In re Campos
| Decision Date | 30 September 2015 |
| Docket Number | Case No. 3:15-CV-00629-SI |
| Parties | REBECCA V. CAMPOS, individually and on behalf of all others similarly situated, Plaintiff, v. BLUESTEM BRANDS, INC. and WEBBANK, Defendants. |
| Court | U.S. District Court — District of Oregon |
Bonner Charles Walsh, WALSH, LLC, PO Box 7 Bly, OR 97622; Kelly D. Jones, KELLY D. JONES, ATTORNEY AT LAW, 819 SE Morrison St., Suite 255, Portland, OR 97214; Michael R. Fuller, OLSENDAINES, PC, US Bancorp Tower, 111 SW 5th Ave., 31st Fl., Portland, OR 97204. Of Attorneys for Plaintiff.
Aaron D. Van Oort and Erin L. Hoffman, FAEGRE BAKERS DANIELS LLP, 2200 Wells Fargo Center, 90 South Seventh St., Minneapolis, MN 55402; Brandy A. Sargent and Reed W. Morgan, STOEL RIVES, LLP, 900 SW 5th Ave., Suite 2600, Portland, OR 97204. Of Attorneys for Defendants.
On October 8, 2014, Plaintiff Rebecca Campos ("Campos") filed an adversary proceeding against Defendants in U.S. Bankruptcy Court for the District of Oregon. She alleges that Defendants, with whom she had opened a credit account, willfully violated an automatic stay by collecting a debt that Campos contends was discharged in her Chapter 7 bankruptcy case. Shebrings suit individually and on behalf of all others similarly situated. While the adversary proceeding was before the Bankruptcy Court, Defendants moved to compel arbitration based on a credit agreement for the credit account that Campos opened. Judge Randall L. Dunn issued a Report and Recommendation recommending withdrawal of the reference for Campos's adversary proceeding. Dkt. 1. This Court adopted the Report and Recommendation and now considers Defendant's motion to compel arbitration. For the reasons set forth below, Defendants' motion is deferred pending resolution in either an evidentiary hearing or a jury trial of the factual dispute over whether the parties agreed to arbitration.
The Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-15, applies to all contracts involving interstate commerce and specifies that "written agreements to arbitrate controversies arising out of an existing contract 'shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.'" Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (quoting 9 U.S.C. § 2). The text of the FAA "leaves no place for the exercise of discretion by a district court," but instead "mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Id. at 218 (citing 9 U.S.C. §§ 3-4) (emphasis in original). The district court must limit itself "to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000).
Under the FAA, "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983). However, the "liberal federal policy regarding the scope of arbitrable issues is inapposite" to the question whether a particular party agreed to the arbitration agreement. Comerv. Micor, Inc., 436 F.3d 1098, 1104 n.11 (9th Cir. 2006). The validity of arbitration agreements remains "a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT & T Technologies, Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648 (1986). Because arbitration is fundamentally "a matter of contract," the FAA "places arbitration agreements on an equal footing with other contracts and requires courts to enforce them according to their terms." Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 67 (2010) (citations omitted). Courts should also generally "apply ordinary state-law principles that govern the formation of contracts" to determine whether the parties agreed to arbitrate. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).1
A court, not an arbitrator, must decide "the threshold issue of the existence of an agreement to arbitrate." Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1140-41 (9th Cir. 1991). In deciding whether an agreement to arbitrate existed, a court should apply a summary-judgment-style standard. "Only when there is no genuine issue of fact concerning the formation of the agreement" should the court decide as a matter of law that an agreement to arbitrate existed. Id. at 1141 (quoting Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 (3d Cir. 1980)). The district court should give the party opposing a motion to compel arbitration "the benefit of all reasonable doubts and inferences that may arise." Id. The party seeking to compel arbitration bears "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). Where "the making of the arbitration agreement" is at issue, "the court shall proceed summarily to the trial thereof." 9 U.S.C. § 4. "The court shall hear and determine such issue" if the party alleged to be in violation of the agreement does not demand a jury trial. Id.
Applying standards applicable to a motion for summary judgment (Fed. R. Civ. P. 56), the Court draws the following facts from the allegations in Campos's complaint, the parties' papers, declarations, and associated exhibits.
Bluestem Brands, Inc. ("Bluestem") is a Delaware corporation with its principal place of business in Minnesota. Dkt. 19 ¶ 2. Bluestem is the parent company of Fingerhut, a retail business that makes products available for purchase through direct mail and Internet shopping channels. Id. To allow customers to pay for their Fingerhut purchases on credit, Bluestem developed a loan program with WebBank, a Utah-chartered industrial bank headquartered in Salt Lake City. WebBank issues the Fingerhut credit accounts, and Bluestem services the accounts. Id. ¶ 4.
Bluestem mailed Campos a Fingerhut catalog with a prescreened offer of credit. Dkt. 19 ¶ 7. Bluestem asserts that it mailed summary credit disclosures along with the offer. Id. Bluestem's summary credit disclosures stated that her credit agreement would contain a binding arbitration provision. Id. ¶ 8. Campos claims she never noticed or read the summary credit disclosures. Dkt. 21 ¶ 11.
On June 1, 2013, Campos called Bluestem using the telephone number in the catalog and applied for a Fingerhut credit account. Dkt. 19 ¶ 9. She provided the Bluestem telephone representative with her mother's address, 18395 NW Chemeketa Lane, Apartment C, Portland, Oregon 97729. She did not, however, reside at that address. Dkt. 19 ¶ 11; Dkt. 21 ¶ 4.
According to Bluestem, every telephone representative follows a script that requires the representative to ask the customer if she agrees to the summary credit disclosures. The representative must then check a box next to the question "Do you agree to the terms and conditions of the account?" If the customer does not agree, the representative must refrain from checking the box and discontinue the application. Dkt. 26 ¶ 6. Campos claims the representative never asked her if she agreed to summary credit disclosures or any terms and conditions relating to the account. Dkt. 21 ¶ 9. Bluestem never claims that the telephone representative would have gone through specific elements of the summary credit disclosures or terms of use with Campos. Bluestem, however, approved Campos's application, and WebBank issued her a credit account. Dkt. 19 ¶ 9.
Bluestem asserts that after the phone call, it mailed Campos a welcome package at 18395 NW Chemeketa Lane, the address she had provided over the phone. The welcome package purportedly contained four items: a welcome letter with a detachable paper card listing a Fingerhut account number, the 2013 WebBank Fingerhut Credit Account Agreement ("2013 WFCAA"), the Fingerhut privacy statement, and the WebBank privacy statement. Dkt. 26 ¶¶ 9-10. According to Bluestem's Vice President, Bluestem records show that on June 2, 2013, Bluestem sent its print vendor a written request to print a welcome package for Campos. Dkt. 26 ¶ 11. Bluestem, however, has not produced records showing that the vendor actually prepared or mailed the package. Campos asserts that she did not receive a welcome package but rather simply received a letter, no more than two pages, with the paper card attached. Dkt. 21 ¶ 12. She remembers receiving the letter approximately ten to fourteen days after applying for the credit account. Dkt. 21 ¶¶ 4, 12.
The 2013 WFCAA stated, "You and WebBank will be bound by this Agreement from the first time a transaction is posted to your Account." Dkt. 19 ¶ 12. Campos made her first Fingerhut purchase using the WebBank account on November 12, 2013. Id. The day before her first purchase, she also provided Bluestem with a new address: 11635 Bowmont Street, Portland, Oregon 97225. Dkt. 19 ¶ 14.
Bluestem further asserts that in April 2014 it updated its account agreement and sent a notice of the changes—though not the new agreement—to Campos at her Bowmont Street address. Id. Bluestem called the new agreement the WebBank Fingerhut Advantage Credit Account Agreement ("2014 WFACAA"). Dkt. 19 ¶ 15. Both the 2013 and 2014 agreements contained the same choice-of-law provision: "This Agreement and your Account will be governed by federal law applicable to a FDIC-insured institution and, to the extent permitted by law and not preempted by federal law, the law of Utah, without regard to its choice of law provisions." Dkt. 19 ¶ 16. Both the 2013 and 2014 agreements also contained the same arbitration provision:
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