Free Brief - District Court of California - California

Case 4:07-cv-03407-CW

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MICHAEL J. STORTZ (SBN #139386) [email protected] BETH O'NEAL ARNESE (SBN #241186) [email protected] DRINKER BIDDLE & REATH LLP 50 Fremont Street 20th Floor San Francisco, CA 94105-2235 Telephone: (415) 591-7500 Facsimile: (415) 591-7510 Attorneys for Defendant AT&T MOBILITY LLC UNITED STATES DISTRICT COURT

9 NORTHERN DISTRICT OF CALIFORNIA 10 11 12 13 Plaintiffs, 14 v. 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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LOUIS JIRAN AND DELORES GRESHAM, individually and on behalf of a class of similarly situated individuals,

Case No. C-08-00013 CW BRIEF IN SUPPORT OF JOINT MOTION TO STAY

AT&T MOBILITY, LLC d/b/a The New AT&T f/k/a CINGULAR WIRELESS, a Delaware limited liability company, VERISIGN, INC., a Delaware corporation, M-QUBE, INC., a Delaware corporation, MBLOX, INC., a Delaware corporation, and MOBILE MESSENGER AMERICAS, INC., a Delaware corporation, Defendants. BABAK PISHVAEE, individually, and on behalf of a class of similarly situated individuals, Plaintiffs, v. VERISIGN, INC., a California corporation, M QUBE, INC., a Delaware corporation, and AT&T MOBILITY LLC, formerly known as Cingular Wireless LLC, a Delaware corporation, Defendants.
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Date: September 4, 2008 Time: 2:00 p.m. Courtroom: 2, 4th Floor

Case No. C-07-3407 CW

CASE NO. C-08-00013 CW

Case 4:07-cv-03407-CW

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I. INTRODUCTION Defendant AT&T Mobility LLC ("AT&T Mobility") and Plaintiffs Louis Jiran, and Delores Gresham jointly request a stay of all pretrial proceedings in the above-captioned Pishvaee and Jiran actions as they relate to the claims of putative class members against AT&T Mobility.1 A stay is warranted because preliminary approval has been granted of a refund settlement that encompasses all claims against AT&T Mobility in this action. As previously reported to the Court in the parties' Stipulation dated June 12, 2008, the national settlement arises out of a parallel class action pending before the Superior Court of Fulton County, Georgia and captioned McFerren v. AT&T Mobility LLC, No. 2008-EV-004400F. On May 30, 2008, the McFerren Court preliminarily approved the settlement, and set a hearing date of December 8, 2008 for final approval of the settlement. This Court should stay these matters pending a decision from the McFerren Court regarding final approval of the national refund settlement. If the McFerren court grants final approval, the claims of putative class members against AT&T Mobility in these actions would be barred by res judicata, and further litigation would be an inefficient use of resources. A stay also would preserve the benefits of the settlement to AT&T Mobility. In addition, plaintiffs here will not be prejudiced by a stay. In the event the McFerren settlement is not finally approved,2 Plaintiffs here will suffer no significant delay in pursuing their claims. And in any circumstance, Plaintiffs in these actions have ample opportunity to opt out from the McFerren settlement, or to present any objections to the settlement to the McFerren Court.

This motion relates only claims asserted against AT&T Mobility in the Pishvaee and Jiran matters and does not encompass the Bradberry and Valdez related cases. The final approval hearing in the McFerren action is scheduled for December 8, 2008. See Arnese Decl. ¶ 4, Ex. C.
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II. BACKGROUND A. The Pishvaee and Jiran Cases. On June 28, 2007, Plaintiff filed the Pishvaee matter in this Court. On October 16, 2007, Plaintiffs filed the Jiran matter in San Francisco Superior Court. Defendants removed the Jiran case to federal court on January 2, 2008. Both the Pishvaee and Jiran complaints stem from factual allegations related to AT&T Mobility's alleged practice of recycling telephone numbers that are encumbered with third-party charges and/or subscription agreements. Pishvaee Compl. ¶¶ 10-17; Jiran Compl. ¶¶ 1-2, 15-56. Both Jiran and Pishvaee are putative class actions involving so-called "recycled" cellular telephone numbers, i.e., numbers that allegedly "were previously owned and/or used by other persons or entities." Pishvaee First Amended Complaint at ¶ 10; Jiran Complaint at ¶ 1. Plaintiffs allege that due to such "recycled numbers," they and putative class members were charged for wireless content services "that were never authorized by the current owners of affected phone numbers." Pishvaee First Amended Complaint at ¶¶ 10-11; Jiran Complaint at ¶¶ 1-2. Plaintiffs in both actions bring individual and putative class claims under California common law and California statute, including putative claims under California Public Utility Code Section 2890 and California Business & Professions Code Section 17200. Plaintiff in Pishvaee purports to represent a putative class "consisting of all wireless telephone subscribers in California and the nation who were billed by Defendants m-Qube and Cingular for products or services not authorized by the existing owner of the telephone number." Pishvaee First Amended Complaint ¶ 18. Plaintiffs in Jiran purport to represent two classes: (1) "a class consisting of all AT&T wireless telephone subscribers in the nation who were charged by AT&T for mobile content services where the date of authorization for such charges preceded the date that the telephone number was assigned by AT&T to such subscriber"; and (2) "a class consisting of all wireless telephone subscribers in the nation who were charged by VeriSign, m-Qube, Mobile Messenger and/or MBlox for mobile content services where the date of authorization for such charges
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preceded the date that the telephone number was assigned to such subscriber by his or her wireless carrier." Jiran Complaint at ¶ 93. B. The Settlement Plaintiff Tracie McFerren filed a complaint captioned McFerren v. AT&T Mobility LLC, No. 2008-EV-004400F in Fulton County, Georgia. See Arnese Decl. ¶ 2, Ex. A. In her complaint, Plaintiff McFerren alleges claims for damages and injunctive and declaratory relief against AT&T Mobility arising out of the billing of mobile content provided by third parties, such as ringtones, wallpaper, news and information alerts, and other digital and electronic content, to A&T Mobility wireless telephone subscribers. Id. On May 30, 2008, the McFerren Court preliminarily approved a settlement that provides comprehensive relief on the claims of putative class. The Settlement Class is defined as "all current and former AT&T Mobility Account Holders Nationwide who, at any time from January 1, 2004 to the Notice Date, were billed for Third Party Mobile Content." Arnese Decl. ¶¶ 3-4, Exs. B-C. The settlement provides the class with refunds equal to the amount of all unauthorized third-party mobile content charges, including charges due to recycled numbers. Id. AT&T Mobility has also agreed to take steps to inform its customers about mobile content and methods for its customers to dispute unauthorized charges and cancel mobile content subscriptions. Id. The hearing for final approval of the settlement is scheduled for December 8, 2008. The McFerren settlement releases all claims of AT&T Mobility subscribers relating to any charge for mobile content and involving "any allegation on any basis that such charge was unauthorized." Such claims include the claims asserted by plaintiffs in these actions ­ that the charges "were the result of receiving a `recycled' cellular telephone number." Settlement Agreement at 9, attached to Arnese Decl. at Ex. B. In their most recent Stipulated request to continue, filed June 12, 2008, the parties notified this Court that Judge Bonner had granted preliminary approval of the national settlement in the McFerren matter. The parties further explained that the settlement would resolve the claims of both Plaintiffs and the proposed class against AT&T Mobility in these actions. The parties also attached the order from the McFerren Court granting preliminary approval to the stipulation.
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III. ARGUMENT A. The Court Should Stay this Action Based on the Principles of Comity and Efficiency. Federal courts routinely grant stays of purported class actions pending final approval of a class-wide settlement proposed in a parallel state court action where the claims are overlapping. See Landis v. North American Co., 299 U.S. 248, 254 (1936) ("[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants."); see also Dibel v. Jenny Craig, Inc., Case No. 06-CV-2533 BEN (AJB), 2007 U.S. Dist. LEXIS 58573, at *5-6 (S.D. Cal. Aug. 10, 2007) (citing Landis) (ordering stay of case until resolution of the final approval hearing in state court action "in the interests of judicial economy and orderly disposition of this case, as well as the direct correlation with the abstention principles . . ."); Kramer v. Pearson, Civ. No. 03-1166 (JRT/FLN), 2003 U.S. Dist. LEXIS 11730, at *6 (D. Minn, July 9, 2003) (citing Landis) (finding "a wise use of judicial resources to stay [the federal] action pending resolution of settlement and class certification issues in [the state court proceeding]"); Board of Trustees of Teachers' Retirement System of Illinois v. Worldcom, Inc., 244 F. Supp. 2d 900, 905-06 (N.D. Ill. 2002) (granting stay of proceedings to promote judicial economy); cf. In re RC2 Corp. Toy Lead Paint Products Liability Litigation, Case No. 07 C 7184, MDL No. 1893, 2008 U.S. Dist. LEXIS 14121, *13-*14 (N.D. Ill. Feb. 20, 2008) (granting defendants' motion to stay proceedings in federal court MDL action pending final approval of state court settlement of nationwide class action because stay would not prejudice plaintiffs who could opt-out of state settlement). For example, in Annunziato v. eMachines Inc., Civ. A. No. SACV 05-610-JVS (MLGx), 2006 U.S. Dist. LEXIS 97020 (C.D. Cal. July 24, 2006), the District Court granted Defendant's motion to stay under circumstances very similar to those presented here. In Annunziato, Plaintiffs filed a putative class action against eMachines alleging a defect in Defendant's laptop computers. Id. at *2. Subsequently, a Plaintiff filed a putative class action in a state court in Ohio alleging similar problems with the laptops. Id. at *4. The Ohio Plaintiff thereafter moved the state court
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for preliminary approval of a classwide settlement, and the Defendant in the District Court matter requested a stay pending final approval of the settlement. Id. at *6. The District Court granted the motion to stay based on the similarity of the state and federal court proceedings, and on principles of efficiency and comity. Id. at *15-18. In this case, grounds for a stay are even stronger than those in Annunziato because here the McFerren Court has already granted preliminary approval to the settlement. 1. The Putative Class Members in the Pishvaee and Jiran Actions Are Encompassed in the Settlement.

In Annunziato, the court explained that the similarities of the claims of the plaintiffs in the District Court to those of the plaintiffs in the state court weighed in favor of granting a stay. 10 Annunziato, supra, 2006 U.S. Dist. LEXIS 97020 at * 15. As in Annunziato, the pending 11 settlement encompasses the putative classes in the Pishvaee and Jiran proceedings. Indeed, the 12 Plaintiffs and counsel in Jiran and Pishvaee have joined in support of the settlement. See Arnese 13 Decl. ¶ 3-4, Exs. B-C 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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2.

The Claims of the Putative Class Members Against AT&T Mobility in Pishvaee and Jiran Will Be Barred by Res Judicata.

The class claims against AT&T Mobility in the Pishvaee and Jiran proceedings will be precluded after the state court settlement is finalized. The Ninth Circuit has recognized that the "full faith and credit" provisions of 28 U.S.C. § 1738 "require[] a federal court to give precisely the preclusive effect to a state court judgment that the state prescribes for its own courts." Noel v. Hall, 341 F.3d 1148, 1160 (9th Cir. 2003). See also Annunziato, supra, 2006 U.S. Dist. LEXIS 97020 at * 16-17, ("[C]onsiderations of comity compel this Court to honor the injunction ordered by the Ohio state court and consequently, to grant this motion to stay."). Federal courts will grant stays when the res judicata effect of a state court settlement would render continued federal litigation unnecessary. See Advanced Internet Tech., Inc. v. Google, Inc., Nos. C 05 02579 RMW, C 05 02885 RMW, 2006 WL 889477 (N.D. Cal. April 5, 2006) (granting stay of federal class action after state court preliminarily approved state class settlement); Chartener v. Provident Mut. Life Ins. Col, No. Civ. A. 02 8045 2003 WL 22518526 (E.D. Pa. Oct. 22, 2003) (granting stay of federal class action pending resolution of state class settlement). This preclusive effect
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means that the parties' efforts to continue to pursue and defend the claims in the District Court will be moot once the McFerren Court approves the settlement. 3. Principles of Efficiency Also Dictate that the Court Should Grant Defendants' Motion to Stay.

As the United States Supreme Court has recognized, "the power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its 6 docket with economy of time and effort for itself, for counsel, and for litigants." Landis v. North 7 American Co., 299 U.S. 248, 254 (1936). The Annunziato Court applied this principle in granting 8 defendants' motion to stay, explaining that "if the Ohio state court approves the preliminary 9 settlement, [the parties] . . . would be saved from `hundreds of hours spent on discovery and 10 briefing' in proceeding with this case." Annunziato, supra, 2006 U.S. Dist. LEXIS 97020 at *16. 11 If the Court does not grant a stay in the present case, the parties will proceed with 12 discovery and issues related to Plaintiffs' pleadings, all of which will be unnecessary when the 13 settlement receives final approval. The Court's own resources will also be wasted on overseeing 14 litigation that will be unnecessary and redundant. When presented with duplicative litigation, a 15 court may grant a stay based on judicial economy. See, e.g., Mediterranean Enterprises, Inc. v. 16 Ssangyong Corp., 708 F.2d 1458, 1465 (9th Cir. 1983) (internal citations omitted) ("a trial court 17 may, with propriety, find it is efficient for its own docket and the fairest course for the parties to 18 enter a stay of an action before it, pending resolution of independent proceedings which bear 19 upon the case."); LaDuke v. Burlington Northern R.R. Co., 879 F.2d 1556, 1560 (7th Cir. 1989) 20 ("[T]he results of simultaneous litigation of identical issues in the state and federal courts may be 21 both `unseemly' and a `grand waste' of the efforts of the parties and the courts."). The Court 22 should grant a stay not only to avoid unnecessary litigation, but also to conserve its own 23 resources. 24 25 26 final approval to the settlement, Plaintiffs will have suffered no significant delay in pursuing their 27 claims in the Pishvaee and Jiran matters. If the McFerren Court does give final approval to the 28
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B.

A Stay Will Not Prejudice the Plaintiffs. Plaintiffs here will not be prejudiced by a stay. If the McFerren Court does not provide

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settlement and this action is precluded, the Settlement Agreement provides that Plaintiffs can optout from the settlement in the McFerren Court. See Settlement Agreement, Arnese Decl. ¶ 3, Ex. B ("A Class Member may opt out of the Class at any time during the Opt-Out Period, as will be outlined in the Court-approved Notice."). The Settlement Agreement further provides that a member may object to the settlement. Id. ("Any Settlement Class Member who intends to object to the Settlement Agreement must include his/her name and address, include all arguments, citations, and evidence supporting the objection. An objecting Class Member must state, in writing, all objections and the basis for any such objection(s), and provide a statement whether the Objector intends to appear at the Fairness Hearing, either with or without counsel."). At the Fairness Hearing, the McFerren Court will review comments and/or objections regarding the settlement and consider its fairness, reasonableness and adequacy in determining whether to grant final approval. See Settlement Agreement and Preliminary Approval Order, Arnese Decl. ¶¶ 3-4, Ex. B-C. See also Annunziato, supra, 2006 U.S. Dist. LEXIS 97020 at *15, fn 5 (acknowledging plaintiffs' concern that the preliminary settlement was "not even remotely adequate," but explaining that "resolution of this issue should be presented to the Ohio state court by way of a timely objection"). IV. CONCLUSION For the foregoing reasons, AT&T Mobility respectfully requests that the Court grant a stay in the Pishvaee and Jiran proceedings pending final approval of the settlement in the McFerren action. /// /// /// /// /// /// ///
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1 Dated: July 17, 2008 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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By: /S/ Beth O'Neal Arnese Beth O'Neal Arnese Attorneys for Defendant AT&T MOBILITY LLC Dated: July 17, 2008 KAMBEREDELSON, LLC

By:/S/ Myles McGuire Myles McGuire Attorneys for Plaintiffs Louis Jiran and Dolores Gresham

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