Noah v. T-Mobile USA Inc

• Court: District Court, W.D. Washington
• Decided: October 25, 2024
• Docket: 2:24-cv-00885
• Status: Unknown

Opinion

THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE 9 JACKSON NOAH, CASE NO. C24-0885-JCC 10 Plaintiff, ORDER 11 v. 12 T-MOBILE USA, INC., 13 Defendant. 14

15 Before the Court is Defendant T-Mobile USA, Inc.’s (“T-Mobile”) motion to compel 16 arbitration (Dkt. No. 17). Having thoroughly considered the parties’ briefing and the relevant 17 record, the Court hereby GRANTS the motion for the reasons explained below. 18 Plaintiff alleges that Defendant’s service, DIGITS, violated various state and federal 19 laws. (Dkt. No. 1-1 at 12–17.) DIGITS permitted users, including Plaintiff, to answer a single 20 phone line on multiple devices. (See id. at 10.) Plaintiff also alleges that the application allowed 21 hackers to receive and delete text messages to his phone number, which in turn helped them 22 access his bank account. (Id. at 11.) Plaintiff says these hackers stole small amounts of money 23 over time that totaled more than $230,000. (Id.) In his complaint, Plaintiff claims that Defendant 24 defectively designed DIGITS, negligently rushed DIGITS to market, and failed to protect 25 26 1 consumers. (Id. at 4, 12, 14.)1 2 Defendant now moves to compel arbitration of all claims pursuant to 9 U.S.C. § 4 and 3 Defendant’s Terms and Conditions (“T&Cs”). (See generally Dkt. No. 17.) Plaintiff agreed to 4 the T&Cs when he first signed up for phone service in 2017. (Dkt. No. 19 at 8.)2 And he signed 5 the T&Cs again when he added services in 2020 and 2021. (Id. at 263–64, 266.) And he 6 acknowledged the T&Cs once more in a clickwrap agreement to download DIGITS in 2021. 7 (Dkt. Nos. 1-1 at 10, 19 at 5); see also Kaplan v. Athletic Media Co., 705 F. Supp. 3d 992, 1001– 8 03 (N.D. Cal. 2023) (finding that similar clickwrap provided conspicuous notice and 9 unambiguous assent). There is no dispute that Plaintiff used DIGITS subject to Defendant’s 10 T&Cs, which include an arbitration clause. (See Dkt. Nos. 17 at 9–10, 22 at 5.) 11 Defendant’s T&Cs have been amended over time, but all versions relevant here state, in 12 bold and capital letters, “YOU AND WE EACH AGREE THAT . . . ANY AND ALL 13 CLAIMS OR DISPUTES . . . WILL BE RESOLVED BY . . . BINDING ARBITRATION 14 OR IN SMALL CLAIMS COURT.” (Dkt. No. 19 at 14, 46–47, 77, 108, 140, 173, 195, 231– 15 32.) Customers may opt out of the arbitration agreement, (see Dkt. No. 19 at 15), but it is 16 undisputed that Plaintiff did not. (See Dkt. Nos. 17 at 8, 19 at 5, 22 at 5.) 17 The arbitration clause contains a third relevant agreement that purports to delegate 18 gateway issues to the arbitrator. (See Dkt. No. 19 at 14–16); see also Caremark, LLC v. 19 Chickasaw Nation, 43 F.4th 1021, 1029 (9th Cir. 2022) (describing delegation clauses and 20 gateway issues). Contracting parties may delegate gateway issues, including whether an 21 arbitrator or a court should decide the agreement’s validity, by “clear and unmistakable 22

23 1 Plaintiff originally brought claims against Apple and Google for hosting DIGITS on their respective application stores, but those Defendants have since been voluntarily dismissed. (See 24 Dkt. No. 11 at 2.) 25 2 There is some confusion in the record about Plaintiff’s name. “Joseph Otis” and “Jackson Noah” are given in various places, but the parties do not dispute that both refer to Plaintiff. (See 26 Dkt. Nos. 17 at 6 n.1.) 1 evidence” of their intent. Henry Schein, Inc. v. Archer and White Sales, Inc., 586 U.S. 63, 69 2 (2019). Such an agreement is severable from the arbitration clause and the T&Cs, and thus must 3 be analyzed as a distinct contract between the parties. See Rent-A-Center, West, Inc. v. Jackson, 4 561 U.S. 63, 70–72 (2010). Here, the T&Cs incorporate the American Arbitration Association’s 5 (“AAA”) Consumer Arbitration Rules, (Dkt. No. 19 at 15), which provide that the arbitrator has 6 jurisdiction over all questions of arbitrability. AAA, Consumer Arbitration Rules, R-14(a) (Sept. 7 1, 2014); see also Brennan v. Opus Bank, 796 F.3d 1125, 1130 (holding AAA Rules provide 8 clear and unmistakable evidence of the intent to delegate gateway issues). Additionally, the 9 T&Cs broadly assign “ANY AND ALL CLAIMS OR DISPUTES” to the arbitrator, which 10 would necessarily include a dispute over the arbitrator’s jurisdiction. (See Dkt. No. 19 at 14.) 11 Finally, Defendant’s T&Cs provide that the arbitrator has the power to rule on their own 12 jurisdiction. (Id. at 16.) Plaintiff and Defendant have thus clearly agreed to delegate gateway 13 issues to the arbitrator, not this Court. 14 The Federal Arbitration Act (“FAA”) limits a court’s review to deciding whether an 15 arbitration clause (1) is valid and (2) covers the dispute at issue. See 9 U.S.C. § 2; Chiron Corp. 16 v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). The Court’s role is even 17 more circumspect where the parties have agreed to delegate gateway issues to the arbitrator. See 18 Rent-A-Center, 561 U.S. at 72. Because there are multiple agreements that could be disputed— 19 the T&Cs, the arbitration clause, and the delegation provision—a party must challenge the 20 delegation agreement specifically to secure review by the court. Bielski v. Coinbase, Inc., 87 21 F.4th 1003, 1009–10 (9th Cir. 2023). In Fli-Lo Falcon, LLC v. Amazon.com, Inc., for example, 22 the plaintiff referenced the AAA rules in their unconscionability challenge, which was sufficient. 23 97 F.4th 1190, 1199–1200 (9th Cir. 2024). “[U]nless [Plaintiff] challenged the delegation 24 provision specifically, we must treat it as valid under [FAA] § 2, and must enforce it under §§ 3 25 and 4, leaving any challenge to the validity of the Agreement as a whole for the arbitrator.” Rent- 26 A-Center, 561 U.S. at 72. If an arbitration agreement is so enforced, the litigation will be stayed. 1 See 9 U.S.C. § 3. 2 Plaintiff here does not challenge delegation specifically—he does not even mention it 3 once in his opposition to arbitration. (See generally Dkt. No. 22.) Nor does Plaintiff mention any 4 mitigating circumstance that might undermine the delegation provision, such as his 5 sophistication as a consumer. Cf. Brennan, 796 F.3d 1130–31 (reserving the question of whether 6 sophistication is relevant to delegation); Fli-Lo Falcon, 97 F.4th at 1200–01 (considering a 7 sophistication-based challenged to a delegation provision). Instead, Plaintiff claims the entire 8 arbitration agreement is a “contract of adhesion” that is procedurally and substantively 9 unconscionable. (Dkt. No. 22 at 10–12.) Therefore, “[P]laintiff[] ha[s] not stated explicitly that 10 they believe the Delegation Provision itself (as opposed to the Arbitration agreement or 11 the . . . Agreement as a whole) is unconscionable.” Fli-Lo Falcon, 97 F.4th at 1200. His 12 arguments3 at this stage are only proper for arbitration, not litigation. 13 For the foregoing reasons, T-Mobile’s motion to compel arbitration (Dkt. No. 17) is 14 GRANTED. This action is STAYED pending arbitration. The parties are ORDERED to submit a 15 joint status report within fourteen (14) days of the completion of arbitration proceedings. 16 17 DATED this 25th day of October 2024. A 18 19 20 John C. Coughenour 21 UNITED STATES DISTRICT JUDGE

23 3 For example, in opposing arbitration, Plaintiff disputes choice of law despite the T&Cs, (see 24 Dkt. No. 19 at 8), references outdated class action precedent, see Lowden v. T-Mobile USA, Inc., 512 F.3d 1213 (9th Cir. 2008), overruled by AT&T Mobility LLC v. Concepcion, 563 U.S. 333 25 (2011), focuses on the effect rather than the terms of the T&Cs, and cites cases that ultimately compelled arbitration, see Bennett v. T-Mobile USA, Inc., 2024 WL 229580, slip op. at 16 (W.D. 26 Wash. 2024). (See Dkt. No. 22 at 9–10.)