Hodges v. Comcast Cable Commc'ns, LLC

21 F.4th 535

Brandon HODGES, Plaintiff-Appellee,

v.COMCAST CABLE COMMUNICATIONS, LLC, a Delaware limited liability company, Defendant-Appellant.

No. 19-16483

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 1, 2020 Portland, Oregon

Filed September 10, 2021

Amended December 23, 2021

Mark A. Perry (argued) and Joshua M. Wesneski, Gibson Dunn & Crutcher LLP, Washington, D.C.; Michael W. McTigue Jr., Meredith C. Slawe, and Seamus C. Duffy, Akin Gump Strauss Hauer & Feld LLP, Philadelphia, Pennsylvania; Michael J. Stortz, Akin Gump Strauss Hauer & Feld LLP, San Francisco, California; for Defendant-Appellant.

Karla Gilbride (argued), Public Justice P.C., Washington, D.C.; Ray Gallo, Gallo LLP, San Francisco, California; Hank Bates and David Slade, Carney, Bates & Pulliam PLLC, Little Rock, Arkansas; for Plaintiff-Appellee.

Gary B. Friedman, Los Angeles, California; Professor Myriam E. Gilles, Benjamin N. Cardozo School of Law, New York, New York; for Amici Curiae Civil Procedure and Arbitration Law Professors.

Roger N. Heller and Ian R. Bensberg, Lieff Cabraser Heimann & Bernstein LLP, San Francisco, California, for Amici Curiae Consumer Organizations.

Before: Marsha S. Berzon, Daniel P. Collins, and Lawrence VanDyke, Circuit Judges.

Order;

Opinion by Judge Collins ;

Dissent by Judge Berzon

ORDER

The dissenting opinion of Judge Berzon, previously published at 12 F.4th 1108, 1122–26, is replaced by the accompanying amended dissent. The majority opinion previously published at 12 F.4th 1108 remains unchanged.

Judges Collins and VanDyke have voted to deny the petition for panel rehearing and the petition for rehearing en banc (Dkt. No. 58). Judge Berzon has voted to grant the petition for panel rehearing and the petition for rehearing en banc. The full court has been advised of the petition for rehearing en banc, and no judge has requested a vote on whether to rehear the matter en banc. See Fed. R. App. P. 35. The petition for panel rehearing and the petition for rehearing en banc, filed October 22, 2021, are DENIED. No further petitions for rehearing or rehearing en banc will be entertained.

AMENDED OPINION

COLLINS, Circuit Judge:

Comcast Cable Communications, LLC ("Comcast") appeals the district court's denial of its motion to compel arbitration of the claims asserted against it by former cable subscriber Brandon Hodges. Hodges brought this putative class action challenging certain of Comcast's privacy and data-collection practices and seeking a variety of monetary and equitable remedies. The district court held that, because Hodges' complaint sought "public injunctive relief" as one of its requested remedies, the complaint implicated the so-called " McGill rule," under which a contractual provision that waives the right to seek "public injunctive relief" in all forums is unenforceable. McGill v. Citibank, N.A. , 2 Cal.5th 945, 216 Cal.Rptr.3d 627, 393 P.3d 85, 87 (2017). The parties did not dispute that, if the relief Hodges seeks is classified as public injunctive relief, the non-severable arbitration provisions of Hodges' subscriber agreements with Comcast did seek to waive that public injunctive relief in any forum. Accordingly, the district court held that those provisions were unenforceable under McGill. We conclude that the district court misconstrued what counts as "public injunctive relief" for purposes of the McGill rule and that it therefore erred in concluding that the complaint here sought such relief. Because Hodges' complaint did not seek such relief, the McGill rule is not implicated, and the arbitration agreement should have been enforced. We therefore reverse the district court's denial of Comcast's motion to compel.

I

Between October 2015 and January 2018, Hodges subscribed to Comcast's cable television services at his home in Oakland, California. In February 2018, Hodges filed a complaint in California state court on behalf of a putative class of California residential Comcast subscribers, alleging that Comcast violated class members' statutory privacy rights in collecting "data about subscribers' cable television viewing activity" as well as "personally identifiable demographic data about its subscribers." Specifically, Hodges alleged that Comcast violated the Cable Communications Policy Act of 1984 ("Cable Act"), by (1) failing to clearly inform subscribers of how long Comcast would keep such information; (2) failing to provide subscribers with access to this information upon request; and (3) failing to obtain subscribers' consent before gathering information about viewing activity. See 47 U.S.C. § 551(a)(1)(C), (b), (d). Hodges also alleged that Comcast violated the California Invasion of Privacy Act ("CIPA"), by (1) failing to obtain subscribers' consent before using its cable boxes to collect viewing activity; and (2) failing to disclose, within 30 days of a subscriber request, "individually identifiable subscriber information" Comcast had collected. CAL. PEN. CODE § 637.5(a)(1), (d). In addition, Hodges asserted that the same five violations of the Cable Act and CIPA constituted "unlawful" business practices, thereby giving rise to a derivative cause of action under California's unfair competition law ("UCL"), CAL. BUS. & PROF. CODE § 17200 et seq. On behalf of himself and the putative class, Hodges sought liquated, statutory, and punitive damages; seven specified forms of "statewide public injunctive relief"; and attorney's fees.

Comcast removed the case to the U.S. District Court for the Northern District of California based on federal question jurisdiction, see 28 U.S.C. § 1331, and diversity jurisdiction under the Class Action Fairness Act, id. § 1332(d). Noting that each version of Hodges' various "Subscriber Agreements" with Comcast contained an arbitration provision, Comcast then moved to compel arbitration. Hodges opposed the motion, arguing that the arbitration provision was unenforceable under McGill because its non-severable "Waiver of Class Actions and Collective Relief" impermissibly deprived Hodges of the right to pursue public injunctive relief in any forum.¹ In reply, Comcast argued that McGill was inapplicable because Hodges was not seeking public injunctive relief and that, in any event, the McGill rule is preempted by the Federal Arbitration Act ("FAA").

Because the question of whether McGill was preempted by the FAA had already been raised in several cases before this court, the district court stayed the case pending our resolution of that issue. After we held in Blair v. Rent-A-Center, Inc. , 928 F.3d 819, 822 (9th Cir. 2019), that the FAA did not preempt the McGill rule, the district court denied Comcast's motion to compel arbitration. Comcast filed an interlocutory appeal challenging the district court's ruling, and we have jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(B).

II

Section 2 of the FAA provides that

[a] written provision in ... a contract ... to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2. The Supreme Court has "described this provision as reflecting both a liberal federal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract." AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (citations omitted). "In line with these principles, courts must place arbitration agreements on an equal footing with other contracts and enforce them according to their terms." Id. (simplified). The final clause of § 2—the "saving clause"—confirms that arbitration agreements, like any other contract, can be invalidated on generally applicable grounds "for the revocation of any contract." 9 U.S.C. § 2. But arbitration agreements may not be invalidated "by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." Concepcion , 563 U.S. at 339, 131 S.Ct. 1740.

This case involves one such ground for contractual invalidation under California law, viz. , the so-called " McGill rule." Under that rule, insofar as a contractual provision "purports to waive [a party's] right to request in any forum ... public injunctive relief, it is invalid and unenforceable under California law." McGill , 216 Cal.Rptr.3d 627, 393 P.3d at 94. We held in Blair that "the FAA does not preempt the McGill rule," 928 F.3d at 830–31, and we therefore reject Comcast's contrary arguments here. The only remaining question before us, then, is whether Comcast's enforcement of the Subscriber Agreement in this case violates the McGill rule. We conclude that, because Hodges' complaint does not seek public injunctive relief, the McGill rule is not implicated and that rule therefore does not bar enforcement of the arbitration provision.

A

As an initial matter, Hodges argues that, in addressing whether the McGill rule is implicated in this case, it is irrelevant whether his complaint "actually includes a claim" for public injunctive relief. All that matters, in his view, is whether the Subscriber Agreement's language theoretically purports to waive public injunctive relief in any case. This argument is foreclosed by McGill itself. In addressing whether the contract in that case was unenforceable, the California Supreme Court stated that, in "answering this question, we first conclude that McGill's complaint does, in fact, appear to seek ... public injunctive relief." 216 Cal.Rptr.3d 627, 393 P.3d at 90 (emphasis added). And in Mejia v. DACM Inc. , 54 Cal.App.5th 691, 268 Cal. Rptr. 3d 642 (2020), the California Court of Appeal likewise began its analysis of the applicability of the McGill rule by addressing whether the operative complaint actually sought public injunctive relief in the first place. See id. at 650–53 (holding that the complaint did seek such relief and that McGill...