Frazier v. W. Union Co.

Decision Date27 March 2019
Docket NumberCivil Action No. 18-cv-00998-KLM
Citation377 F.Supp.3d 1248
Parties Kazmiera FRAZIER, Rhonda Laubler, Teresa Riggs, Anita Seward, and Koaleshia Simon, individually and on behalf of all others similarly situated, Plaintiffs, v. The WESTERN UNION COMPANY, Western Union Financial Services, Inc., Hikmet Ersek, and Various "Doe" Defendants, including Western Union Officers, Directors, and Agents, Defendants.
CourtU.S. District Court — District of Colorado

Adam Jay Levitt, DiCello Levitt & Casey LLC, Daniel R. Ferri, Vitale Vickrey Niro & Gasey, LLP, Chicago, IL, James Edward Tonrey, Jr., Kevin Peter Roddy, Wilentz Goldman & Spitzer PA, Woodbridge, NJ, Kenneth Steven Canfield, Doffermyre Shields Canfield Knowles & Devine, LLC, Atlanta, GA, Ty Cheung Gee, Haddon Morgan & Foreman, P.C., Denver, CO, for Plaintiffs.

Claire Elizabeth Wells Hanson, Holly Stein Sollod, Holland & Hart, LLP, Denver, CO, Hille von Rosenvinge Sheppard, David Franklin Graham, Joseph Ryan Dosch, Sidley Austin, LLP, Chicago, IL, for Defendants.


KRISTEN L. MIX, United States District Judge

This matter is before the Court on Defendants' Motion to Stay Proceeding Pending Arbitration Pursuant to Section 3 of the Federal Arbitration Act [# 33]1 (the "Motion").2 Thereafter, Defendants filed a Factual Supplement [# 48], Plaintiffs filed a Response [# 52] in opposition to the Motion [# 33], and Defendants filed a Reply [# 56]. The Court has reviewed the relevant briefs, the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [# 33] is GRANTED .

I. Summary of the Case

Plaintiffs initiated this putative class action against The Western Union Company ("Western Union"), Western Union Financial Services, Inc. ("WUFSI"), Western Union's Chief Executive Officer Hikmet Ersek ("Ersek"), and various other unnamed Doe Defendants (collectively, "Defendants"). Am. Compl. [# 27] at 4. Plaintiffs assert claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the Colorado Organized Crime Control Act, and their respective state consumer protection laws.3 Id. at 46-72. WUFSI, a subsidiary of Western Union, operates a "Money Transfer System" through which consumers send money to other individuals in the United States and around the world. Id. at 16. Each of the named Plaintiffs alleges that she was defrauded by an unnamed third-party fraudster who convinced her to send a fraudulent money transfer order. Id. at 5-6.

Money transfer orders sent through WUFSI are subject to a set of contractual terms and conditions ("Terms and Conditions") located on a pre-printed Send Money Form. Motion [# 33] at 10, 12-13. The Terms and Conditions in place at the time of each of the named Plaintiffs' alleged money transfers included arbitration clauses, requiring the parties to arbitrate any disputes individually, rather than on a class-wide basis (the "Arbitration Clauses"). Id. at 10-11. Defendants maintain that the Terms and Conditions are included in both the Send Money Form customers fill out to send money and on the receipts given to customers after sending money transfer orders. Id. at 12-13. Defendants also assert that before a customer can send money using a Send Money Form, WUFSI's standard business practices require the customer to sign the form, agreeing to the accompanying terms and conditions. Id. at 13. Once the information on the Send Money Form is verified by a Western Union clerk on location, the clerk then prints a receipt for the customer. Id. at 14. Like the Send Money Form, Defendants assert that WUFSI's standard business practices require the customer to sign the receipt. Id.

At the relevant times of Plaintiffs' alleged fraudulently-induced money transfer orders, two separate Arbitration Clauses appeared in Defendants' Terms and Conditions. Id. at 11-12; Response [# 52] at 10. One Arbitration Clause appeared in Send Money Form Terms and Conditions in 2005, and the other Arbitration Clause appeared in Send Money Form Terms and Conditions in 2016 and 2017. Motion [# 33] at 11-12; Response [# 52] at 10.

Defendants seek a stay of this case while arbitration proceedings are held. Motion [# 33] at 7. At issue in the instant motion is: (1) whether Plaintiffs are bound by the Arbitration Clauses in dispute, (2) whether Defendants Ersek, Western Union, and WUFSI respectively are bound by the Arbitration Clauses in dispute, (3) whether the two individual Arbitration Clauses in question are enforceable, and (4) whether Plaintiffs' RICO claims fall within the scope of the Arbitration Clauses.

II. Standard of Review

Issues of arbitrability are governed by the Federal Arbitration Act ("FAA"). Belnap v. Iasis Healthcare , 844 F.3d 1272, 1279 (10th Cir. 2017). The FAA "manifests a liberal federal policy favoring arbitration." Comanche Indian Tribe v. 49, L.L.C. , 391 F.3d 1129, 1131 (10th Cir. 2004) (quoting Gilmer v. Interstate/Johnson Lane Corp. , 500 U.S. 20, 25, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) ); see also Epic Sys. Corp. v. Lewis , ––– U.S. ––––, 138 S.Ct. 1612, 1621, 200 L.Ed.2d 889 (2018). Consequently, the Court must "resolve ‘any doubts concerning the scope of arbitrable issues... in favor of arbitration.’ " P & P Indus., Inc. v. Sutter Corp. , 179 F.3d 861, 866 (10th Cir. 1999) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ). In addition, "this liberal policy ‘covers more than simply the substantive scope of the arbitration clause,’ and ‘encompass[es] an expectation that [arbitration] procedures will be binding.’ " Id. (citation omitted).

Under the FAA, when parties agree to settle a controversy by arbitration, courts must enforce that agreement "save upon grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2 (2018). Such grounds include "generally applicable contract defenses, such as fraud, duress, or unconscionability." Rent-A-Center, W., Inc. v. Jackson , 561 U.S. 63, 68, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) (quoting Doctor's Assocs., Inc. v. Casarotto , 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996) ). "Under the FAA, unless the arbitration provision states otherwise, the question of the enforceability of a contract as a whole is a matter for the arbitrator. Only if an enforceability argument applies specifically to the arbitration provision (such as a claim that the provision is unconscionable or that a party was defrauded into agreeing to the arbitration provision) is enforceability to be decided by the court." In re Cox Enters., Inc. Set-top Cable Television Box Antitrust Litig. , 835 F.3d 1195, 1209 (10th Cir. 2016). While the Supreme Court recently held that courts should decide whether certain types of employment contracts meet FAA exceptions prior to ordering arbitration, see e.g. , New Prime Inc. v. Oliveira , ––– U.S. ––––, 139 S.Ct. 532, 538, 202 L.Ed.2d 536 (2019), this holding does not impact whether courts or the arbitrator should decide challenges to the overall contract.

Just as parties can agree to arbitrate the merits of a dispute, they can agree to arbitrate arbitrability, such as the validity and scope of an arbitration provision. Rent-A- Center, W., Inc. , 561 U.S. at 69, 130 S.Ct. 2772. If the parties' contract delegates the issues of arbitrability, the party opposing arbitration must specifically dispute the validity of the delegation clause. Id. at 72, 130 S.Ct. 2772.

"[A]lthough the presence of an arbitration clause generally creates a presumption in favor of arbitration, this presumption disappears when the parties dispute the existence of a valid arbitration agreement." Bellman v. i3Carbon, LLC , 563 F. App'x 608, 613 (10th Cir. 2014). Determining whether a dispute is subject to arbitration is "similar to summary judgment practice." Id. at 612 (quoting Hancock v. Am. Tel. & Tel. Co. , 701 F.3d 1248, 1261 (10th Cir. 2012) ). The party moving to compel arbitration must present "evidence sufficient to demonstrate the existence of an enforceable agreement." Id. If sufficient evidence of an enforceable agreement is presented, the burden then shifts to the nonmoving party to "raise a genuine dispute of material fact regarding the existence of an agreement." Id. ; BigBen 1613, LLC v. Belcaro Grp., Inc. , No. 17-cv-00272-PAB-STV, 2018 WL 4257321, at *2 (D. Colo. Sept. 6, 2018). When analyzing whether the parties agreed to submit a specific dispute to arbitration, "[a]ll ‘doubts are to be resolved in favor of arbitrability.’ " Coors Brewing Co. v. Molson Breweries , 51 F.3d 1511, 1514 (10th Cir. 1995) (quoting Oil, Chem., & Atomic Workers Int'l Union, Local 2-124 v. Am. Oil Co. , 528 F.2d 252, 254 (10th Cir. 1976) ).

Stays are generally disfavored in this District. See Wason Ranch Corp. v. Hecla Mining Co ., No. 07-cv-00267-EWN-MEH, 2007 WL 1655362, at *1 (D. Colo. June 6, 2007). However, a stay may be appropriate in arbitration disputes given the strong federal policy in favor of arbitration agreements under the FAA.

McWilliams v. Logicon Inc. , 143 F.3d 573, 576 (10th Cir. 1998). Once the Court determines that the claims are subject to an arbitration agreement, the Court must stay "the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration." 9 U.S.C. § 3. If "all of [the] plaintiff's claims are subject to arbitration, under the FAA, [the Court] must stay litigation of the entire case pending arbitration." GATX Mgmt. Servs., LLC v. Weakland , 171 F.Supp.2d 1159, 1167 (D. Colo. 2001).

III. Analysis

The analysis begins by examining whether enforceable Arbitration Clauses exist between the parties. The Court first determines whether each Plaintiff is bound by an existing Arbitration Clause. Next, the Court resolves whether Defendant WUFSI is bound by an Arbitration Clause, and whether Defendants Western Union and...

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