‘Cutting-Edge Issues’ Demand More Time to Answer Verizon Appeal: Plaintiffs

The 27 plaintiff-appellees in Verizon’s 9th Circuit appeal of a district court’s denial of its motion to compel arbitration seek a 65-day extension to Feb. 24 to file their answering brief, said their unopposed motion Thursday (docket 22-16020). The plaintiff-appellees don’t deny that arbitration terms existed in their customer agreements when they signed up for Verizon service, but U.S. District Judge Edward Chen for Northern California in San Francisco agreed with them in a July 1 order that the arbitration provisions were unconscionable and unenforceable.

The deadline extension “is justified by the number of cutting-edge issues raised in the appeal,” plus the “historical issues raised” in two amicus briefs that supported Verizon’s position, said the motion. The plaintiffs initiated their class action alleging Verizon engages in a false advertising scheme by padding consumers’ bills with an “invented and undisclosed” administrative charge through which it collected more than $1 billion from its California subscribers.

More time is required to file an answering brief, “based on two, interconnected demonstrations of substantial need,” said the motion. Verizon’s appeal “raises at least two cutting-edge issues of arbitration law that need additional time to address,” plus the Nov. 28 amicus briefs, one from the U.S. Chamber of Commerce, the second from the California Employment Law Council, “raise a separate historical inquiry into the use and characteristics of bellwether proceedings,” it said.

Verizon’s appeal “is on track to be the first case in which a federal appellate court will decide whether the recent Supreme Court opinion in Viking River Cruises v. Moriana preempts a California rule of contract law called the McGill rule, named after the 2017 decision in McGill v. Citibank, said the motion. Plaintiffs maintain that the McGill rule is “a generally applicable contract defense” that, per Section 2 of the Federal Arbitration Act, “can render an arbitration agreement unenforceable,” it said. The 9th Circuit reached the same conclusion in its 2019 decision in Blair v. Rent-A-Center, it said.

Verizon, and the “corporate defense bar as a whole,” contends that Viking River resulted in the implied overruling of Blair, said the motion. The determination of whether a recent SCOTUS decision “overturned by implication” a 9th Circuit precedent “is a new and important appellate question where the research and briefing should not be rushed,” it said.

This is also a topic where the 9th Circuit “could benefit from a reasonable delay,” said the motion. During the delay, district courts may issue opinions on the topic that could inform the 9th Circuit’s analysis, it said. To date, the Chen order being appealed in the Verizon case “is the only district court order to have addressed the question,” it said.

A second cutting-edge issue in Verizon’s appeal involves what is sometimes called a “mass arbitration” clause, said the motion. Mass arbitration clauses are a “new innovation” that emerged about three years ago under which a corporation attempts to severely limit the number of demands for arbitration that can proceed against it “at any one time,” it said. Verizon, in the case at hand, amended its customer agreement in 2021 to require that demands for arbitration against Verizon “proceed in batches of 10 under certain circumstances,” it said.

Verizon’s appeal “is on track to be the first case in which a federal appellate court will pass judgment on the legality of mass arbitration clauses in general and Verizon’s clause specifically,” said the motion. The 9th Circuit’s decision in Verizon’s appeal “will have ramifications throughout the plaintiff’s bar and its opponents in the corporate defense bar,” it said.

The two amicus briefs filed highlight the interest in and complexity of Verizon’s appeal when they discuss “the historical use of bellwether proceedings to assist in the resolution of controversies that involve a large number of claims,” said the motion. Verizon, the Chamber and the Law Council “take the position that Verizon’s mass arbitration provision creates a bellwether proceeding,” it said. The plaintiffs and Chen’s order disagree, it said.

A bellwether proceeding “preserves individualized arbitration by ensuring that parties can feasibly be heard on the merits while encouraging an orderly settlement process,” said the Chamber’s brief. “Mass arbitrations are ripe for abuse, leading to blackmail settlements,” it said. A bellwether process “defangs that threat,” it said. Chen’s order “erred in ignoring these benefits,” it said.

The plaintiffs’ answering brief “will need to address the history and characteristics of a true bellwether proceeding,” said the motion. “This will require some additional time.” The plaintiffs are filing their motion for an extension within days of receiving the two amicus briefs, and only a week and a half after Verizon filed its opening brief, it said. The plaintiffs “are staying ahead of the situation and are not waiting until the last moment to request extra time,” it said.