Consumers Urge 9th Circ. To Revive Subway TCPA Claims

By Joyce Hanson

Law360, New York (June 13, 2017, 2:35 PM EDT) -- A proposed class of consumers told the Ninth Circuit on Monday that Subway cannot enforce their arbitration agreement with T-Mobile in their Telephone Consumer Protection Act suit against the sandwich chain, saying Subway doesn't have the right to enforce T- Mobile's agreements with customers.

Lead plaintiff David Moshe Rahmany argued that a Washington district court erred in holding that "unaffiliated non-signatory" Subway Sandwich Shops Inc. could enforce an arbitration agreement between the consumers and T-Mobile USA Inc. under the theory of equitable estoppel, which prevents a first party from taking advantage of a second party when the second party is injured from relying on misrepresentations made by the first party.

"Arbitrating statutory TCPA claims against a third party such as Subway was not bargained for by appellants when entering into the contracts with T-Mobile for wireless telephone service, and it is inequitable to allow Subway to enforce the arbitration provision on the T-Mobile contracts," Rahmany told the Ninth Circuit.

The consumers argued further that their TCPA claims against Subway for unwanted marketing text messages to their cellphones are "completely independent" from their wireless service agreements with T-Mobile, which contain an arbitration provision. The consumers added that they aren't looking to hold Subway liable pursuant to duties imposed by T-Mobile's service agreements, but rather their claims are based on separate statutory violations of the federal TCPA.

On Jan. 5, a Washington federal judge told the proposed consumer class accusing T-Mobile and Subway of sending unwanted text-message ads to their cellphones to take their claims outside of court, dismissing the case.

Plaintiffs David Moshe Rahmany and Yehuda Rahmany had filed their Telephone Consumer Protection Act class action in September against both Subway and T-Mobile after allegedly receiving the same text on Sept.

1. For a promotion to be held Sept. 6, the same day the suit was filed.

The text purportedly said: "This T-Mobile Tuesday, Score a free 6'' Oven Roasted Chicken sub at SUBWAY, just for being w/ T-Mobile," and included a link to an app that would provide more details.

The consumers said the joint promotion for chicken sandwiches that sent out mass unwanted text messages to T-Mobile customers' phones violated the TCPA. They said the messages, allegedly sent by an autodialer without the obtainment of express written consent from the recipients, were spam.

But U.S. District Judge John C. Coughenour concluded those claims, relating to T-Mobile's services and devices, fall within the scope of the companies' arbitration agreements and don't belong in court, reasoning that consumers can't opt out of the arbitration deal unless they can show it to be excessive.

David Moshe Rahmany and Yehuda Rahmany are residents of California but filed their original complaint in Washington federal court. T-Mobile is headquartered in Bellevue, Washington, although incorporated under the laws of Delaware. Subway is based and incorporated in Milford, Connecticut, according to the suit.

The claims include negligent violation of the TCPA and knowing or willful violation of the TCPA. Legal counsel for the consumers declined to comment on Tuesday, saying the brief speaks for itself. Representatives for the companies did not immediately respond Tuesday to requests for comment.

The consumers are represented by Abbas Kazerounian and Jason A. Ibey of Kazerouni Law Group APC and Joshua Swigart of Hyde & Swigart.

Subway Sandwich Shops is represented by Michael A. Moore of Corr Cronin Michelson Baumgardner Fogg & Moore LLP, and Kristine M. Brown and Derin B. Dickerson of Alston & Bird LLP.

Counsel information for T-Mobile was not available.

The appellate case is David Moshe Rahmany and Yehuda Rahmany v. T-Mobile USA Inc. and Subway Sandwich Shops Inc., case number 17-35094, in the U.S. Court of Appeals for the Ninth Circuit.

The underlying case is Rahmany et al. v. T-Mobile USA Inc. et al., case number 2:16-cv-01416, in the U.S. District Court for the Western District of Washington.

--Additional reporting by Kat Sieniuc. Editing by Orlando Lorenzo.