Cristales v. Scion Grp. LLC, No. CV-19-04950-PHX-DGC

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Arizona
Writing for the CourtDavid G. Campbell, Senior United States District Judge
Citation478 F.Supp.3d 845
Parties Janelle CRISTALES, et al., Plaintiffs, v. The SCION GROUP LLC, Defendant.
Decision Date16 April 2020
Docket NumberNo. CV-19-04950-PHX-DGC

478 F.Supp.3d 845

Janelle CRISTALES, et al., Plaintiffs,
v.
The SCION GROUP LLC, Defendant.

No. CV-19-04950-PHX-DGC

United States District Court, D. Arizona.

Signed April 16, 2020


478 F.Supp.3d 849

Aaron Radbil, Pro Hac Vice, Greenwald Davidson Radbil PLLC, Austin, TX, for Plaintiffs.

Jessica D. Gallegos, Pro Hac Vice, Ryan D. Watstein, Pro Hac Vice, Kabat Chapman & Ozmer LLP, Atlanta, GA, for Defendant.

ORDER

David G. Campbell, Senior United States District Judge

This putative class action arises out of text messages received by Plaintiffs Janelle Cristales and Marianna Carvajal. Plaintiffs allege that Defendant The Scion Group, LLC, delivered these messages in violation of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. §§ 227, et seq. Scion moves to dismiss and compel arbitration. Doc. 19. The parties seek leave to file additional briefing. Docs. 22, 24. The motions are fully briefed, and no party requests oral argument. Docs. 20, 21, 23. For the following reasons, the Court will consider the additional briefing and grant Scion's motion to dismiss and compel arbitration.

I. Background.

The facts are taken from the complaint and affidavits and exhibits filed in connection with the motion to dismiss. Docs. 1, 19. Plaintiffs each entered into a housing agreement to reside at the Cottages of Tempe, a residential property owned by Scion. Doc. 1 at 1.1 In the course of their tenancy, Plaintiffs signed up for and used Scion's property management software platform. Doc. 19-1 at 4. The platform was created by Entrata, Inc., and allowed Scion to administer its relationship with its applicants and residents. Id. at 3. The platform allows residents to apply for apartments and submit maintenance requests and questions online, and enables Scion to communicate relevant information to its residents. Id.

When Plaintiffs created their accounts to access the platform, they were required to check a box indicating they "agree to the terms and conditions" of using the platform. Doc. 19-2 at 3, 6. A link to the "Property Terms and Conditions" (hereafter, "Terms"), which is bolded and underlined, is placed at the bottom of the account creation page. Id. at 6. Plaintiffs also agreed to the Terms each time they paid rent using the platform. Id. at 3. Cristales used the platform to make 15 rent payments; Carvajal used it to make 23. Doc. 19-1 at 4-5. The Terms include an arbitration provision that applies to "[a]ny controversy or claim arising out of or relating to the use of the services on this site, the relationship resulting from the use of such services, or a breach of any duties hereunder." Doc. 19-2 at 21.

478 F.Supp.3d 850

After signing up for the platform, Plaintiffs received marketing text messages from Scion that advertised leasing specials at the Cottages of Tempe and other Scion properties across the country. Doc. 1 at 2-6. Plaintiffs unsuccessfully attempted to opt-out of these messages by following the procedures outlined in Scion's messages. Id. Cristales received about 16 unsolicited texts – 13 marketing messages and 3 acknowledgements of her attempts to opt-out. Id. at 4. Carvajal received 10 advertising messages and 5 acknowledgements of her opt-out attempts. Id. at 6.

Plaintiffs filed this putative class action on August 13, 2019, alleging violations of the TCPA, 47 U.S.C. §§ 227, et seq. Doc. 1.

II. Parties’ Motions for Leave to File Additional Briefing.

The Court has reviewed Plaintiffs’ surreply and Scion's lodged response. Docs. 22-1, 25. Plaintiffs argue that Scion raised new evidence and argument in its reply which "require clarification and response." Doc. 22 at 1. Plaintiffs highlight Scion's contention that the American Arbitration Association's ("AAA") Consumer Rules would apply to any arbitration, as opposed to the Commercial Rules addressed in its opening brief and the Terms. Doc. 22 at 2; see Doc. 19 at 6. Plaintiffs also contend that Scion "suggests for the first time through its reply brief an arbitral forum different than that found in the alleged contract at issue" and that Scion pay certain costs associated with arbitration. Doc. 22 at 2; see Doc. 21 at 13. The Court agrees that these are new and important issues, and will grant the parties’ motions for leave to file additional briefing.

III. Legal Standard.

The Federal Arbitration Act ("FAA") "provides that arbitration agreements ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ " Chalk v. T-Mobile USA, Inc. , 560 F.3d 1087, 1092 (9th Cir. 2009) (quoting 9 U.S.C. § 2 ). Because arbitration is a matter of contract, "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT&T Techs., Inc. v. Commc'ns Workers of Am. , 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). Thus, "[a] party seeking to compel arbitration has the burden under the FAA to show (1) the existence of a valid, written agreement to arbitrate; and, if it exists, (2) that the agreement to arbitrate encompasses the dispute at issue." Ashbey v. Archstone Prop. Mgmt., Inc. , 785 F.3d 1320, 1323 (9th Cir. 2015).

IV. Discussion.

A. Arbitrability.

Plaintiffs do not dispute that they agreed to Entrata's enrollment agreement which contained the arbitration clause, but argue that this does not obligate them to arbitrate their claims because Scion is a nonsignatory to that agreement. Doc. 20 at 2. Plaintiffs also argue that the arbitration provision is substantively and procedurally unconscionable. Id. at 13.

Scion argues that "Plaintiffs clearly agreed to arbitrate their dispute with Scion, which has standing to compel arbitration as a third-party beneficiary or through equitable estoppel, even though Entrata is the only entity listed by name." Doc. 19 at 8. Scion cites cases recognizing that "nonsignatories can enforce arbitration agreements as third party beneficiaries." See Comer v. Micor, Inc. , 436 F.3d 1098, 1101 (9th Cir. 2006) ; Bultemeyer v. Sys. & Servs. Techs., Inc. , No. CV12-0998-PHX-DGC, 2012 WL 4458138, at *6 (D. Ariz. Sept. 26, 2012).

The parties appear to agree that Utah law applies in determining whether Scion, a nonsignatory, can compel arbitration. See

478 F.Supp.3d 851

Docs. 20 at 7-9, 21 at 3; see also Doc. 19-2 at 22 (the agreement "shall be governed by and construed in accordance with the laws of the State of Utah"). Plaintiffs argue that Utah law only "recognizes third-party beneficiary status based on an arbitration provision as a corollary to the doctrine of equitable estoppel." Doc. 20 at 11. The Court does not agree. Although the doctrines are similar, they are not the same. In Ellsworth v. American Arbitration Association , 148 P.3d 983 (Utah 2006), the Utah Supreme Court noted that third-party beneficiary status can be used to invoke an arbitration provision, observing that it is "closely analogous" to estoppel. Id. at 989 n.11. The Utah court then cited Bridas S.A.P.I.C. v. Government of Turkmenistan , 345 F.3d 347 (5th Cir. 2003), which provides this helpful explanation of the difference between the doctrines:

Under third party beneficiary theory, a court must look to the intentions of the parties at the time the contract was executed. Under the equitable estoppel theory, a court looks to the parties’ conduct after the contract was executed. Thus, the snapshot this Court examines under equitable estoppel is much later in time than the snapshot for third party beneficiary analysis.

Id. at 362 (citation omitted). In this case, the parties’ focus on the intention of the parties at the time the contract was executed – the third-party beneficiary issue.

B. Third-Party Beneficiary.

Third-party beneficiaries are "persons who are recognized as having enforceable rights created in them by a contract to which they are not parties and for which they give no consideration." SME Indus., Inc. v. Thompson, Ventulett, Stainback & Assocs., Inc. , 28 P.3d 669, 684 (Utah 2001) (citations omitted). "The existence of third party beneficiary status is determined by examining a written contract." Wagner v. Clifton , 62 P.3d 440, 442 (Utah 2002) (citation omitted). "For a third party to have enforceable rights under a contract, the intention of the contracting parties to confer a separate and distinct benefit upon the third party must be clear." SME Indus. , 28 P.3d at 684 (citations omitted); see also Wagner , 62 P.3d at 442. Thus, the question in this case is whether the Entrata agreement clearly reflects an intent to confer a "separate and distinct" benefit upon Scion. The Court concludes that it does.

The Terms make clear that Entrata is not the entity that operates the properties Plaintiffs were renting: "We are a third-party vendor, who is not the seller, lessor, or management company." Doc. 19-2 at 15. Instead, the Terms identify the "Property Client" as "[t]he legal entity that owns or manages the property displayed on the website." Id. at 10. In this case, that entity is Scion. The...

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1 practice notes
  • Robertson v. Argent Tr. Co., CV-21-01711-PHX-DWL
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Arizona
    • July 27, 2022
    ...waiver of a party's right to pursue statutory remedies.” Id. at 1212 (cleaned up). See generally Cristales v. Scion Grp. LLC, 478 F.Supp.3d 845, 854 (D. Ariz. 2020) (“The effective vindication doctrine is a judge-made exception to the FAA. It holds that an arbitration clause will be enforce......
1 cases
  • Robertson v. Argent Tr. Co., CV-21-01711-PHX-DWL
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Arizona
    • July 27, 2022
    ...waiver of a party's right to pursue statutory remedies.” Id. at 1212 (cleaned up). See generally Cristales v. Scion Grp. LLC, 478 F.Supp.3d 845, 854 (D. Ariz. 2020) (“The effective vindication doctrine is a judge-made exception to the FAA. It holds that an arbitration clause will be enforce......

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