Melo v. Zumper, Inc.

Decision Date27 January 2020
Docket NumberCivil No. 3:19cv621 (DJN)
CourtU.S. District Court — Eastern District of Virginia
Parties Ernest MELO, on behalf of himself and all others similarly situated, Plaintiff, v. ZUMPER, INC., et al., Defendants.

Leonard Anthony Bennett, Consumer Litigation Associates, Newport News, VA, Matthew James Erausquin, Tara Boen Keller, Consumer LitIgation Associates PC, Alexandria, VA, for Plaintiff.

Craig Thomas Merritt, Lauren Elizabeth Fisher White, Christian & Barton LLP, Richmond, VA, John Andrew Shope, Pro Hac Vice, Kevin James Conroy, Pro Hac Vice, Foley Hoag LLP, Boston, MA, Esther Slater McDonald, Seyfarth Shaw LLP, Atlanta, GA, for Defendant.

MEMORANDUM OPINION

David J. Novak, United States District Judge

Plaintiff Ernest Melo ("Plaintiff"), on behalf of himself and all others similarly situated, brings this action against Zumper, Inc. ("Zumper") and Trade House Data ("Trade House") (collectively, "Defendants"), alleging various violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681, et seq. This matter comes before the Court on Zumper's Motion to Transfer Venue and to Stay Proceedings Pending Arbitration (ECF No. 11) and Trade House's Joinder in Motion to Stay Pending Arbitration (ECF No. 34). For the reasons set forth below, the Court hereby GRANTS Zumper's Motion to Transfer Venue and to Stay Proceedings Pending Arbitration (ECF No. 11) and DENIES WITHOUT PREJUDICE Trade House's Joinder in Motion to Stay Pending Arbitration (ECF No. 34).

I. BACKGROUND

A. Factual Allegations.

Zumper is a corporation organized under Delaware law with its principal place of business in San Francisco, California. (Affidavit of Brian Coyne in Supp. of Def.'s Mot. to Transfer Venue and to Stay Proceedings Pending Arbitration ("Coyne Aff.") (ECF No. 12-1) ¶ 2.) The company operates a real estate website that allows individuals throughout the United States and Canada to search for rental apartments and to connect with landlords and realtors. (Coyne Aff. ¶ 2.) Through the website, potential renters may request that Zumper gather credit, criminal and eviction records from third-party sources and transmit those records to landlords and realtors for evaluation. (Coyne Aff. ¶ 2.) Further, through the website, landlords can communicate with and evaluate prospective tenants. (Coyne Aff. ¶ 2.) Trade House is a corporation headquartered in Sandy, Utah. (Compl. ¶ 10.) Plaintiff alleges that Trade House operates as a consumer reporting agency and regularly assembles, evaluates and publishes consumer information and reports to third parties. (Compl. ¶ 11.)

In August 2017, Plaintiff, a resident of Virginia, applied to rent a condominium. (Compl. ¶¶ 6, 13.) At the time, the leasing agent "requested Plaintiff's consumer report through Zumper's online tenant screening resource." (Compl. ¶¶ 13-14.) Zumper's records show that on August 28, 2017, a realtor sent Plaintiff a request via Zumper to "create a Credit Report and to run a background screen." (Coyne Aff. ¶ 6.) Zumper's internal records reveal that "Ernest Martin de Jesus Melo" created a Zumper account on August 28, 2017.

(Coyne Aff. ¶ 20). Plaintiff subsequently ordered and paid fifty dollars for Zumper to send credit, criminal and eviction reports to his prospective landlord. (Coyne Aff. ¶ 32.)

Zumper then obtained Plaintiff's requested records from Trade House. (Compl. ¶ 15). Zumper shared with the prospective landlord a consumer report that, according to Plaintiff, included derogatory reports that did not belong to him. (Compl. ¶¶ 16-17.) Plaintiff alleges that due to Zumper's failure to maintain procedures to ensure maximum accuracy, Zumper incorrectly reported Plaintiff's father's information instead of his own. (Compl. 17-18.) Because of this error, Plaintiff states that he could not secure the rental property and remained further deterred from applying for other rental properties because of the inaccurate records. (Compl. ¶ 19.) Finally, following this incident, Plaintiff reports requesting a copy of his consumer file; however, Plaintiff asserts, Zumper did not respond to the request. (Compl. 20-21.)

According to Zumper's records, Plaintiff used a Samsung Galaxy S8 running the Google Chrome web browser to create his Zumper account. (Coyne Aff. ¶ 24.) When a prospective user, like Plaintiff, receives a request from a landlord, the user clicks a blue "Get Started" button that takes him to a website to create his account. (Coyne Aff. ¶¶ 8-10.) According to Zumper records, this website had a pink "Create an Account" button. (Coyne Aff. ¶ 10.) Clicking this button produces a pop-up window that prompts a user to enter a name and password. (Coyne Aff. ¶ 10.) A rendition of what the website would have looked like to a user creating an account in August 2017 appears below.1

(Coyne Aff. at 5.) Below the "Create Account" button, a prospective user sees the following language without having to scroll down: "By creating a Zumper account you indicate your acceptance of our Terms and Conditions and Privacy Policy." (Coyne Aff. ¶ 13.) Zumper asserts that a prospective user cannot create an account without entering the required information and affirmatively clicking the blue "Create Account" button. (Coyne Aff. ¶ 12.)

The words "Terms and Conditions" and "Privacy Policy" appeared in blue to indicate that they were hyperlinks. (Coyne Aff. ¶ 14.) Clicking on the "Terms and Conditions" hyperlink took a user to Zumper's Terms of Use. (Coyne Aff. ¶ 15.) According to Zumper, the Terms of Use as they existed on August 28, 2017, the day that Plaintiff created his account, included an agreement to binding arbitration and, to the extent that the claims were not arbitrable, exclusive venue in the federal or state courts in San Francisco. (Coyne Aff. ¶ 27; Ex. D to Coyne Aff. (the "Agreement") (ECF No. 12-5) at 16-17.) Section 14 of the Agreement, entitled "Arbitration and Dispute Resolution," provided:

All disputes arising out of or relating to this Agreement, the Website or the Services shall be resolved exclusively by binding arbitration before a single arbitrator (the "Arbitrator") in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the "AAA") then in effect (for information on the AAA and its rules, see www.adr.org.) and the further procedures set forth herein, except that each party retains the right to seek injunctive or other equitable relief in a court of competent jurisdiction to prevent the actual or threatened infringement, misappropriation or violation of a party's copyrights, trademarks, trade secrets, patents or other intellectual property rights.
...
Notwithstanding the foregoing, you may at your option file an individual claim in any small claims court for disputes or claims within the scope of its subject matter jurisdiction if such court has personal jurisdiction. Zumper does not hereby waive any defense that such jurisdiction may be lacking in your state. Without derogation of the parties' obligation to arbitrate as set forth herein, for any claims other than those in small claims court, jurisdiction for any court proceedings arising out of or relating to this Agreement, the Website or the Services shall be vested exclusively in, and venue shall be laid in, the state or federal courts sitting [in] San Francisco, California except that, following confirmation of an arbitration award in a state or federal court in San Francisco, California, a judgment arising therefrom may be executed in any court of competent jurisdiction.

(Agreement at 16-17.)

B. Plaintiff's Complaint.

On August 22, 2019, Plaintiff filed this Complaint (ECF No. 1) against Defendants, setting forth three claims for relief. In Count I, Plaintiff alleges that Trade House violated 15 U.S.C. § 1681e(b) by failing to "maintain reasonable procedures to ensure the maximum possible accuracy of the consumer credit information it reported." (Compl. ¶ 24.) Similarly, in Count II, Plaintiff alleges that Zumper violated 15 U.S.C. § 1681e(b) by failing to "maintain reasonable procedures to ensure the maximum possible accuracy of the consumer credit information it reported." (Compl. ¶ 28.)

Finally, in Count III, Plaintiff asserts that Zumper violated 15 U.S.C. § 1681g when it failed to provide Plaintiff a response to his written request for his consumer file, failed to disclose the "source of the judgment information contained in his consumer report" and failed to "identify each person that procured the Plaintiff's report during the preceding [one]-year period." (Compl. ¶ 32.) Pursuant to Federal Rule of Civil Procedure 23, Plaintiff brings Count III on behalf of himself and a putative class defined as:

All natural persons residing in the United States (a) who requested their consumer disclosure from Zumper, (b) within the two year period preceding the filing of this action and during its pendency, and (c) to whom Zumper failed to provide a response that included the source of the judgment information that appeared in the consumer's file.

(Compl. ¶ 33.) Under all three counts, Plaintiff asserts that he is entitled to recover actual damages, statutory damages and punitive damages, in addition to costs and attorneys' fees. (Compl. ¶¶ 26, 30, 41.)

C. Defendant Zumper's Motion to Transfer Venue and Stay Proceedings.

In response to Plaintiff's Complaint, on September 24, 2019, Zumper filed a Motion to Transfer Venue and to Stay Proceedings Pending Arbitration. (ECF No. 11). Zumper moves to transfer this entire action to the United States District Court for the Northern District of California. (Def. Zumper, Inc.'s Mem. in Supp. of its Mot. to Transfer Venue and to Stay Proceedings Pending Arbitration ("Def.'s Mem.") (ECF No. 12) at 1.) Zumper first asserts that Plaintiff agreed to arbitration or to exclusive venue in the Northern District of California when he created an account and accepted the terms of the Agreement. (Def.'s Mem. at 1.)...

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