Doherty v. Barclay's Bank Delaware

Filing 39

ORDER denying without prejudice 25 Defendant's Motion to Compel Individual Arbitration and to Stay. The Court DENIES WITHOUT PREJUDICE Defendant'smotion to compel individual arbitration and to stay. Defendant's alternative motion to dismiss is thus rendered moot. Signed by Judge Anthony J. Battaglia on 2/14/2017. (acc)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 15 ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL INDIVIDUAL ARBITRATION AND TO STAY (Doc. No. 25) Plaintiff, 13 14 Case No.: 16-cv-01131-AJB-NLS MICHAEL DOHERTY, on behalf of himself and all others similarly situated, v. BARCLAYS BANK DELAWARE, a Delaware Corporation, 16 Defendant. 17 18 Presently before the Court is Defendant Barclays Bank Delaware’s (“Defendant”) 19 motion to compel individual arbitration and to stay, or in the alternative to dismiss. (Doc. 20 No. 25.) Plaintiff Michael Doherty (“Plaintiff”) opposes the motion. (Doc. No. 28.) For the 21 reasons set forth below, the Court DENIES WITHOUT PREJUDICE Defendant’s 22 motion. 23 BACKGROUND 24 This matter comes before the Court alleging Defendant violated the Telephone 25 Consumer Protection Act (“TCPA”)1. (Doc. No. 13.) Plaintiff is a resident of San Diego, 26 27                                                                   1 28 The TCPA exists to put an end to invasive telephone calls that are autodialed, placed without consent, and made without regard to the charges such calls can incur. (Doc. No. 13 ¶ 4.) 1 16-cv-01131-AJB-NLS 1 California. (Id. ¶ 9.) Defendant is one of the top ten issuers of credit cards in the United 2 States. (Id. ¶ 2; Doc. No. 22 ¶ 2.) 3 On June 9, 2012, Plaintiff was added, without his purported knowledge, as an 4 authorized user to his father’s credit card account (the “Account”) through Defendant’s 5 website. (Bell Decl. I ¶ 7, Doc. No. 25-1; Doherty Decl. ¶¶ 2, 3, Doc. No. 28-1.) Plaintiff 6 was at no time an authorized user of his mother’s credit card. (Doc. No. 28 at 9.) 7 Between October 26, 2015, and February 4, 2016, Plaintiff then alleges that 8 Defendant called his cellular telephone number at least fifty-five times. (Doc. No. 13 ¶¶ 9 25, 26; Doherty Decl. ¶ 4.) The Court notes that it is disputed whether these calls concerned 10 the credit card account of Thomas Doherty, Plaintiff’s father, or a credit card account of 11 Chona Doherty, Plaintiff’s mother.2 (Doc. No. 25 at 8; Doc. No. 28 at 8.) Nevertheless, 12 Plaintiff contends that he never provided his cellular number to Defendant or gave prior 13 express consent for Defendant to call his cellular telephone using a prerecorded or artificial 14 voice. (Doc. No. 13 ¶¶ 22, 24.) In addition, Plaintiff alleges that he incurred a charge 15 through his service provider for each call Defendant made to his cellular telephone. (Id. ¶ 16 29.) 17 On three separate occasions: June 12, 2012, August 14, 2013, and June 4, 2015, 18 Defendant mailed multiple credit cards for the Account to Plaintiff’s home address. (Doc. 19 No. 25 at 10; Bell Decl. I ¶¶ 8, 10, 12.) The Account cards sent on August 14, 2013, were 20 activated on September 19, 2013, with Plaintiff’s cell phone and without his purported 21 knowledge. (Bell Decl. I ¶ 11; Doherty Decl. ¶¶ 5, 9.) The Account cards sent on June 12, 22 2012, included the following on the back: “Use of this card is subject to the Cardmember 23 24 25                                                                   26 2 27 28 Defendant has asserted that it was attempting to contact Plaintiff’s father with the calls from October 2015 to December 2015. (Doc. No. 25 at 8; Bell Decl. II ¶ 9, Doc. No. 34-1.) Plaintiff contends the calls concerned his mother. (Doc. No. 13 ¶¶ 24, 25; Doc. No. 28 at 8; Doherty Decl. ¶ 4.) However, Plaintiff has stated that he does not “recall hearing any messages or speaking to anyone about attempting to contact [his] father, although that may have happened.” (Doherty Decl. ¶ 4.) 2 16-cv-01131-AJB-NLS 1 Agreement issued by Barclays Bank Delaware.”3 (Doc. No. 25 at 10; Bell Decl. I ¶ 8.) The 2 Cardmember Agreement (“the Agreement”) contains an arbitration clause, requiring the 3 parties, including authorized users, to submit any dispute “arising from or relating in any 4 way to th[e] Agreement or [] Account” to arbitration. (Bell Decl. I ¶ 9; Bell Decl. III Ex. I 5 at 6-7, Doc. No. 37-1.) 6 On October 3, 2015, Plaintiff’s mother called Defendant to cancel an automatic 7 payment on the Account. (Lamborn Decl. ¶ 8, Doc. No. 25-2; Doherty Decl. ¶ 8.) Plaintiff 8 and his father were brought onto the call and Plaintiff agreed to make a one-time payment 9 of $548.19 on the Account. (Id.) Plaintiff was removed as an authorized user of the Account 10 during this phone conversation.4 (Lamborn Decl. ¶ 9; Doherty Decl. ¶ 7.) 11 Plaintiff instituted this action on May 11, 2016, by filing a complaint seeking redress 12 for Defendant’s alleged noncompliance with the TCPA. (Doc. No. 1.) On July 22, 2016, 13 Defendant filed a motion to strike Plaintiff’s class allegations in the complaint. (Doc. No. 14 9.) On the same day, Defendant also filed a motion to stay. (Doc. No. 10.) Plaintiff filed 15 his first amended complaint on August 9, 2016. (Doc. No. 13.) On August 29, 2016, the 16 Court denied Defendant’s motion to strike and motion to stay. (Doc. No. 19.) Shortly 17 thereafter, on September 29, 2016, Defendant filed the instant motion to compel arbitration. 18 (Doc. No. 25.) 19 LEGAL STANDARD 20 The Federal Arbitration Act (“FAA”) governs the enforcement of arbitration 21 agreements involving interstate commerce. 9 U.S.C. § 2. Pursuant to Section 2 of the FAA, 22 an arbitration agreement is “valid, irrevocable, and enforceable, save upon such grounds 23 as exist at law or in equity for the revocation of any contact.” Id. The FAA permits “[a] 24 25                                                                   26 3 27 28 It is unclear whether the Account cards that were activated on September 19, 2013, had a similar statement. 4 Plaintiff contends that he asked to be removed as an authorized user during the October 3, 2015 conversation. (Doherty Decl. ¶ 7.) Defendant asserts that it was Plaintiff’s mother and father who requested that Plaintiff be removed as an authorized user. (Lamborn Decl. ¶ 9.) 3 16-cv-01131-AJB-NLS 1 party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a 2 written agreement for arbitration [to] petition any United States district court . . . for an 3 order directing that such arbitration proceed in the manner provided for in [the] 4 agreement.” Id. § 4. 5 Given the liberal federal policy favoring arbitration, the FAA “mandates that district 6 courts shall direct the parties to proceed to arbitration on issues as to which an arbitration 7 agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) 8 (emphasis in original). Thus, in a motion to compel arbitration, the district court’s role is 9 limited to determining “‘(1) whether a valid agreement to arbitrate exists and, if it does, (2) 10 whether the agreement encompasses the dispute at issue.’” Kilgore v. KeyBank, Nat’l 11 Ass’n, 673 F.3d 947, 955 (9th Cir. 2012) (quoting Chiron Corp. v. Ortho Diagnostic Sys., 12 Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)). If these factors are met, the court must enforce 13 the arbitration agreement in accordance with its precise terms. See id. 14 While generally applicable defenses to contract, such as fraud, duress, or 15 unconscionability, may invalidate agreements, the FAA preempts state law defenses that 16 apply only to arbitration or that derive their meaning from the fact that an agreement to 17 arbitrate is at issue. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). Because 18 of the strong policy favoring arbitration, any doubts are to be resolved in favor of the party 19 moving to compel arbitration. Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 20 U.S. 1, 24–25 (1983). 21 22 DISCUSSION I. The Court May Consider Plaintiff’s Arguments 23 Defendant first argues that the Court may not consider the merits of Plaintiff’s 24 arguments because they go to the arbitration agreement’s applicability, an issue which the 25 Agreement delegates to the arbitrator. (Doc. No. 25 at 21.) In opposition, Plaintiff asserts 26 that as a threshold matter, the Court is required to determine whether a valid agreement to 27 arbitrate exists. (Doc. No. 28 at 14.) 28 Under the FAA, “parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ 4 16-cv-01131-AJB-NLS 1 such as whether the parties have agreed to arbitrate or whether their agreement covers a 2 particular controversy.” Rent–A–Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68–69 (2010). 3 “Because such issues would otherwise fall within the province of judicial review, we apply 4 a more rigorous standard in determining whether the parties have agreed to arbitrate the 5 question of arbitrability.” Momot v. Mastro, 652 F.3d 982, 987 (9th Cir. 2011). Thus, 6 “[u]nless the parties clearly and unmistakably provide otherwise, the question of whether 7 the parties agreed to arbitrate is to be decided by the court, not the arbitrator.” AT&T Techs., 8 Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986). “Such [c]lear and 9 unmistakable ‘evidence’ of agreement to arbitrate arbitrability might include . . . a course 10 of conduct demonstrating assent . . . or . . . an express agreement to do so.” Momot, 652 11 F.3d at 988 (citation omitted). 12 However, “arbitration is a matter of contract and a party cannot be required to submit 13 to arbitration any dispute which he has not agreed so to submit.” Commc’n Workers of Am., 14 475 U.S. at 648 (citation omitted). Therefore, “when one party disputes ‘the making of the 15 arbitration agreement,’ the Federal Arbitration Act requires that ‘the court [] proceed 16 summarily to the trial thereof’ before compelling arbitration under the agreement.” Sanford 17 v. MemberWorks, Inc., 483 F.3d 956, 962 (9th Cir. 2007) (quoting 9 U.S.C. § 4). The Ninth 18 Circuit has interpreted this to include challenges to the arbitration clause, as well as 19 challenges to the making of the contract containing the arbitration clause. Id. (citing Three 20 Valleys Mun. Water Dist. v. E.F. Hutton & Co., Inc., 925 F.2d 1136, 1140–41 (9th Cir. 21 1991)). 22 Here, Plaintiff is challenging the existence of a contract with Defendant. Therefore, 23 following relevant Ninth Circuit case law, the Court must first decide whether a valid 24 contract exists. For the reasons set forth below, the Court finds the requisite showing of the 25 existence of a valid contract has not been met. 26 II. A Valid Arbitration Agreement Does Not Exist 27 Defendant argues that as Plaintiff was an authorized user of the Account, that there 28 can be no dispute that a valid arbitration agreement exists. (Doc. No. 25 at 21.) In 5 16-cv-01131-AJB-NLS 1 opposition, Plaintiff asserts that Defendant may not compel arbitration because he was 2 never a party to the agreement. (See Doc. No. 28.) To determine whether a valid agreement 3 to arbitrate exists, we “apply ordinary state-law principles that govern the formation of 4 contracts.” Norcia v. Samsung Telecomms. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017) 5 (citation and internal quotation marks omitted). Here, California law governs the issue of 6 contract formation and as the party seeking to compel arbitration, Defendant bears “‘the 7 burden of proving the existence of an agreement to arbitrate by a preponderance of the 8 evidence.’” Id. (quoting Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 9 2014)). After a careful analysis of both parties’ motions, declarations, and in light of the 10 applicable law, the Court finds Defendant has not carried its burden. 11 “It is undisputed that under California law, mutual assent is a required element of 12 contract formation.” Knutson, 771 F.3d at 565. Mutual assent may be manifested through 13 words or conduct and acceptance can be implied through action or inaction. Id. The mutual 14 consent necessary to form a contract “is determined under an objective standard applied to 15 the outward manifestations or expressions of the parties, i.e., the reasonable meaning of 16 their words and acts, and not their unexpressed intentions or understandings.” Deleon v. 17 Verizon Wireless, LLC, 207 Cal.App.4th 800, 813 (2012) (citation omitted). “Although 18 mutual consent is a question of fact, whether a certain or undisputed state of facts 19 establishes a contract is a question of law for the court.” Id. at 813. 20 In this case, it is clear that factual disputes exist. First, the Court notes that the facts 21 are unclear as to whether mutual assent exists between Plaintiff and Defendant. According 22 to Defendant, Plaintiff consented to the Agreement by being an authorized user and using 23 the Account on three separate occasions.5 (Doc. No. 25 at 21-22; Doc. No. 37 at 6-8.) Two 24 of these alleged uses were balance transfers from another credit card purportedly belonging 25 26                                                                   27 5 28 Defendant briefly mentions that Plaintiff may have assented by purchasing airline tickets. (Doc. No. 37 at 6-7.) In light of Plaintiff’s denial of this allegation, in combination with Defendant’s lack of support for this assertion, the Court is unpersuaded by this argument. 6 16-cv-01131-AJB-NLS 1 to Plaintiff that totaled $21,239.69.6 (Lamborn Decl. ¶¶ 4-7.) However, both transfers 2 occurred online and it is unclear who made the transfers. (Id.) In addition, Plaintiff denies 3 he made the two transfers, and that the other account used in the transfer belonged to him. 4 (Doherty Decl. ¶ 6.)7 Second, Plaintiff disputes ever having knowledge that he was an 5 authorized user for the Account. Plaintiff argues that the October 3, 2015 conversation is 6 when he first learned he was an authorized user with the ability to use his father’s account. 7 (Id. ¶ 7.) In response, Defendant has failed to show that Plaintiff assented to the Agreement 8 prior to this one-time payment Plaintiff made on October 3, 2015. 9 Given these disputed facts, and under California common law, the Court finds that 10 there are genuine factual issues as to whether Plaintiff consented to be bound to the 11 Agreement. Specifically, with so many facts in dispute, it is unclear to the Court whether 12 Plaintiff’s manifested actions reasonably portray that he consented to the terms of the 13 arbitration agreement. See Windsor Mills, Inc. v. Collins & Aikman Corp., 25 Cal.App.3d 14 987, 992 (1972) (holding that as “the outward manifestation or expression of assent is the 15 controlling factor,” an offeree, “knowing that an offer has been made to him but not 16 knowing all of its terms, may be held to have accepted, by his conduct, whatever terms the 17 offer contains.”). Thus, finding that Defendant has failed to carry its burden in showing the 18 existence of an agreement to arbitrate between the parties by a preponderance of the 19 evidence, arbitration is inappropriate. 20 The Ninth Circuit’s decision in Three Valleys supports the Court’s decision. There, 21 plaintiffs sued for losses in their investment accounts. Three Valleys, 925 F.2d at 1137. 22 Defendant asserted an arbitration clause in a client agreement and plaintiffs argued the 23 entire agreement was not binding because the signor lacked authority to bind plaintiffs. Id. 24 25                                                                   26 6 27 28 The first transfer occurred on September 29, 2011, almost a year before Plaintiff became an authorized user of the account. (Lamborn Decl. ¶ 4.) The second transfer occurred twenty days after Plaintiff became an authorized user in 2012. (Id. ¶ 5.) 7 However, both parties agree Plaintiff made a one-time payment on the Account during the October 3, 2015 conversation. (Lamborn Decl.¶ 8; Doherty Decl. ¶ 8.) 7 16-cv-01131-AJB-NLS 1 at 1138. The Ninth Circuit reversed the district court’s order to compel arbitration of the 2 contract formation issue on the grounds that forcing the formation issue into arbitration 3 would have held the plaintiffs to an arbitration clause upon which they might not have 4 agreed. Id. at 1138–42. Similarly, in the present matter, given the array of disputed facts, 5 the Court is unwilling to compel Plaintiff to arbitrate his claims when Defendant has failed 6 to make the requisite showing of Plaintiff assenting to the Agreement and the arbitration 7 clause contained within. Accordingly, the Court DENIES Defendant’s motion to compel 8 arbitration.8 9 CONCLUSION 10 Based on the foregoing, the Court DENIES WITHOUT PREJUDICE Defendant’s 11 motion to compel individual arbitration and to stay. Defendant’s alternative motion to 12 dismiss is thus rendered moot. 13 14 IT IS SO ORDERED. 15 Dated: February 14, 2017 16 17 18 19 20 21 22 23 24 25 26                                                                   27 8 28 As the Court is denying Defendant’s motion to compel arbitration for failure to demonstrate that a valid arbitration agreement exists, the Court finds no reason to analyze both parties’ arguments concerning the scope of the Agreement and waiver by conduct. 8 16-cv-01131-AJB-NLS

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