Postpichal v. Cricket Wireless, LLC

• Court: District Court, N.D. California
• Decided: January 20, 2022
• Docket: 3:19-cv-07270
• Status: Unknown

Opinion

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8

10 URSULA FREITAS and JAMIE POSTPICHAL, 11 No. C 19-7270 WHA Plaintiffs, 12

v.

13 ORDER RE MOTION TO COMPEL CRICKET WIRELESS, LLC, ARBITRATION 14 Defendant. 15

16 INTRODUCTION 17 In this RICO class action, defendant moves to compel arbitration of class members’ 18 claims. This order will not order any absent class members to arbitrate, but it will modify the 19 class definition in light of the issues raised. 20 STATEMENT 21 Plaintiffs Ursula Freitas and Jamie Postpichal claim that defendant, Cricket Wireless, 22 LLC, advertised 4G service and sold 4G-capable phones in markets where defendant did not 23 actually provide 4G coverage. Thus, plaintiffs allege that they and the class members were 24 harmed because they paid for 4G phones and coverage, but they received only 3G coverage, 25 which was slower and cheaper than 4G coverage. 26 A previous order in this action certified the following class: 27 between November 1, 2012 and September 30, 2014, purchased 1 from Cricket a 4G/LTE monthly plan for service on LegacyCricket’s network, or later activated a 4G/LTE plan with 2 the device for service on LegacyCricket’s network. 3 (Dkt. No. 298 at 19). But the order excluded certain groups from the class, including, but not 4 limited to:

5 (1) any Cricket customer who continued to use Cricket [after] receiving the May 22, 2014 text message notification 6 regarding Cricket’s arbitration clause;

7 (2) any Cricket customer who agreed to Cricket’s arbitration provision via electronic signature after May 2017; 8 (3) [a]ny class member that defendant proves is subject to 9 an arbitration agreement. 10 In the instant motion, only the third exclusion applies. Defendant argues that there are 11 two means by which class members are subject to arbitration: 12 • Until May 18, 2014, defendant placed a “Quick Start Guide” inside phone 13 boxes, which included an arbitration provision. 14 • From May 18, 2014 onward, defendant instead placed a “Terms and 15 Conditions” booklet inside phone boxes, which included an arbitration 16 provision. 17 Plaintiffs concede that defendant’s phone boxes contained either the Quick Start Guide or 18 the Terms and Conditions booklet throughout the class period (Opp. 6–8). Moreover, 19 defendant states that “as a matter of company policy and practice . . . employee[s] would 20 provide the box and its contents, including any booklets, to the customer[s]” (Dkt. No. 199-9, ¶ 21 7). Upon purchase of a phone, defendant provided each class member with a receipt that 22 referred to an agreement to arbitrate and terms of purchase (Moses Decl., ¶ 7, Exh. A). 23 1. QUICK START GUIDE. 24 The Quick Start Guide consisted of a cover page and sixteen pages of text (Dkt. No. 199- 25 2). The first six pages of text contained information on how to activate defendant’s phones and 26 cellular service. None of those pages referred to any terms of service. The remaining ten 27 pages consisted of dense text that, according to the guide, constituted an agreement between 1 the purchaser and defendant. At the top of the seventh page of text was the phrase “TERMS 2 AND CONDITIONS.” On the same page, the guide stated:

3 These Terms and Conditions of Service constitute an agreement (“Agreement”) between you and the provider of your 4 Cricket service and contain an arbitration clause and other clauses which may affect your legal rights. 5 * * * 6 IMPORTANT: WHEN YOU START THE SERVICE OR 7 USE THE SERVICE BY, FOR EXAMPLE, PLACING A CALL, SENDING A MESSAGE OR TRANSMITTING DATA ON THE 8 CRICKET WIRELESS SYSTEM OR ANOTHER SYSTEM THAT’S AGREED TO CARRY OUR SERVICES, YOU 9 INDICATE YOUR ACCEPTANCE OF THIS AGREEMENT. 10 The arbitration provision began on the fourteenth page of text and ended on the sixteenth 11 page. It included the following statements:

12 ARBITRATION MAY LIMIT RIGHTS YOU MAY HAVE . . . NO JUDGE OR JURY IS PRESENT AT AN 13 ARBITRATION . . . YOU AND WE ARE WAIVING RIGHTS TO PARTICIPATE IN CLASS ACTIONS . . . . 14 * * * 15 You may reject this arbitration clause by sending us a 16 rejection notice (“Rejection Notice”) within sixty (60) days after the date of your phone activation . . . by going to 17 www.mycricketdisputeresolution.com.

18 * * *

19 Any past, present or future claim, dispute or controversy (“Claim”) by either you or us against the other . . . arising from or 20 relating in any way to this Agreement or Services provided to you under this Agreement, including (without limitation) statutory, tort 21 and contract Claims . . . shall be resolved, upon the election by you or us, by binding arbitration. 22 Defendant has records of 1,099 customers who opted out of arbitration during the class period 23 by sending a rejection notice to defendant (Dkt. No. 199-9, ¶ 10). 24 2. TERMS AND CONDITIONS BOOKLET. 25 The Terms and Conditions booklet consisted of a cover page (labeled “Terms and 26 Conditions”) and 26 pages of text (Dkt. No. 199-5). The first page of text stated, in part: 27 DISPUTES, RATHER THAN JURY TRIALS OR CLASS 1 ACTIONS. THESE TERMS AND CONDITIONS LIMIT OUR LIABILITY AND THE REMEDIES AVAILABLE TO YOU IN 2 THE EVENT OF A DISPUTE. 3 The following two pages stated, in part:

4 These Ts&Cs are part of your Wireless Customer Agreement (“Agreement”) and form a contract between you and 5 Cricket that applies to all Devices and Wireless Services provided to you. Your Agreement with us also includes: our Privacy Policy 6 . . . any rate plans . . . any terms of service . . . not otherwise described in these Ts&Cs that we provide to you (collectively 7 “Supplemental Materials”) and . . . our Policies (as defined below). In the event of any conflict between these Ts&Cs and any 8 Supplemental Materials, these Ts&Cs shall control.

9 * * *

10 Your Agreement with Cricket begins when you accept the Ts&Cs by doing any of the following: (a) giving us a written or 11 electronic signature or telling us orally that you accept, or by otherwise accepting through any other printed, oral, or electronic 12 statement; (b) paying for Service; (c) activating the Service; (d) attempting to use or in any way using the Service; (e) upgrading or 13 modifying the Service; or (f) opening any Device packaging, or starting any application, program or software that says you are 14 accepting.

15 Services are subject to our business policies, practices, and procedures (“Policies”) . . . . You agree to follow our Policies 16 when you use our Services. Our Policies are subject to change at any time. You can find them on our website at 17 www.cricketwireless.com/support. 18 Additionally, a six-page arbitration clause began on the twentieth page of text. It stated, 19 in part:

20 Cricket and you agree to arbitrate all disputes and claims between us. This agreement to arbitrate is intended to be broadly 21 interpreted. It includes, but is not limited to: claims arising out of or relating to any aspect of the relationship between us, whether 22 based in contract, tort, statute, fraud, misrepresentation or any other legal theory; claims that arose before this or any prior 23 agreement (including, but not limited to, claims relating to advertising); claims that are currently subject of purported class 24 action litigation in which you are not a member of a certified class, and claims that may arise after the termination of this Agreement. 25 * * * 26 You agree that, by entering into this Agreement, you and 27 Cricket are each waiving the right to a trial by jury or to participate 1 The Terms and Conditions booklet, however, did not provide an opportunity to opt out of 2 arbitration. Nor did it expressly provide purchasers with a right to return their phones for a 3 refund. Defendant, however, maintained a seven-day return policy on its website at all 4 relevant times (Moses Supp. Decl., ¶¶ 4–6, Exhs. A, B). 5 3. PHONE BOXES. 6 Prior to May 18, 2014, the back panels of defendant’s phone boxes included the 7 following text in fine print, which was within a longer paragraph that also discussed signal 8 frequency and battery performance:

9 Use of phone requires purchase of Cricket® service, which must be purchased separately. By activating Cricket® service, you agree to 10 the enclosed terms and conditions of the service. 11 (Dkt. No. 199-4, Exh. C). 12 From May 18, 2014 onward, either the sides or the backs of defendant’s phone boxes 13 included substantially the following language in fine print:

14 The purchase, activation, or use of this phone and wireless service is subject to the Cricket Wireless Terms and Conditions of Service 15 inside this box or available in-store or at www.cricketwireless.com. These Terms and Conditions contain 16 important information – including your agreement to dispute resolution by binding individual arbitration instead of jury trials or 17 class actions. By activating and/or using this phone or phone number you acknowledge and agree to these Terms and Conditions 18 of Service. 19 (Keser Decl., ¶ 6). 20 4. BARRAZA V. CRICKET WIRELESS, LLC. 21 In a prior action against defendant regarding false advertising, an order of ours denied 22 defendant’s motion to compel arbitration under California and Missouri law. Barraza v. 23 Cricket Wireless, LLC, No. C 15-02471 WHA, 2015 WL 6689396, at *1 (N.D. Cal. Nov. 3, 24 2015). The order stated that defendant’s Quick Start Guide “lacked any indication of its 25 contractual nature.” Id. at *5 (emphasis in original). The plaintiffs’ failure to opt out did not 26 constitute acceptance because a reasonable consumer would not have been aware of the 27 arbitration provision buried inside the Quick Start Guide. Moreover, the plaintiffs “had no 1 And defendant’s use of the phrase “terms and conditions” rather than “contract” on boxes and 2 receipts was not consequential. The order held that a summary trial was necessary to resolve a 3 credibility issue of whether the plaintiffs had actually read the materials notifying them of the 4 in-the-box terms. 5 This order follows full briefing and a telephonic hearing. 6 ANALYSIS 7 1. RULING ON DEFENDANT’S MOTION IS PROPER. 8 Defendant argues that Schwarzchild v. Tse, 69 F.3d 293 (9th Cir. 1995), proposed that, 9 prior to provision of class notice and the expiration of the opt-out deadline, an order 10 compelling arbitration does not bind absent class members (Br. 1 n. 1). This order finds that it 11 may exclude from the class definition absent class members who are likely subject to 12 arbitration, but those excluded persons will still be free to bring suit later and litigate 13 arbitrability issues individually. Thus, ruling on the motion to compel arbitration will help fine 14 tune the class. 15 2. CHOICE-OF-LAW. 16 “The choice-of-law inquiry has two levels. First, we must determine whose choice-of- 17 law rules govern. Second, applying those rules, we determine whose law applies.” 18 Schoenberg v. Exportadora de Sal, S.A. de C.V., 930 F.2d 777, 782 (9th Cir. 1991). 19 Here, the choice-of-law rules of the Restatement (Second) of Conflict of Laws (1969) 20 govern because there is federal question jurisdiction in this RICO action. Ibid. There is no 21 California statute on choice-of-law. See Paulsen v. CNF Inc., 559 F.3d 1061, 1080 (9th Cir. 22 2009). So the Restatement requires that this order analyze the factors in Section 6, as follows: 23 the interstate system requires this order to apply the proper state substantive law to each class 24 member to avoid abridging or enlarging rights under 28 U.S.C. Section 2072(b); California law 25 on in-the-box contracts differs from that of other interested states; the law on in-the-box 26 contracts is not so complex as to prevent application of different states’ laws; and general 27 contract law will provide some uniformity of result. Thus, this order shall apply the laws of 1 the respective class members’ states of residence at the time of purchase. And the prior class 2 certification order justifies the parties’ expectation that this order do so. 3 3. VALIDITY OF THE ARBITRATION PROVISIONS. 4 The Federal Arbitration Act states that arbitration agreements “shall be valid, irrevocable, 5 and enforceable, save upon such grounds as exist at law or in equity for the revocation of any 6 contract.” 9 U.S.C. § 2. “A party seeking to compel arbitration has the burden under the FAA 7 to show (1) the existence of a valid, written agreement to arbitrate; and, if it exists, (2) that the 8 agreement to arbitrate encompasses the dispute at issue.” Ashbey v. Archstone Prop. Mgmt., 9 Inc., 785 F.3d 1320, 1323 (9th Cir. 2015). 10 In determining the former, “federal courts ‘apply ordinary state-law principles that 11 govern the formation of contracts.’” Nguyen v. Barnes & Noble, Inc., 763 F.3d 1171, 1175 12 (9th Cir. 2014) (citation omitted). In determining the latter, “any doubts concerning the scope 13 of arbitrable issues should be resolved in favor of arbitration . . . .” Moses H. Cone Mem’l 14 Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983). If both questions are answered in 15 the affirmative, then the FAA requires enforcement of the arbitration agreement according to 16 its terms, “leav[ing] no place for the exercise of discretion by a district court.” Dean Witter 17 Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985). But “[g]enerally applicable contract 18 defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration 19 agreements without contravening [FAA] § 2.” Dr.’s Ass’n, Inc. v. Casarotto, 517 U.S. 681, 20 682 (1996). 21 A. DEFENDANT’S ADVERTISEMENTS DID NOT DEFEAT CONTRACT FORMATION. 22 Plaintiffs argue that, due to defendant’s “no contract” advertisements, class members did 23 not believe that they were entering into contractual relationships with defendant (Opp. 5). So 24 class members could not have assented to the terms accompanying their phones (see ibid.). 25 But Barraza stated the following: 26 “No Contract” in the context of advertisements for 27 telecommunications services is meant to distinguish services with “No Contract” ads to trick consumers into unknowingly assenting 1 to arbitration, rather than to convey [defendant]'s offer of service without an annual commitment. Defendant[] cannot now be 2 precluded from enforcing contracts against plaintiffs . . . . 3 2015 WL 6689396, at *6. Other courts have agreed with this conclusion. E.g., Jialu Wu v. 4 iTalk Glob. Commc’ns, Inc., No. CV 20-7150 PSG (PJWx), 2020 WL 8461696, at *3 (C.D. 5 Cal. Oct. 21, 2020) (Judge Philip S. Gutierrez). One of defendant’s employees also stated here 6 that defendant’s “no contract” policy referred only to the time commitment for defendant’s 7 services (Dkt. No. 177-17, Towster Dep. 250). Thus, the “no contract” policy alone did not 8 defeat contract formation, and it did not invalidate the arbitration provisions. 9 B. THE QUICK START GUIDE WOULD LIKELY REQUIRE ARBITRATION IN STATES THAT FOLLOW SEVENTH CIRCUIT DECISIONS. 10 There are two Seventh Circuit decisions that enforce in-the-box contracts, and several 11 states follow them. In ProCD, Inc. v. Zeidenberg, the plaintiff sold an encoded CD-ROM disc 12 inside a box. 86 F.3d 1447, 1450 (7th Cir. 1996). The outside of the box warned of an 13 enclosed license, which also appeared on the computer screen before the CD-ROM disc could 14 be used. Ibid. The license expressly provided the plaintiffs an opportunity to return the disc if 15 they found the terms unsatisfactory. Id. at 1453. 16 Under Wisconsin law, ProCD enforced the license because “[the defendant] extended an 17 opportunity to reject if a buyer should find the license terms unsatisfactory; [the plaintiff] 18 inspected the package, tried out the software, learned of the license, and did not reject the 19 goods.” Id. at 1452–53. It emphasized that, regarding transactions for consumer goods, 20 “[n]otice on the outside, terms on the inside, and a right to return the software for a refund if 21 the terms are unacceptable (a right that the license expressly extends), may be a means of doing 22 business valuable to buyers and sellers alike.” Id. at 1451. ProCD rejected the conclusion that 23 general contract terms must be conspicuous to be enforceable. Id. at 1453. 24 In a later Seventh Circuit case, Hill v. Gateway 2000, Inc., 105 F.3d 1147, 1148 (7th Cir. 25 1997), the plaintiffs ordered and paid for a computer over the phone. The computer and a list 26 of terms were enclosed in a box that the defendant sent to the plaintiffs. Ibid. The outside of 27 the box, however, did not display a notice that additional terms were enclosed. Id. at 1150. 1 The terms stated that they would govern disputes between the parties unless the plaintiffs 2 returned the computer within thirty days. Id. at 1149. The plaintiffs did not return the 3 computer within thirty days. Ibid. The court followed ProCD and held that, under both 4 Illinois and South Dakota law, the plaintiffs accepted the offer “by keeping the computer 5 beyond thirty days.” Id. at 1150. 6 Here, the Quick Start Guide, but not the Terms and Conditions booklet, would likely 7 require arbitration of class members’ claims in states that follow ProCD and Hill. As to the 8 Quick Start Guide, it is enforceable as an in-the-box contract. Like in ProCD and Hill, in 9 which the terms inside the product boxes expressly provided an opportunity to opt out of 10 arbitration or to return the products, here, the Quick Start Guide inside defendant’s phone 11 boxes expressly provided an opportunity to opt out of the arbitration provision (Dkt. No. 199- 12 2). Although the Quick Start Guide was not obviously contractual, and the arbitration 13 provision was inconspicuous (ibid.), ultimately an arbitration provision need not be 14 conspicuous to be enforceable under ProCD. 86 F.3d at 1453. Notably, because Barraza 15 applied California and Missouri law — which require conspicuous terms — enforcing the 16 Quick Start Guide here does not conflict with Barraza. 17 Thus, all class members who made a purchase prior to May 18, 2014 and who, at the time 18 of such purchase, resided in states that follow ProCD and Hill would likely be subject to 19 arbitration, except for those who opted out of arbitration (which could be up to 1,099 persons) 20 (Dkt. No. 199-9, ¶ 10). These states follow ProCD and Hill: 21 • Delaware. Westendorf v. Gateway 2000, Inc., No. 16913, 2000 WL 307369, 22 at *2–3 (Del. Ch. Mar. 16, 2000); Rinaldi v. Iomega Corp., No. 98C-09-064- 23 RRC, 1999 WL 1442014, at *3–4 (Del. Super. Ct. Sept. 3, 1999). 24 • Florida. Salco Distributors, LLC v. iCode, Inc., No. 8:05-CV-642-T- 25 27TGW, 2006 WL 449156, at *2 (M.D. Fla. Feb. 22, 2006) (Judge James 26 Whittemore); see Dye v. Tamko Bldg. Prods., Inc., 908 F.3d 675, 682–84 27 (11th Cir. 2018); Chamberlain v. LG Electronics U.S.A., Inc., No. CV 17- 1 2046-MWF (PLAx), 2017 WL 3084270, at *4 (C.D. Cal. June 29, 2017) 2 (Judge Michael W. Fitzgerald). 3 • Illinois. Hill, 105 F.3d at 1149. 4 • Indiana. Sprint Sols., Inc. v. Aldridge, 50 F. Supp. 3d 1024, 1026 (S.D. Ind. 5 2014) (Judge Tanya Walton Pratt). 6 • Louisiana. O’Quin v. Verizon Wireless, 256 F. Supp. 2d 512, 516 (M.D. La. 7 2003) (Judge James Brady). 8 • Maine. Stenzel v. Dell Inc., No. Civ.A. CV-03-323, 2004 WL 1433657, at *3 9 (Me. Super. Ct. Mar. 11, 2004). 10 • Maryland. See Sprint Nextel Corp. v. Simple Cell Inc., 31 F. Supp. 3d 710, 11 712–13 (D. Md. 2014) (Judge Catherine C. Blake). 12 • New York. Brower v. Gateway 2000, Inc., 676 N.Y.S.2d 569, 572 (N.Y. 13 App. Div. 1998); see Chamberlain, 2017 WL 3084270, at *3. 14 • Rhode Island. Defontes v. Dell, Inc., 984 A.2d 1061, 1071 (R.I. 2009). 15 • South Dakota. Hill, 105 F.3d at 1149. 16 • Tennessee. MDB, LLC v. BellSouth Advert. & Pub. Corp., No. 3:07-CV-126, 17 2007 WL 2782287, at *3–4 (E.D. Tenn. Sept. 21, 2007) (Judge Thomas W. 18 Phillips). 19 • Washington. M.A. Mortenson Co., Inc. v. Timberline Software Corp., 140 20 Wash. 2d 568, 583–84 (2000); see Chamberlain, 2017 WL 3084270, at *4. 21 • West Virginia. Schultz v. AT & T Wireless Services, Inc., 376 F. Supp. 2d 22 685, 691–92 (N.D. W. Va. 2005) (Judge Frederick P. Stamp Jr.). 23 • Wisconsin. ProCD, 86 F.3d at 1450–51. 24 By contrast, the Terms and Conditions booklet is not enforceable because, unlike the 25 contracts in ProCD and Hill, it did not expressly extend a right to reject the terms. It contained 26 neither a return provision nor an opt-out clause. Defendant counterargues that its online 27 policies were incorporated into the Terms and Conditions booklet, and those online policies 1 contained a seven-day return provision (Reply Br. 11). But the failure to expressly state the 2 provision in the booklet rendered it insufficient to provide an opportunity to reject the terms. 3 Moreover, the Terms and Conditions booklet stated that opening the phone box, 4 activating the service, or starting an application constitutes acceptance, conflicting with the 5 online provision that failure to return a phone within seven days constitutes acceptance (Dkt. 6 No. 199-5). Thus, because the booklet stated that its terms control over conflicting outside 7 terms, the return provision on defendant’s website could not save it. 8 Additionally, even if the return policy did control, opening a phone box would not have 9 constituted acceptance because class members could not have reviewed the terms prior to 10 acceptance, as required under ProCD and Hill. Further, defendant’s argument that class 11 members ratified the booklet terms is meritless because ratification would not change the fact 12 that there was never a meaningful opportunity to reject the terms. 13 C. CLASS MEMBERS NEED NOT ARBITRATE UNDER CALIFORNIA LAW. 14 In California, “[a] party who is bound by a contract is bound by all its terms, whether or 15 not the party was aware of them.” Norcia v. Samsung Telecomms. Am., LLC, 845 F.3d 1279, 16 1284 (9th Cir. 2017). This is true even when the party did not read the contract. Ibid. 17 “[T]he essential elements for a contract are (1) ‘[p]arties capable of contracting;’ (2) 18 ‘[t]heir consent;’ (3) ‘[a] lawful object;’ and (4) ‘[s]ufficient cause or consideration.’” United 19 States ex rel. Oliver v. Parsons Co., 195 F.3d 457, 462 (9th Cir. 1999) (quoting Cal. Civ. Code 20 § 1550). “‘Mutual assent may be manifested by written or spoken words, or by conduct’ . . . .” 21 Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014) (citation omitted). “Courts 22 must determine whether the outward manifestations of consent would lead a reasonable person 23 to believe the offeree has assented . . . .” Ibid. 24 Regarding acceptance, our court of appeals has stated the following:

25 As a general rule, “silence or inaction does not constitute acceptance of an offer.” California courts have long held that “[a]n 26 offer made to another, either orally or in writing, cannot be turned into an agreement because the person to whom it is made or sent 27 makes no reply, even though the offer states that silence will be 1 Norcia, 845 F.3d at 1284 (citations omitted). “There are exceptions to this rule, however. An 2 offeree's silence may be deemed to be consent to a contract when the offeree has a duty to 3 respond to an offer and fails to act in the face of this duty.” Id. at 1284–85. “An offeree's 4 silence may also be treated as consent to a contract when the party retains the benefit offered.” 5 Id. at 1285. 6 But, “[e]ven if there is an applicable exception to the general rule that silence does not 7 constitute acceptance, courts have rejected the argument that an offeree's silence constitutes 8 consent to a contract when the offeree reasonably did not know that an offer had been made.” 9 Ibid. “An offeree, regardless of apparent manifestation of his consent, is not bound by 10 inconspicuous contractual provisions of which he was unaware, contained in a document 11 whose contractual nature is not obvious.” Windsor Mills, Inc. v. Collins & Aikman Corp., 25 12 Cal.App.3d 987, 993 (1972). 13 Finally, California does not follow ProCD or Hill with respect to in-the-box contracts. 14 Norcia, 845 F.3d at 1289. 15 Here, the California class members did not assent to the terms of the Quick Start Guide 16 or the Terms and Conditions booklet, so they need not arbitrate under California law. 17 Moreover, defendant has not shown that any class members manifested an intent to use silence 18 or failure to opt out as assent, such as by signing either of the pamphlets. Although defendant 19 provided each class member with a receipt that referred to an agreement to arbitrate, defendant 20 does not state that any class members signed such receipts or read them (Moses Decl., ¶ 7, 21 Exh. A). Thus, the class members’ silence did not equal acceptance. Further, defendant does 22 not argue that the class members had a duty to respond or retained any benefit by failing to act. 23 Finally, the pamphlets cannot be enforced as in-the-box contracts under California law. 24 Defendant argues that the class members had “a wide array of notice” regarding the 25 arbitration provisions (Br. 24). But defendant misunderstands Norcia. Norcia turned on assent 26 — not notice. See Norcia, 845 F.3d at 1285–86. Even if the class members here were on 27 notice of the arbitration provisions, there is no indication that they manifested assent to them. 1 Further, although some of defendant’s phone boxes stated that purchase, activation, or 2 use of the phones constituted agreement to the arbitration provision (Keser Decl., ¶ 6), Norcia 3 did not hold that such notice creates a contract. See Norcia, 845 F.3d at 1286–87. Moreover, 4 the references here to the terms were in fine print on the sides or the backs of the phone boxes. 5 Thus, even if notices on phone boxes could create contracts in some cases, here, the notices 6 were inconspicuous, and the phone boxes were not clearly contractual in nature. Barraza, 7 2015 WL 6689396, at *5. So there could not have been contract formation based on the phone 8 boxes alone. Windsor Mills, 25 Cal.App.3d at 993. 9 Additionally, although Barraza required a summary trial to resolve the contract 10 formation question, such a trial is unnecessary here because, unlike in Barraza, there is no 11 credibility issue here. 12 D. CLASS MEMBERS NEED NOT ARBITRATE UNDER THE LAWS OF THE REMAINING STATES. 13 Defendant has not met its burden to prove the existence of valid, written agreements to 14 arbitrate under the laws of the remaining states. 15 States that apply UCC Section 2-207 to in-the-box contracts treat such contracts as 16 additional terms to the agreement of purchase. Klocek v. Gateway, Inc., 104 F. Supp. 2d 1332, 17 1341 (D. Kan. 2000) (Judge Kathryn H. Vratil). Here, because the class members did not 18 expressly assent to the additional terms, the arbitration provision is unenforceable in states that 19 apply UCC Section 2-207. See ibid. 20 New Jersey follows ProCD and Hill in enforcing in-the-box contracts. See In re 21 Samsung Elecs. Am., Inc. Blu-Ray Class Action Litig., No. 08-0663 (JAG), 2008 WL 5451024, 22 at *4 n. 5 (D.N.J. Dec. 31, 2008) (Judge Joseph A. Greenaway, Jr.). But New Jersey does not 23 enforce “‘inconspicuous contractual provisions . . . contained in a document whose contractual 24 nature is not obvious . . . .’” Noble v. Samsung Elecs. Am., Inc., 682 F. App’x 113, 117 (3rd 25 Cir. 2017) (quoting Norcia, 845 F.3d at 1285). Thus, here, the Quick Start Guide’s arbitration 26 provision is unenforceable because it was inconspicuous, and the Terms and Conditions 27 1 booklet’s arbitration provision is unenforceable because it did not contain an express right of 2 rejection, as required under ProCD. 3 Because the remaining states “have not squarely considered terms-in-the-box contracts,” 4 the decisions of those states are distinguishable and unpersuasive here (Br. 17). This order 5 declines to interpret those jurisdictions’ laws under facts that they have not yet considered. 6 4. SCOPE OF THE ARBITRATION PROVISIONS. 7 The arbitration provision in the Quick Start Guide applied to claims “arising from or 8 relating in any way to this Agreement or Services provided to [the purchaser] under this 9 Agreement” (Dkt. No. 199-2). The arbitration provision in the Terms and Conditions booklet 10 applied to “claims arising out of or relating to any aspect of the relationship between [the 11 purchaser and defendant] . . . including . . . claims relating to advertising . . .” (Dkt. No. 199-5). 12 Because this dispute arises from defendant’s services and advertising practices, it falls within 13 the scope of both arbitration provisions, if enforceable. 14 5. DEFENDANT COMPLIED WITH THE DISCOVERY RULES. 15 Plaintiffs argue that defendant failed to identify Katie Keser in its initial disclosures, so 16 the Keser Declaration should be stricken (Opp. 25). Moreover, plaintiffs argue that defendant 17 did not produce the exhibits accompanying the Keser Declaration in response to plaintiffs’ 18 requests for production. Thus, plaintiffs argue that defendant was not permitted to use the 19 declaration or its accompanying exhibits to support its motion under FRCP 37(c)(1). 20 But defendant’s failure to identify Katie Keser in its initial disclosures was “substantially 21 justified” under FRCP 37(c)(1) because defendant’s initial witness, Roger Mahn, left his 22 employ with defendant one day before defendant’s motion was due (Russell Supp. Decl., ¶ 4). 23 Thus, defendant did not intend for Katie Keser to support its defenses until one day before its 24 motion was due, on which date defendant promptly substituted Katie Keser for Roger Mahn. 25 Moreover, although plaintiffs had requested “[d]ocuments concerning the packaging of 26 4G LTE capable devices sold by [defendant],” the failure to produce those documents at 27 discovery was “harmless” under FRCP 37(c)(1) (Hudson Decl., Exh. C at 27). In Hill, the 1 enforced the terms inside the product box. 105 F.3d at 1150. Thus, here, even if defendant 2 could not have used the exhibits to show that the phone boxes displayed a notice of in-the-box 3 terms, the findings above would have been the same. Accordingly, this order does not strike 4 the Keser Declaration or its accompanying exhibits. 5 CONCLUSION 6 There is one group of class members whom this order excludes from the class definition: 7 • All class members who made a purchase prior to May 18, 2014 and who, at 8 the time of purchase, resided in states that follow ProCD and Hill, namely 9 Delaware, Florida, Illinois, Indiana, Louisiana, Maine, Maryland, New York, 10 Rhode Island, South Dakota, Tennessee, Washington, West Virginia, and 11 Wisconsin, except for those who opted out of arbitration. 12 This order makes clear that the persons in the group above are not being required to 13 arbitrate. Rather, those persons are being excluded from the class as a concession to efficient 14 administration of this case because it is likely that they would be required to arbitrate. Those 15 excluded persons will be free to bring suit later and litigate arbitrability issues individually. 16 The burden is on defendant to name each and every person excluded from the class and to 17 do so within 21 calendar days of this order. Additionally, a notice must be sent to the excluded 18 persons to apprise them that they are no longer in any proposed class. Counsel for the parties 19 must meet and confer to determine the best way to provide such notice. 20 The class definition is now as follows:

21 All persons in the United States with a customer address in a geographic market with no Cricket 4G/LTE network coverage who 22 purchased from Cricket a 4G/LTE monthly plan for service on LegacyCricket’s network, or later activated a 4G/LTE plan with 23 the device for service on LegacyCricket’s network: (1) between November 1, 2012 and May 17, 2014, having a customer address 24 in the state of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Georgia, Hawaii, Idaho, Iowa, Kansas, 25 Kentucky, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New 26 Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Utah, 27 Vermont, Virginia, or Wyoming; or (2) between May 18, 2014 and 1 Finally, there is another motion to compel arbitration pending in this case, which may 2 further alter the class definition based on the first and second exclusions in the class 3 certification order. FRCP 23(c)(2)(B) notice will be delayed until after that motion is resolved. 4 5 IT ISSO ORDERED. 6 7 Dated: January 20, 2022. Pee 8 A = WILLIAM ALSUP 9 SENIOR UNITED STATES DISTRICT JUDGE 10 11 12

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