NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAY 4 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ARTHUR MERKIN; JAMES SMITH, No. 14-55397
individually and on behalf of all others
similarly situated, and on behalf of the D.C. No. 2:13-cv-08026-CAS-
general public, MRW
Plaintiffs - Appellees,
MEMORANDUM*
v.
VONAGE AMERICA, INC.,
Defendant - Appellant.
Appeal from the United States District Court
for the Central District of California
Christina A. Snyder, District Judge, Presiding
Argued and Submitted February 2, 2016
Pasadena, California
Before: WARDLAW and HURWITZ, Circuit Judges and RICE,** Chief District
Judge.
In this putative class action, Arthur Merkin and James Smith (“Plaintiffs”)
allege that Vonage America, Inc. (“Vonage”) violated California law by charging
*
This disposition is not appropriate for publication and is not precedent except
as provided by 9th Cir. R. 36-3.
**
The Honorable Thomas O. Rice, Chief United States District Judge for the
Eastern District of Washington, sitting by designation.
certain fees in connection with its Voice over Internet Protocol service. Vonage
filed a motion to compel arbitration pursuant to its Terms of Service. The district
court denied the motion, and Vonage timely appealed. We have jurisdiction under
9 U.S.C. § 16(a)(1)(B) and reverse with directions to grant the motion.
1. We reject Vonage’s argument that the district court should have referred
to the arbitrator the Plaintiffs’ contention that the arbitration provision in the Terms
of Service was unconscionable. “[W]hen a plaintiff’s legal challenge is that a
contract as a whole is unenforceable, the arbitrator decides the validity of the
contract,” but “when a plaintiff argues that an arbitration clause, standing alone, is
unenforceable . . . that is a question to be decided by the court.” Bridge Fund
Capital Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1000 (9th Cir. 2010).
Plaintiffs’ challenge was clearly directed at the arbitration provision.
2. “Under California law, a contract must be both procedurally and
substantively unconscionable to be rendered invalid.” Chavarria v. Ralphs
Grocery Co., 733 F.3d 916, 922 (9th Cir. 2013); see also Sanchez v. Valencia
Holding Co., 353 P.3d 741, 748 (Cal. 2015) (“[P]rocedural and substantive
unconscionability must both be present.”) (alterations omitted). We agree with the
district court that the arbitration provision in the Vonage Terms of Service is
procedurally unconscionable because it is adhesive, Sanchez, 353 P.3d at 751, and
can be unilaterally modified by Vonage. See Westlye v. Look Sports, Inc., 22 Cal.
2
Rptr. 2d 781, 792 (Ct. App. 1993) (describing procedural unconscionability as
arising in situations where there is “no real negotiation and an absence of meaningful
choice”); Chavarria, 733 F.3d at 923 (explaining that the Ninth Circuit has held,
when applying California law, that the “degree of procedural unconscionability is
enhanced when a contract binds an individual to later-provided terms”).
3. In the district court, Plaintiffs identified several provisions of the
arbitration agreement in the 2013 Terms of Service as substantively
unconscionable.1 The only provision among those challenged below asserted on
appeal to be substantively unconscionable is Section 14.10, which exempts certain
categories of claims from arbitration. We therefore address only that provision.
See Collins v. City of San Diego, 841 F.2d 337, 339 (9th Cir. 1988) (“It is well
established in this Circuit that claims which are not addressed” on appeal “are
deemed abandoned.”).
4. Assuming arguendo that Section 14.10 is unconscionable, “[w]here . . .
only one provision of the agreement is found to be unconscionable and that provision
can easily be severed without affecting the remainder of the agreement, the proper
1
The unilateral modification clause of the 2013 Terms of Service was not
among the provisions that Plaintiffs claimed were substantively unconscionable.
The district court only cited that clause, however, in finding procedural
unconscionability.
3
course is to do so.”2 Dotson v. Amgen, Inc., 104 Cal. Rptr. 3d 341, 350 (Ct. App.
2010) (finding an abuse of discretion for refusing to sever such a provision). The
district court therefore erred by “declin[ing] to sever the offending provision.”
5. The order of the district court denying Vonage’s motion to compel
arbitration is REVERSED, and this case is REMANDED with instructions to grant
the motion.
2
Because the district court did not find Vonage’s unilateral modification clause
substantively unconscionable, we do not address whether the alleged
unconscionability of a unilateral modification provision is a basis for declining to
sever any other unconscionable provisions in an arbitration agreement.
4