. Mot. at 2. Plaintiff has not opposed this request. The Court agrees to take judicial notice of the existence of these documents, as they are not the subject of reasonable 24 dispute and their authenticity is not in question. See Fed. R. Evid. 201; Trudeau v. Google LLC, 349 F. Supp. 3d 869, 876 (N.D. Cal. 2018) (taking judicial notice of the “TOS, the opt-out 25 website, and the website at which advertisers accepted or declined the TOS,” because, inter alia, “they are not the subject of reasonable dispute and their authenticity is not in question” (citing 26 FED. R. EVID. 201)), aff’d, 816 F. App’x 68 (9th Cir. 2020). That said, the Court only takes judicial notice of the existence of the documents and is not bound by any specific fact findings and 27 legal conclusions set forth in them. 1 13(F) (explaining opt out process). 3 The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., sets forth a policy favoring 4 arbitration agreements and establishes that a written arbitration agreement is “valid, irrevocable, 5 and enforceable.” 9 U.S.C. § 2; Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018) (noting 6 federal policy favoring arbitration); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 7 U.S. 1, 24 (1983) (same). The FAA allows that a party “aggrieved by the alleged failure, neglect, 8 or refusal of another to arbitrate under a written agreement for arbitration may petition any United 9 States district court . . . for an order directing that . . . arbitration proceed in the manner provided 10 for in such agreement.” 9 U.S.C. § 4. This federal policy is “simply to ensure the enforceability, 11 according to their terms, of private agreements to arbitrate.” Volt Info. Sciences, Inc. v. Bd. of 12 Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 476 (1989). Courts must resolve any 13 “ambiguities as to the scope of the arbitration clause itself . . . in favor of arbitration.” Id. 14 When a party moves to compel arbitration, the court must determine (1) “whether a valid 15 arbitration agreement exists” and (2) “whether the agreement encompasses the dispute at issue.” 16 Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). The 17 agreement may also delegate gateway issues to an arbitrator, in which case the court’s role is 18 limited to determining whether there is clear and unmistakable evidence that the parties agreed to 19 arbitrate arbitrability. See Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). In either 20 instance, “before referring a dispute to an arbitrator, the court determines whether a valid 21 arbitration agreement exists.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 22 530 (2019) (citing 9 U.S.C. § 2). 24 A. Google’s Motion to Compel Arbitration 25 Google moves to compel arbitration of Plaintiff’s claims against it pursuant to an agreed- 26 upon arbitration clause in Google’s terms of service. On a motion to compel arbitration, this 27 Court’s role is simply to determine (1) whether a valid agreement to arbitrate exists and, if it does, 1 F.3d 1052, 1058 (9th Cir. 2013). Plaintiff’s primary argument in response to Google’s motion to 2 compel arbitration is that the so-called “McGill rule” renders the parties’ arbitration agreement 3 unenforceable. The Court will first explain why the arbitration agreement is valid and covers the 4 dispute at issue, and it will then briefly explain why the McGill rule is irrelevant to this case. 5 First, the arbitration agreement is valid. Section 2 of the FAA contains a savings clause, 6 which provides that arbitration agreements are “enforceable, save upon such grounds as exist at 7 law or in equity for the revocation of any contract.” 9 U.S.C. § 2. This savings clause “preserves 8 generally applicable contract defenses.” Kilgore, 718 F.3d at 1058 (citations omitted). Under the 9 FAA savings clause, state law doctrines that “arose to govern issues concerning the validity, 10 revocability, and enforceability of contracts generally” remain applicable to arbitration 11 agreements. Id. (citations omitted). Thus, generally applicable contract defenses, such as fraud, 12 duress, or unconscionability, may be applied to invalidate arbitration agreements without 13 contravening § 2. Id. And under California law, a contractual clause is unenforceable if it is both 14 procedurally and substantively unconscionable. See Nagrampa v. MailCoups, Inc., 469 F.3d 15 1257, 1280 (9th Cir. 2006).2 16 Google contends, and Plaintiff does not dispute, that the arbitration clause in the TOS is 17 neither procedurally nor substantively unconscionable. The Ninth Circuit has held that “the 18 threshold inquiry in California’s unconscionability analysis is whether the arbitration agreement is 19 adhesive.” Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1210 (9th Cir. 2016) (quoting 20 Nagrampa, 469 F.3d at 1281 (alterations and internal quotation marks omitted)). “[I]f there is an 21 opportunity to opt out,” the arbitration agreement is not adhesive, and thus not procedurally 22 unconscionable. Id. 23 Here, the TOS offers advertisers an opportunity to opt out of arbitration. Specifically, 24
25 2 There is no dispute that California law governs the interpretation of the TOS and its arbitration clause. See Mot. at 3, n.1 (In the TOS, the parties agreed that “ALL CLAIMS ARISING OUT OF 26 OR RELATING TO THESE TERMS OR THE PROGRAMS WILL BE GOVERNED BY CALIFORNIA LAW, . . . EXCEPT TO THE EXTENT THAT CALIFORNIA LAW IS 27 CONTRARY TO OR PREEMPTED BY FEDERAL LAW.”) (citing Shadd Decl., Exs. A & D, § 1 Section 13(F) of the TOS provides an advertiser with 30 days to opt out of the arbitration 2 provision, which the advertiser can do by clicking on a hyperlink that leads to a landing webpage 3 containing the “Opt Out Procedure.” See Shadd Decl. ¶¶ 10, 12, 15-16 (discussing the TOS’s opt- 4 out process). Plaintiff has not argued that this procedure fails to afford a meaningful opportunity 5 to opt out of arbitration. So in light of this voluntary opt out procedure, the Court finds that the 6 arbitration provision in the TOS is not procedurally unconscionable and thus not unconscionable. 7 See Trudeau v. Google LLC, 349 F. Supp. 3d 869, 877 (N.D. Cal. 2018) (“This Court finds that 8 the 2017 TOS provided a meaningful opportunity to opt out of the arbitration provision.”), aff'd, 9 816 F. App'x 68 (9th Cir. 2020); Adtrader, Inc. v. Google LLC, No. 17-CV-07082-BLF, 2018 WL 10 1876950, at *5 (N.D. Cal. Apr. 19, 2018) (“[A]n advertiser’s decision to decline the September 11 2017 AdWords Agreement to avoid being subject to the new arbitration provision is a voluntary 12 choice given that he or she can easily opt out from that provision.”). There is thus no need to 13 assess whether the arbitration agreement is substantively unconscionable. But in any event, 14 Plaintiff does not contend that it is, and the Court finds no reason to conclude otherwise. At 15 bottom, the arbitration agreement is valid and enforceable. 16 Second, the arbitration agreement encompasses Plaintiff’s claims. Plaintiff alleges that it 17 overpaid Google for showing advertisements on Google’s search results pages due to an 18 anticompetitive agreement not to compete in the internet search business between Apple and 19 Google. See FAC ¶¶ 45, 48, 139. With exceptions that no one contends are applicable here, the 20 TOS applies to “all disputes and claims” under “any legal theory” that “arise out of or relate in any 21 way” to Google’s advertising programs. Shadd Decl., Exs. A & D, § 13(A). Moreover, the 22 arbitration agreement applies to Plaintiff’s claims against each of the respective Google 23 Defendants, since the TOS also applies to “Google,” “Google parent companies, and the 24 respective officers [and] directors” of those entities. See id. Plaintiff has identified no reason why 25 this broad agreement does not encompass the antitrust claims here, and the Court is aware of none. 26 Thus, a valid agreement to arbitrate exists, and it encompasses the dispute at issue in this lawsuit. 27 All of that is uncontested. Plaintiff’s main argument in response to Google’s motion is that 1 relief”—renders the parties’ arbitration agreement unenforceable. The Court disagrees. 2 California courts have interpreted certain California unfair competition and consumer 3 protection statutes to “authorize injunctive relief that is primarily for the benefit of the general 4 public.” Hodges v. Comcast Cable Commc’ns, LLC, 21 F.4th 535, 541 (9th Cir. 2021) (citation 5 omitted); see also Cal. Bus. & Prof. Code § 17200 (UCL), et seq.; id. § 17500 (FAL), et seq.; Cal. 6 Civ. Code § 1750 (CLRA), et seq. In McGill v. Citibank, N.A., the California Supreme Court 7 reasoned that any contract that purports to waive a party’s right to seek the “the public injunctive 8 relief available under the UCL, the CLRA, and the false advertising law” would “seriously 9 compromise the public purposes the statutes were intended to serve.” 2 Cal. 5th 945, 216 Cal. 10 Rptr. 3d 627, 638 393 P.3d 85, 94 (2017). The “McGill rule” is the case’s central holding, which 11 is that an arbitration provision that purports to waive the right to request such public injunctive 12 relief in any forum is invalid and unenforceable under California law. Id. 13 After Google filed its motion to compel arbitration, Plaintiff amended its complaint to add 14 a request for “Forward-Looking Public Injunctive Relief for the General Public as a Whole.” 15 Compare Compl. ¶ 156 (g), (k) (omitting any request for such relief) with FAC ¶ 162 (adding that 16 request). The request essentially asks the Court to enjoin Apple and Google from engaging in the 17 alleged anticompetitive conduct. FAC ¶ 162. Since the Complaint now “clearly seeks public 18 injunctive relief,” Plaintiff contends, “the McGill rule is implicated, and the arbitration agreement 19 should not be enforced.” Reply at 3. 20 But Plaintiff’s novel attempt to invoke the McGill rule fails at the threshold because none 21 of Plaintiff’s claims authorize it to seek public injunctive relief in the first place. “The public 22 injunction is a creature of California law,” and, as interpreted by California courts, it is authorized 23 by certain California unfair competition and consumer protection statutes. Rogers v. Lyft, Inc., 24 452 F. Supp. 3d 904, 919 (N.D. Cal. 2020). The McGill rule, in turn, is a state law doctrine that 25 protects public injunctions already available under those statutes. See McGill, 216 Cal. Rptr. 3d at 26 638, 393 P.3d at 94 (reasoning that enforcing a contract to waive a party’s right to seek “the public 27 injunctive relief available under the UCL, the CLRA, and the false advertising law” would 1 Nothing in the California Supreme Court’s decision in McGill purports to extend its reach to 2 claims that arise under the law of other jurisdictions. 3 The Amended Complaint, meanwhile, raises no California state law claims. It instead 4 raises two federal antitrust claims pursuant to Sections 4 and 16 of the Clayton Antitrust Act (15 5 U.S.C. §§ 15, 26). See FAC ¶¶ 1, 44. Plaintiff has not identified a single case where the McGill 6 rule was invoked to protect federal claims, and the Court is aware of none. In short, while the 7 Amended Complaint nominally requests public injunctive relief, it does not premise that request 8 on a California statute that authorizes such relief. The Court accordingly finds no basis in McGill 9 to bar enforcement of the parties’ arbitration agreement. See, e.g., In re Nat'l Football League's 10 Sunday Ticket Antitrust Litig., No. ML15-2668-PSG-JEMX, 2021 WL 2350814, at *7 (C.D. Cal. 11 Apr. 20, 2021) (finding the McGill rule “irrelevant” where the complaint does not raise CLRA, 12 UCL, or FAL claims); In re Google Digital Advert. Antitrust Litig., No. 20-CV-03556-BLF, 2021 13 WL 2021990, at *7 (N.D. Cal. May 13, 2021) (“The Court credits Defendants’ concern that [the 14 plaintiffs] may not seek public injunctive relief under the Sherman Act.”). 15 At oral argument, Plaintiff’s counsel for the first time suggested that he could remedy this 16 issue by (again) amending the Complaint to add a Cartwright Act claim, which he contends would 17 then authorize Plaintiff to seek public injunctive relief. But any such amendment would not 18 change the Court’s conclusion. See Novak v. United States, 795 F.3d 1012, 1020 (9th Cir. 2015) 19 (“the general rule that parties are allowed to amend their pleadings does not extend to cases in 20 which any amendment would be an exercise in futility”) (cleaned up). This is primarily because, 21 to the Court’s knowledge, no court has interpreted the Cartwright Act (or any other law other than 22 the UCL, CLRA, and FAL) to authorize the distinct kind of public injunctive relief addressed in 23 McGill. 24 Even if the Cartwright Act could generally be read to authorize public injunctive relief, the 25 specific claims Plaintiff seeks to raise would still not authorize such relief. Both the California 26 Supreme Court and the Ninth Circuit have made clear that public injunctive relief cannot be 27 sought in pursuit of representative claims or for the benefit of a discrete subset of similarly 1 request for [public injunctive] relief does not constitute the pursuit of representative claims or 2 relief on behalf of others”); Hodges, 21 F.4th at 548 (“[W]e reaffirm that non-waivable ‘public 3 injunctive relief’ within the meaning of the McGill rule refers to prospective injunctive relief that 4 aims to restrain future violations of law for the benefit of the general public as a whole, rather 5 than a discrete subset of similarly situated persons, and that does so without requiring 6 consideration of the individual claims of non-parties.”). Plaintiff’s antitrust claims here, however, 7 seek relief on behalf of itself and other “consumers and businesses who paid Google to place 8 advertising on Google search in the United States since January 1, 2005,” on the ground that those 9 individuals and entities paid inflated prices for advertising services and therefore are entitled to 10 recoup their past losses. FAC ¶ 65. In the Court’s view, these are paradigmatic “representative 11 claims” that would primarily benefit a discrete set of similarly-situated persons—namely, 12 individuals or entities that have paid to advertise on Google’s services. To the extent the public 13 would benefit from these claims, it would be collaterally, not primarily. See Hodges, 21 F.4th at 14 546 (“[T]he existence of an incidental benefit to the general public is not enough to classify that 15 relief as non-waivable public injunctive relief.”) (citations omitted); see also Magana v. 16 DoorDash, Inc., 343 F. Supp. 3d 891, 901 (N.D. Cal. 2018) (concluding that the relief sought was 17 not public injunctive relief because “any benefit to the public would be derivate of and ancillary to 18 the benefit to DoorDash’s employees”). The Court’s conclusion is thus reinforced: Plaintiff 19 cannot evade its plainly valid arbitration agreement by tacking on the label of “public injunctive 20 relief.” 21 In the end, a valid arbitration agreement exists and covers the dispute at issue in this case. 22 The FAA accordingly requires this Court “to compel arbitration in accordance with the terms of 23 the agreement.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344, 131 S. Ct. 1740, 1748 24 (2011) (internal quotation marks omitted). Google’s motion is therefore GRANTED. Once an 25 arbitration agreement is found to be valid, enforceable, and applicable, the court shall stay the 26 action pending the outcome of the arbitration or dismiss the action. 9 U.S.C. § 3; Sparkling v. 27 Hoddwan Constr. Co. Inc., 864 F.2d 635, 638 (9th Cir. 1988). Having found that the arbitration 1 Court STAYS Plaintiff’s claims against Google pending the outcome of arbitration. 2 B. Apple’s Motion to Stay Pending Arbitration 3 Having ordered that Plaintiff’s claims against Google be compelled to arbitration, the 4 Court turns to Apple’s request to stay the claims against it pending arbitration. See Dkt. No. 34. 5 This request is denied. 6 Under Section 3 of the FAA, a stay is mandatory as to the parties to the arbitration 7 agreement. See 9 U.S.C. § 3. As to litigants who are not parties to the arbitration agreement, 8 however, the court may stay the litigation as a matter of discretion to await the outcome of the 9 pending arbitration. When exercising its discretionary power to stay, a court must weigh the 10 “competing interests which will be affected by the granting or refusal to grant a stay,” among 11 which are “the possible damage which may result from the granting of a stay, the hardship or 12 inequity which a party may suffer in being required to go forward, and the orderly course of 13 justice measured in terms of the simplifying or complicating of issues, proof, and questions of law 14 which could be expected to result from a stay.” Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 15 (9th Cir. 2005) (quoting CMAX Inc. v. Hall, 200 F.2d 265, 268 (9th Cir. 1962)). The Ninth Circuit 16 has noted “a preference for proceeding with the non-arbitrable claims when feasible.” See Gray v. 17 SEIU, No. 20-CV-01980-JSW, 2020 WL 12228937, at *5 (N.D. Cal. Aug. 5, 2020) (citing United 18 Commc'ns Hub, Inc. v. Qwest Commc'ns, Inc., 46 Fed. Appx. 412, 415 (9th Cir. 2002)). A court 19 should accordingly stay “only when doing so would serve some legitimate interest of the parties or 20 the court.” Id. 21 Apple contends that a stay of the remaining claims against it is warranted here because (i) 22 the potential damage to Plaintiff from such a stay is minimal if not nonexistent; (ii) there is a real 23 risk of inconsistent rulings if both arbitration and litigation were to proceed in parallel; and (iii) a 24 stay would promote the orderly course of justice. Dkt. No. 34 at 2. 25 Neither party has identified concrete prejudice (beyond simple delay) that would result 26 from either staying or declining to stay this case, so the Court’s decision is premised on concerns 27 of efficiency and judicial economy. On those fronts, the Court agrees with Apple that there is a 1 and Google, and the claims arise out of the same underlying facts, both an arbitrator and this Court 2 will have to decide similar questions of law and fact to determine whether Google and Apple 3 conspired in violation of Sections 1 and 2 of the Sherman Act. 4 But in a case like this, that redundancy seems inevitable. A stay is generally “appropriate 5 where the arbitrable claims predominate, or where the outcome of the nonarbitrable claims will 6 depend upon the arbitrator’s decision.” United Commc'ns Hub, 46 Fed. Appx. at 415 (quoting 7 Simitar Entm't, Inc. v. Silva Entm't, Inc., 44 F. Supp. 2d 986, 997 (D. Minn. 1999)). Here, 8 however, Apple does not contend that the arbitrator’s findings of fact or law in Plaintiff’s 9 arbitration against Google would be binding on this Court or otherwise have any impact on the 10 non-arbitrable claims left here.3 Since Plaintiff and Apple will presumably need to eventually 11 litigate the remaining non-arbitrable claims irrespective of whatever happens in the arbitration, 12 proceeding with this lawsuit would not waste judicial resources. To the contrary, staying the non- 13 arbitrable claims would only serve to needlessly delay their resolution. In these circumstances, 14 where one alleged co-conspirator has an enforceable arbitration agreement and the other does not, 15 the possibility that parallel proceedings could produce inconsistent results is simply inevitable. 16 Without more, that risk does not require granting a stay. As such, Apple has not identified how 17 time and effort could be saved by staying the non-arbitrable claims. 18 Having considered the parties’ arguments, the Court finds that Apple fails to show that a 19 stay would simplify the legal and factual issues in this lawsuit or otherwise promote the orderly 20 course of justice. Apple’s Motion is DENIED. 21 // 22 // 23
24 3 See Glob. Live Events v. Ja-Tail Enterprises, LLC, No. CV 13-8293 SVW, 2014 WL 1830998, at *6 (C.D. Cal. May 8, 2014) (“Inconsistent verdicts are possible whether the trial precedes the 25 arbitration or vice-versa, and can be avoided only if the second forum gives preclusive effect to the judgment of the first forum.”); Chen v. Bank of Am., N.A., No. CV 19-6941-MWF (SK), 2020 26 WL 4561658, at *3 (C.D. Cal. Mar. 31, 2020) (“As the arbitration is not binding on the Court, the arbitrator's decision will not necessarily impact the outcome of the non-arbitrable claims.”); 27 Congdon v. Uber Techs., 226 F. Supp. 3d 983, 991 (N.D. Cal. 2016) (defendant “has not presented IV. CONCLUSION The Court GRANTS Google’s Motion to Compel Arbitration and STAYS Plaintiff's 2 claims against Google pending the outcome of arbitration. Plaintiff and Google are further 3 DIRECTED to file a status report with the Court every 120 days from the date of this order and 4 notify the Court within 48 hours of the completion of arbitration. The Court shall retain 5 jurisdiction to confirm the arbitration award and enter judgment, if any, for purposes of 6 enforcement. 7 The Court DENIES Apple’s Motion to Stay Pending Arbitration. As to Defendants’ 8 pending motion to dismiss the Amended Complaint, Plaintiff and Apple may file a supplemental 9 brief that addresses whether the Amended Complaint states plausible claims against Apple, 10 specifically. Any supplemental brief may not exceed ten pages and is due on August 25, 2022. 11 Neither party may file a reply brief. 12 IT IS SO ORDERED.
Dated: 8/12/2022 v 14
4S HAYWOOD S. GILLIAM, JR. United States District Judge 16
Z 18 19 20 21 22 23 24 25 26 27 28