Hansen v. LMB Mortg. Servs., Inc.

• Decision Date: 11 June 2021
• Docket Number: No. 20-15272,20-15272
• Citation: 1 F.4th 667
• Parties: Bill HANSEN, Plaintiff-Appellee, v. LMB MORTGAGE SERVICES, INC., dba LowerMyBills.com; CPL Assets, LLC, dba Core Digital Media, Defendants-Appellants, and Digital Media Solutions, LLC, dba DCMG, Defendant.
• Court: U.S. Court of Appeals — Ninth Circuit

1 F.4th 667

Bill HANSEN, Plaintiff-Appellee,

v. LMB MORTGAGE SERVICES, INC., dba LowerMyBills.com; CPL Assets, LLC, dba Core Digital Media, Defendants-Appellants,andDigital Media Solutions, LLC, dba DCMG, Defendant.

No. 20-15272

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 1, 2021 San Francisco, California

Filed June 11, 2021

Jeffrey R. Johnson (argued), Yaakov M. Roth, and Andrew J. M. Bentz, Jones Day, Washington, D.C.; John A. Vogt and Edward S. Chang, Jones Day, Irvine, California; for Defendants-Appellants.

David W. Hall (argued), Hedin Hall LLP, San Francisco, California; Frank S. Hedin, Hedin Hall LLP, Miami, Florida; for Plaintiff-Appellee.

Before: Sandra S. Ikuta and Jacqueline H. Nguyen, Circuit Judges, and Richard K. Eaton,^* Judge.

IKUTA, Circuit Judge:

LMB Mortgage Services, Inc. and CPL Assets, LLC (collectively, LMB), appeal the district court's determination that there were genuine disputes of material fact as to whether Bill Hansen was bound to an arbitration agreement. Because the district court mistakenly issued a nonfinal order denying LMB's motion to compel arbitration, while stating its intent to schedule a trial to resolve the factual issues, we have jurisdiction to consider this appeal. But in order to ensure consistency with the procedures required by 9 U.S.C. § 4, we vacate the district court's order and remand for further proceedings.

I

LMB, doing business as LowerMyBills.com, maintained a website for persons interested in refinancing their mortgages. In March 2014, the website collected information from a visitor identified as Willena Hansen. The visitor input a name, a telephone number, an email address, the address of a property that Willena Hansen owned with her son Bill Hansen and his wife, the current value of that property, its mortgage balance, and the interest rate. The telephone number that the visitor input belonged to Bill Hansen.

Directly below this section for inputting visitor information, a visitor could click a button containing the text "Click to See Your Free Results!" (the "submit button"). Below this submit button is text stating: "By clicking the [submit] button, you agree to the Terms of Use and Privacy Policy, to be matched with up to 5 participants [in the lending program], and consent ... for us and/or them to contact you (including through automated or prerecorded means) via telephone, mobile device (including SMS and MMS), and/or e-mail about lending information, even if you are on a corporate, state or national Do Not Call Registry." The Terms of Use included an arbitration agreement.

In November 2018, Bill received a text message stating:

willena – Regarding your monthly payment for your Roseville home.

Come back and see your potential savings in 2 minutes.

**[hyperlink]**

LMB Reply STOP to stop

After receiving this message, Bill brought a putative class action against LMB for a violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, which prohibits companies from transmitting autodialed text messages and calls without the recipient's consent. LMB moved to compel arbitration based on Bill Hansen's assent to the arbitration agreement in the Terms of Use or, in the alternative, holding Bill Hansen to the arbitration agreement if Willena Hansen formed the arbitration agreement.

The district court reviewed this motion to compel arbitration under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 – 16. The procedure for addressing such a motion is set forth in 9 U.S.C. § 4. Under § 4, in response to a motion to compel arbitration, the district court must "hear the parties." Id. If the court is "satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." Id. But "[i]f the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof." Id. In applying this language, district courts rely on the summary judgment standard of Rule 56 of the Federal Rules of Civil Procedure. See, e.g. , Tabas v. MoviePass, Inc. , 401 F. Supp. 3d 928, 936 (N.D. Cal. 2019) ; Lopez v. Terra's Kitchen, LLC , 331 F. Supp. 3d 1092, 1097 (S.D. Cal. 2018) ; Concat LP v. Unilever, PLC , 350 F. Supp. 2d 796, 804 (N.D. Cal. 2004). The summary judgment standard is appropriate because the district court's order compelling arbitration "is in effect a summary disposition of the issue of whether or not there had been a meeting of the minds on the agreement to arbitrate." Par-Knit Mills, Inc. v. Stockbridge Fabrics Co. , 636 F.2d 51, 54 n.9 (3d Cir. 1980), abrogated on other grounds by Aliments Krispy Kernels, Inc. v. Nichols Farms , 851 F.3d 283, 287–88 (3d Cir. 2017).¹

The district court may decide the case in a bench trial if the party opposing arbitration does not demand a jury trial. See 9 U.S.C. § 4. But if a jury trial is demanded, "the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose." Id.

In this case, Bill Hansen opposed LMB's motion to compel arbitration and demanded a jury trial if the court found that the making of the arbitration agreement was in issue. Pursuant to § 4, the district court held a hearing in which the parties presented evidence concerning whether they had formed an arbitration agreement. Hansen declared under penalty of perjury that he never visited the LMB website, that he did not bind himself to the arbitration agreement by clicking the submit button, and that Willena Hansen told him before she passed away that although she may have visited an LMB website, "she did not believe she had ever clicked a button to actually submit any of the information she had entered into such a webpage." LMB submitted evidence to show that, based on LMB records, either Hansen or his mother had clicked the submit button.

After considering this evidence, the district court determined that "the existence of an agreement to arbitrate" was "in issue." It concluded that there was a genuine dispute of material fact as to whether Bill Hansen clicked the submit button and agreed to the Terms of Use. Further, it held that even assuming Willena Hansen had agreed to LMB's Terms of Use, there was a genuine issue of material fact as to whether Bill Hansen was bound to the arbitration agreement with LMB under a third-party beneficiary theory. Having concluded that the question whether Bill Hansen was bound by LMB's arbitration agreement was "in issue," the district court held that a jury trial was required to resolve the factual disputes. But the court also ordered that "[d]efendants’ motion to compel arbitration and stay the case ... is DENIED."

LMB appealed, arguing that the district court erred in holding that there were disputed issues of material fact as to whether Hansen was bound to the arbitration agreement.

II

We first address the question whether we have jurisdiction over this appeal, because "we are obliged to inquire sua sponte whenever a doubt arises as to the existence of federal jurisdiction." Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle , 429 U.S. 274, 278, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977).

The district court's order denying the motion to compel arbitration was nonfinal. The denial was merely for docket management purposes, because it did not reach the merits of the question whether Hansen was bound to the arbitration agreement. Indeed, under § 4, a court is not authorized to dispose of a motion to compel arbitration until after factual disputes have been resolved, and so the court was compelled to reserve its ruling on the merits. In other words, in denying the motion to compel, the district court did not conclusively rule on whether Hansen was bound to an arbitration agreement, but merely concluded that it could not resolve the issue as a matter of law.

Although the district court's order was premature and nonfinal, we conclude that we have jurisdiction over the district court's order. In enacting the FAA, Congress gave courts of appeals jurisdiction over specified interlocutory orders relating to arbitration. See 9 U.S.C. § 16. Section 16 provides that "[a]n appeal may be taken from– (1) an order ... (B) denying a petition under section 4 of this title to order arbitration to proceed." 9 U.S.C. § 16(a)(1)(B). On its face, this language gives us jurisdiction over any order denying a motion to compel arbitration; it does not differentiate between final and nonfinal orders.² Therefore, denial of a motion to compel arbitration is immediately appealable even if the district court "intended to reconsider the question of arbitrability following further fact-finding and possibly a trial." Boomer v. AT & T Corp. , 309 F.3d 404, 412 (7th Cir. 2002). The broader context of § 16 supports this reading of § 16(a)(1)(B). Section 16(a)(3) gives appellate courts jurisdiction over "a final decision with respect to an arbitration that is subject to this title." If we interpreted § 16(a)(1)(B) as applying only to final decisions to deny motions to compel arbitration, § 16(a)(3) ’s reference to "final decisions" would be surplusage. See Boomer , 309 F.3d at 412–13. Therefore, "[t]he more natural reading" of § 16(a)(1)(B) is "to treat all orders declining to compel arbitration as reviewable." Sandvik AB v. Advent Int'l Corp. , 220 F.3d 99, 103 (3d Cir. 2000).

The majority of our sister circuits that have considered this issue agree that § 16 provides jurisdiction over all orders denying a motion to compel arbitration, even if they are nonfinal and the district court has reserved ruling on the merits. See, e.g. , id. at 102 ; Boomer , 309 F.3d at 412 ; McLaughlin Gormley King Co. v. Terminix Int'l Co., L.P. , 105 F.3d 1192, 1193 (8th Cir. 1997) ; Snowden v. CheckPoint...