Elizabeth Hart v. Charter Communications, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: May 15, 2020
• Docket: 19-55538
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAY 15 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

ELIZABETH HART, individually, and on No. 19-55538 behalf of all others similarly situated, D.C. No. Plaintiff-Appellant, 8:17-cv-00556-DOC-RAO

and MEMORANDUM* LEROY ROBERSON,

Plaintiff,

v.

CHARTER COMMUNICATIONS, INC.; SPECTRUM MANAGEMENT HOLDING COMPANY, LLC,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California David O. Carter, District Judge, Presiding

Argued and Submitted May 6, 2020 Pasadena, California

Before: GOULD and CHRISTEN, Circuit Judges, and STEIN,** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Sidney H. Stein, United States District Judge for the Southern District of New York, sitting by designation. Plaintiff-Appellant Elizabeth Hart (“Hart”) appeals the district court’s order

compelling arbitration. Hart filed a putative class action under the Class Action

Fairness Act against Defendants-Appellees Spectrum Management Holding Co.,

LLC (“Spectrum”) and Spectrum’s parent company, Charter Communications, Inc.

(“Charter”) (collectively, “Appellees”). Hart alleged Time Warner Cable, Inc.

(“TWC”), which merged into Spectrum in 2016, defrauded and misled consumers

who bought residential Internet services and enrolled in automatic bill payment.

Appellees moved to compel arbitration pursuant to the Federal Arbitration

Act (“FAA”), 9 U.S.C. §§ 3–4, arguing that Hart had accepted prior TWC

subscriber agreements that bind subscribers to arbitration. The district court

granted the motion, holding that Hart had inquiry notice of a 2014 TWC subscriber

agreement and assented to the agreement by continuing to accept TWC’s services.

The district court held that Appellees, as TWC’s successors, could enforce the

terms of the agreement, including the arbitration clause.

We review de novo a district court’s decision to grant a motion to compel

arbitration. Bushley v. Credit Suisse First Bos., 360 F.3d 1149, 1152 (9th Cir.

2004). We have jurisdiction pursuant to 28 U.S.C. § 1291 and 9 U.S.C.

§ 16(a)(1)(D) and (a)(3), and we affirm.

1. “In determining whether a valid arbitration agreement exists, federal

courts apply ordinary state-law principles that govern the formation of contracts.”

2 Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175 (9th Cir. 2014) (quotations

omitted). The parties agree that California law applies.

Under California law, “mutual assent is a required element of contract

formation.” Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014).

“[A]n offeree, knowing that an offer has been made to [her] but not knowing all of

its terms, may be held to have accepted, by [her] conduct, whatever terms the offer

contains.” Windsor Mills, Inc. v. Collins & Aikman Corp., 101 Cal. Rptr. 347, 351

(Cal. Ct. App. 1972).

The district court did not err by determining that Hart had inquiry notice of

TWC’s 2014 subscriber agreement as a result of the notice she received in two

billing statements. The notice was sufficiently clear and conspicuous to provide a

reasonably prudent subscriber with constructive notice of the proposed contract

terms. See Nguyen, 763 F.3d at 1177. Because there is no dispute Hart received

the relevant billing statements, Hart’s continued acceptance of TWC’s services

constituted assent to the agreement. See Harris v. Superior Court, 233 Cal. Rptr.

186, 188 (Cal. Ct. App. 1986). Hart is bound by the terms of the 2014 subscriber

agreement, including the arbitration clause.

2. Under California contract law, “[n]onsignatory defendants may

enforce arbitration agreements where there is sufficient identity of parties.” Jenks

v. DLA Piper Rudnick Gray Cary US LLP, 196 Cal. Rptr. 3d 237, 243 (Cal. Ct.

3 App. 2015) (quotations omitted). When the identity of interest is based on a

merger, the court will look to whether the surviving entity (the non-signatory)

“assumed all of the rights and obligations of the acquired corporation” (the

signatory). See Marenco v. DirecTV LLC, 183 Cal. Rptr. 3d 587, 593 (Cal. Ct.

App. 2015).

Under Delaware corporate law, which applies because the entities were

organized under Delaware law, TWC automatically transferred its “rights,

privileges and powers” to Spectrum pursuant to the merger. See Del. Code Ann.

tit. 6, § 18-209(g). As TWC’s successor-in-interest, Spectrum has the authority to

enforce the arbitration agreement between Hart and TWC. Charter, Spectrum’s

parent company, also can enforce the agreement because Hart sued both Spectrum

and Charter, bringing identical claims against them. See Boucher v. All. Title Co.,

Inc., 25 Cal. Rptr. 3d 440, 444 (Cal. Ct. App. 2005) (holding that a parent company

can enforce a subsidiary’s arbitration agreement where “a plaintiff has an

arbitration agreement with a subsidiary corporation; the plaintiff sues the parent

corporation; and the plaintiff’s claims against the parent company are based on the

same facts and are inherently inseparable”).

3. Hart argues for the first time on appeal that her opt-out of the

arbitration clause in the 2017 subscriber agreement supersedes any prior agreement

to arbitrate. We consider this argument to be forfeited because it was not raised

4 below. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) (“As a general

rule, we will not consider arguments that are raised for the first time on appeal.”).

4. We review a district court’s denial of a request for discovery for abuse

of discretion. Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 726 (9th Cir. 1999).

Under the FAA, discovery in connection with a motion to compel arbitration is

allowed only if “the making of the arbitration agreement or the failure, neglect, or

refusal to perform the same be in issue.” 9 U.S.C. § 4. The district court did not

abuse its discretion by determining there were no triable issues as to whether Hart

was bound by the 2014 arbitration agreement and by denying Hart’s request for

pre-arbitration discovery.

AFFIRMED.