In a class action claiming that a telephone company's offer of a "free" phone to anyone who signed up for its service was fraudulent to the extent the phone company charged the new subscriber sales tax on the retail value of each "free" phone, denial of defendant's motion to compel arbitration is affirmed where an arbitration clause's "premium" payment in the event of an arbitral award in favor of a customer did not prevent the clause from being unenforceable under California law.
Argued and Submitted September 17, 2009
Filed October 27, 2009
Opinion by Judge Bea
Donald M. Falk, Mayer Brown LLP, Palo Alto, CA