Coleman v. Alaska USA Fed. Credit Union

• Decision Date: 09 January 2020
• Docket Number: No. 3:19-cv-0229-HRH,3:19-cv-0229-HRH
• Parties: CHRISTINE COLEMAN, on behalf of herself and all others similarly situated, Plaintiff, v. ALASKA USA FEDERAL CREDIT UNION, Defendant.
• Court: U.S. District Court — District of Alaska

CHRISTINE COLEMAN, on behalf of herselfand all others similarly situated, Plaintiff, v. ALASKA USA FEDERAL CREDIT UNION, Defendant.

No. 3:19-cv-0229-HRH

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ALASKA

January 9, 2020

ORDER

Motion to Compel Arbitration

Defendant moves to compel plaintiff to arbitrate her individual claims.¹ This motion is opposed.² Oral argument was requested but is not deemed necessary.

Background

Plaintiff is Christine Coleman. Defendant is Alaska USA Federal Credit Union. Plaintiff alleges that she "is an Alaska USA customer. . . ."³

Plaintiff alleges that "[o]n November 15, 2018, [she] attempted a small payment to Safeway in the amount of $61.57."⁴ Plaintiff alleges that "Alaska USA rejected payment of that item due to insufficient funds in [p]laintiff's account and charged her a $25 NSF Fee for doing so."⁵ "Plaintiff does not dispute this initial fee, as it is allowed by Alaska USA's Account Documents."⁶ Plaintiff alleges however that without her knowledge and not at her request, "eleven days later, on November 26, 2018, Alaska USA processed the same item yet again, and again rejected the transaction due to insufficient funds and charged [her] another $25 NSF Fee."⁷ Plaintiff alleges that she was thus "charged . . . $50 in NSF Fees [in an] attempt to process a single payment."⁸ Plaintiff alleges that this breached her agreement with defendant because "Alaska USA's Account Documents state that it will charge $25 per item that is returned due to insufficient funds."⁹

On August 21, 2019, plaintiff commenced this action on behalf of herself and others similarly situated. Plaintiff asserts breach of contract, breach of the implied covenant ofgood faith and fair dealing, unjust enrichment, and Unfair Trade Practices Act claims on behalf of herself and others similarly situated.

Defendant now moves to compel plaintiff to arbitrate her individual claims.

Discussion

The Federal Arbitration Act ("FAA") "directs courts to treat arbitration agreements as 'valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.'" Blair v. Rent-A-Center, Inc., 928 F.3d 819, 825 (9th Cir. 2019) (quoting 9 U.S.C. § 2)). The FAA "reflect[s] both a liberal federal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract[.]" AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (citations omitted).

The Account Agreement for individual accounts, such as plaintiff's, provides that

[c]hanges to the terms and conditions of accounts may occur from time to time and do not require member approval. However, members will be notified of any change, amendment, or modification that would adversely affect them at least thirty (30) days in advance of such change.[¹⁰]

In February 2019, defendant changed the Account Agreement by adding an arbitration provision. The arbitration provision states, in relevant part, that

[t]o the extent allowed by law, all claims or controversies arising between you and the Credit Union shall be subject to arbitration. ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO ONLY VERY LIMITED REVIEW

BY A COURT. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL. IF YOU HAVE ANY QUESTIONS ABOUT ARBITRATION, CONSULT AN ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION. YOU AGREE AND UNDERSTAND (I) THAT YOU AND WE ARE BOTH GIVING UP THE RIGHT TO TRIAL BY JURY AND (II) THAT YOU AND WE ARE PRECLUDED FROM PARTICIPATING IN OR BEING REPRESENTED IN ANY CLASS OR REPRESENTATIVE ACTION OR JOINING OR CONSOLIDATING THE CLAIMS OF OTHER PERSONS (THE "CLASS ACTION WAIVER").

ARBITRATION PROVISIONS:

a. Binding Arbitration: At the request of either you or the Credit Union, binding arbitration under the Federal Arbitration Act will be used to resolve any claim or controversy ("Dispute") between or among us and our assigns arising out of or relating in any way to this agreement, this arbitration agreement ("arbitration clause"), or any related agreements or instruments which cover any of your loans, products or services you have or have had in the past with the Credit Union ("Related Documents"). This also includes a Dispute based on or arising from an alleged tort or any alleged statutory or regulatory violation.[¹¹]

"On May 6, 2019, Alaska USA added a 'pop up' notice to the log-in page of the Alaska USA online banking system, which is called UltraBranch."¹²

The pop up stated: "The Share Account Disclosure Statements have been updated. Please click the applicable link below to review the current terms and conditions." Below that text, thepop up included hyperlinks to the amended Account Agreement. Members were required to close the pop up notification by clicking the "Close" button in order to navigate to their online banking pages.[¹³]

June Gardner, defendant's Manager of Enterprise Risk and Compliance, testified that defendant decided to use the pop up notice "so that members that did not want to read [the notice] were not inconvenienced by being forced to read it before . . . access[ing] . . . their account online."¹⁴ "According to Alaska USA's records, [plaintiff] navigated to pages on UltraBranch on May 6 and May 8, 2019."¹⁵ Plaintiff avers, however, that she "did not see a pop-up" like the one described above "on UltraBranch in May 2019. . . ."¹⁶ She also avers that she does "not know whether the pop-up blocker feature on [her] Internet Explorer was enabled or disabled in May 2019."¹⁷

Based on the foregoing, defendant argues that the parties had a valid arbitration agreement and that there can be no dispute that plaintiff's claims fall within the scope of that agreement. Plaintiff, however, disputes whether a valid arbitration agreement exists.

"Generally, 'the [FAA] establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.'" Portland General Electric Company v. Liberty Mutual Insurance Company, 862 F.3d 981, 985 (9th Cir. 2017) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)). "Certain issues, however, are presumptively reserved for the court." Id. "These include 'gateway' questions of arbitrability, such as 'whether the parties have a valid arbitration agreement or are bound by a given arbitration clause, and whether an arbitration clause in a concededly binding contract applies to a given controversy.'" Id. (quoting Momot v. Mastro, 652 F.3d 982, 987 (9th Cir. 2011)). "However, parties may delegate the adjudication of gateway issues to the arbitrator if they clearly and unmistakably agree to do so." Id. (citation omitted).

Defendant argues that the parties have clearly and unmistakably agreed to allow the arbitrator to decide gateway issues, such as the existence of a valid arbitration agreement, because the arbitration agreement contains a delegation clause. Specifically, the arbitration agreement provides that "the arbitrator will have the authority to resolve any other Dispute regarding the terms of this agreement, this arbitration clause or Related Documents, including any claim or controversy regarding the arbitrability of any Dispute."¹⁸ "[L]anguage 'delegating to the arbitrators the authority to determine the validity or application of any ofthe provisions of the arbitration clause[] constitutes an agreement to arbitrate threshold issues concerning the arbitration agreement.'" Mohamed v. Uber Technologies, Inc., 848 F.3d 1201, 1208 (9th Cir. 2016) (quoting Momot, 652 F.3d at 988). The arbitration agreement also incorporates the rules of the American Arbitration Association,¹⁹ which defendant argues is yet another indication that the parties agreed to arbitrate threshold or gateway issues. See Galilea, LLC v. AGCS Marine Insur. Co., 879 F.3d 1052, 1061 (9th Cir. 2018) ("[b]ecause the parties . . . incorporated AAA rules into their arbitration agreement, they have clearly and unmistakably indicated their intent to submit arbitrability questions to an arbitrator"). Thus, defendant argues that it is for the arbitrator, and not the court, to decide whether a valid arbitration agreement exists.

However, "[w]hile the validity of an arbitration clause can be a question for the arbitrator where the 'crux of the complaint is that the contract as a whole (including its arbitration provision)' is invalid, the court determines the validity of the clause where the challenge is 'specifically [to] the validity of the agreement to arbitrate.'" Bridge Fund Capital Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1000 (9th Cir. 2010) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 (2006)). Plaintiff is not challenging the validity of the Account Agreement as a whole. She is challenging the existence and validity of the agreement to arbitrate. Plaintiff contends that an agreement to arbitrate was never formed and thus defendant's reliance on the delegation clause and theagreement's reference to the AAA rules is misplaced. As one court has observed, "[w]hen one party contends that an agreement to arbitrate was never formed, looking to the text of that very agreement is problematic because the agreement is only a valid indicator of the parties' intent if they agreed to be bound by its terms." Allstate Insurance Co. v. Toll Brothers, Inc., 171 F. Supp. 3d 417, 424 (E.D. Pa. 2016). Here, the "'substantive basis of [plaintiff's] challenge' is to the arbitration provision," and thus "the court resolves the question" of whether a valid arbitration agreement exists. Fagerstrom v. Amazon.com, Inc., 141 F. Supp. 3d 1051, 1060 (S.D. Cal. 2015) (quoting Bridge Fund, 622 F.3d at 1001).

"[A]s the party seeking to compel arbitration," defendant "has the burden of proving the existence of an agreement to arbitrate by a preponderance of the evidence." Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014). "State...