Cottrell v. AT&T Inc.

Background

The court had previously denied a motion by AT&T Inc., Pacific Bell Telephone Co., and DIRECTV, LLC to compel arbitration. It nevertheless stayed, or paused, the case because two petitions asked the Supreme Court to review whether the Federal Arbitration Act preempted California’s rule against waiving a plaintiff’s right to seek public injunctive relief under McGill v. Citibank, N.A.

The Supreme Court denied both petitions on June 1, 2020. AT&T then filed a notice of appeal to the Ninth Circuit from the court’s earlier order. In a joint status report, Cottrell argued that the stay should be lifted because the Supreme Court proceedings had ended. AT&T argued that the court should continue the stay for reasons related to its appeal.

Court’s analysis

The court treated AT&T’s position as a new request for a stay pending appeal. Such a stay is discretionary. The court considered whether AT&T had shown a strong likelihood of success on appeal or serious legal questions, whether AT&T would suffer irreparable harm without a stay, whether a stay would substantially harm the other parties, and where the public interest lay.

The court was not persuaded that AT&T had shown either a likelihood of success or serious legal questions. AT&T did not dispute that its arbitration agreement prohibited public injunctive relief in violation of McGill. Instead, AT&T argued that the court should not reach that issue. The court concluded that, based on the complaint, Cottrell sought broad injunctions against future violations of California consumer-protection laws. It found that this relief was directed toward the benefit of the general public. Cottrell’s request to represent a narrower group of existing AT&T customers did not change that conclusion because, under California law, public injunctive relief can be sought through an individual claim.

The court also concluded that the public interest did not favor enforcing a contract provision that plainly violated California law. It noted that AT&T’s agreement contained a provision making the arbitration agreement stand or fall as a whole with the waiver of public injunctive relief. The court found that Cottrell’s interest in proceeding outweighed AT&T’s interest in continuing the stay.

Disposition

Judge Joseph C. Spero denied AT&T’s request to continue the stay. The court lifted the stay imposed by its May 27, 2020 order. It left the initial case-management conference set for August 14, 2020 on the calendar and ordered the parties to file a joint case-management statement by August 7, 2020.