Consumer Appellees Urge 9th Circuit to Affirm Denial of Verizon’s Motion to Compel

Verizon’s appeal of the July 1 district court decision denying its motion to compel the dispute of 27 California consumers to arbitration “is about an arbitration agreement that goes too far,” said the consumers’ answering brief Friday (docket 22-16020) in the 9th U.S. Circuit Appeals Court. The case originated from a November 2021 class action challenging Verizon’s “bait-and-switch scheme” in which it allegedly padded consumers’ monthly wireless bills with a secretive “administrative charge” that kept climbing higher and higher above the flat monthly rates it was advertising.

U.S. District Judge Edward Chen for Northern California, who denied Verizon’s motion to compel, “was shocked by the content” of the arbitration agreement and “correctly refused to compel arbitration under its illusory, unconscionable and inseverable terms,” said the brief. An arbitration agreement “that requires claimants to wait decades or longer for a hearing, allows statutes of limitation to tick away and subjects claimants to unlawful restrictions on what evidence they can obtain and what damages they can seek is not an alternative to litigation,” it said.

The 9th Circuit should affirm Chen’s denial, said the brief. The arbitration process that Verizon is attempting to foist upon the consumers “is an inferior and unfair forum that violates claimants’ rights under federal and state law,” it said.

The case’s “bottom line” is that Verizon “ignored its obligations under federal and state law to structure an arbitration system in which arbitrations occur fairly and in a reasonable time,” said the brief. Under Verizon’s arbitration formula, claimants would be subject to “a waiver of the right to seek punitive damages and public injunctive relief,” it said. Its terms include “a one-sided exculpatory clause that prohibits claimants -- but not Verizon -- from submitting relevant evidence,” it said.

Verizon failed to draft “a clear and unmistakable delegation of authority to the arbitrator to decide threshold issues of arbitrability,” said the brief. The district court “correctly exercised its discretion in refusing to sever the many unlawful provisions and instead declaring the arbitration agreement as a whole unenforceable,” it said. Verizon’s opening brief didn’t present “a specific and distinct argument as to why the district court’s findings of fact were clearly erroneous,” it said.

The 9th Circuit must analyze the delegation clause and the arbitration agreement “as they were written, not as Verizon is attempting to change them on the fly,” said the brief. The plaintiffs contend the delegation clause and the arbitration agreement “are unconscionable or otherwise unenforceable,” it said.

The district court was correct when it asserted that assessing unconscionability, the court must examine the validity of a contractual provision “as of the time of the contract is made,” said the brief. California law “prohibits a party from avoiding an unconscionability determination through the ploy of waiving the unlawful provision,” it said.

The 9th Circuit “must review and pass judgment” on Verizon’s delegation clause and the arbitration agreement “as they were written,” said the brief. It’s required “to disregard Verizon’s after-the-fact pledge that it will toll the limitations period for customers who have served notice or filed suit,” it said. The 9th Circuit similarly is required to reject Verizon’s attempts to “surreptitiously amend” the agreement by interpreting a clause “to mean something other than what it says,” it said.