Citing ‘bad-faith tactics,’ federal judge sanctions Morrison & Foerster

U.S. District Judge James J. Donato on Tuesday sanctioned Morrison & Foerster LLP attorneys for what he described as "bad-faith tactics" and "evasive and misleading statements" related to its handling of the arbitration of a consumer case against client Fitbit Inc.

Donato's order calls for plaintiff's counsel to submit within 14 days a request for attorney fees and costs incurred "because of the misconduct at issue." It also directs Morrison & Foerster to file a copy of the order in every case for the next year in which the firm seeks to compel arbitration under its consumer terms of service.

"Further evidence of untoward delay or obstruction of the arbitration by Fitbit may result in restoration of [the plaintiff's] claims to the Court for resolution," Donato wrote.

William L. Stern, senior counsel with Morrison & Foerster, could not be reached for comment on Tuesday.

Donato said the attorney fees order "is intended to compensate [plaintiff Kate] McLellan and not to impose a penalty on Fitbit."

Forcing his order to be filed in every Morrison & Foerster arbitration case for one year is "to help ensure that Fitbit does not again impose "pointless and wasteful burden[s] on the supposedly summary and speedy procedures prescribed by the Arbitration Act," Donato wrote, citing Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983).

Plaintiff's attorney Jonathan D. Selbin of Lieff, Cabraser, Heimann & Bernstein LLP said he's "thrilled" Donato recognized misconduct, but he's disappointed the judge allowed arbitration to proceed.

"We're pleased that he made the findings that he did," Selbin said.

Selbin represents McLellan, who sued Fitbit for allegedly misrepresenting the accuracy of its heart-rate monitors. She agreed to required arbitration through the American Arbitration Association, but Fitbit didn't pay its arbitration fees "and told McLellan it had no intention of arbitrating her claims or the arbitrability issues," according to Donato's order. McLellan et al. v. Fitbit Inc., 16-CV00036 (N.D. Cal., filed Jan. 5, 2016).

"Fitbit would like to treat this incident as a misunderstanding, but it is much more than that," Donato wrote. "Fitbit's conduct has multiplied the proceedings in this case for no good reason and at the expense of plaintiffs' and the Court's resources. It has also bolstered the perception that arbitration is where consumer lawsuits go to die."

Still, Donato dismissed plaintiff attorneys' request that they be relieved of the arbitration agreement "and more broadly to strike down Fitbit's arbitration clause for all users."

"Although there is some equitable appeal in those requests, the record here does not support terminating the arbitration," the judge wrote.