Calif. Judge Grants SiriusXM Motion to Compel Fraud Claims to Arbitration

U.S. District Judge William Orrick for Northern California in San Francisco granted SiriusXM’s motion to compel the fraud claims of class-action plaintiffs Ayana Stevenson, David Ambrose and Lisa Ramirez to arbitration (see 2309050054), said his signed order Thursday (docket 3:23-cv-02367). The judge granted the plaintiffs’ request to dismiss the case without prejudice so that they may immediately appeal.

The plaintiffs allege that SiriusXM falsely advertised its music plans at lower prices than it actually charges. They opposed SiriusXM’s motion to compel, arguing that provisions in their customer agreement’s “class action waiver” violate California public policy, are unenforceable, and as a result trigger a “poison pill” -- a non-severability clause in the waiver -- nullifying the entire arbitration agreement.

But the plaintiffs’ arguments fail because they challenge a provision of the class action waiver that doesn’t apply to them and because the waiver doesn’t “bar them from recovering public injunctive relief in any forum,” said the judge’s order. Notwithstanding the arbitration provisions in the customer agreement, customers may opt out of arbitration by sending SiriusXM a timely opt-out notice, it said. None of the plaintiffs “exercised that option,” it said.

If a valid arbitration clause exists, “arbitration is mandatory,” said the judge’s order. The plaintiffs don’t contest that they each accepted and agreed to the customer agreement, and that if the agreement’s arbitration clause is enforceable, “then their claims would fall within the scope of the arbitration clause,” it said.

The plaintiffs contend that the arbitration agreement isn’t enforceable because of the class action waiver, said the judge’s order. But the plaintiffs “lack standing to challenge the class action waiver on behalf of consumers who have opted-out,” it said. “To assert a right or challenge a violation of a right under a particular provision of a contract, the individual must have been affected by or interacted with the particular provision,” it said.

California courts “follow that limitation on standing and routinely decline to reach the legality of contractual provisions that do not apply to the plaintiff in front of them,” said the judge’s order. In the June 2017 decision in Wright v. SiriusXM, said the order, the Central District of California held that a provision allowing SiriusXM to sue for non-payment didn’t apply to the plaintiff, so the plaintiff couldn’t challenge the arbitration agreement on the basis of that provision.

Cases like that “are on point,” said the order. The plaintiffs “lack standing to assert claims about provisions of arbitration agreements that do not apply to them,” it said. The plaintiffs counter that unconscionability “should be assessed prospectively, from the time of contracting,” it said. That would give plaintiffs here, who didn’t opt out, standing to challenge the class action waiver in court on behalf of those who opted out, it said.

The plaintiffs contend that because the poison pill doesn’t contain language stating that it can only be enforced by a plaintiff who is subject to one of the arbitration agreement’s unlawful clauses, that omission means that they can enforce the poison pill themselves, said the judge’s order. But the authority that the plaintiffs cite doesn’t support their position “that any party may challenge any provision in a contract,” even if that provision doesn’t apply to them, it said. Since the plaintiffs didn’t opt-out of arbitration, they will never be subject to a provision of the customer agreement that only applies to SiriusXM customers who did, it said.