Parm v. Bluestem Brands, Inc.

• Decision Date: 07 August 2018
• Docket Number: No. 17-1932,No. 17-1931,17-1931
• Parties: Jessica PARM, on behalf of herself and all others similarly situated, Plaintiff-Appellee v. BLUESTEM BRANDS, INC., Defendant-Appellant Sara Arce; Anne Bowers ; Nena Osorio, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees v. Bluestem Brands, Inc., Defendant-Appellant
• Court: U.S. Court of Appeals — Eighth Circuit

898 F.3d 869

Jessica PARM, on behalf of herself and all others similarly situated, Plaintiff-Appellee

v.BLUESTEM BRANDS, INC., Defendant-Appellant

Sara Arce; Anne Bowers ; Nena Osorio, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees

v.Bluestem Brands, Inc., Defendant-Appellant

No. 17-1931

No. 17-1932

United States Court of Appeals, Eighth Circuit.

Submitted: May 17, 2018

Filed: August 7, 2018

Clayton Dean Halunen, HALUNEN & ASSOCIATES, Minneapolis, MN, Jeffrey D. Kaliel, KALIEL PLLC, Washington, DC, Charles D. Moore, Christopher J. Moreland, HALUNEN LAW, Minneapolis, MN, Leah M. Nicholls, PUBLIC JUSTICE, Washington, DC, Melissa S. Weiner, PEARSON & SIMON, Minneapolis, MN, for Plaintiff-Appellee.

Erin L. Hoffman, Jeffrey Justman, Staci L. Perdue, Aaron Daniel Van Oort, FAEGRE & BAKER, Minneapolis, MN, for Defendant-Appellant.

Before SHEPHERD, KELLY, and GRASZ, Circuit Judges.

SHEPHERD, Circuit Judge.

Jessica Parm, Sarah Arce, Anne Bowers, and Nena Osorio represent a class of people who purchased goods from Bluestem Brands, Inc. ("Bluestem") and were extended a line of credit in order to make those purchases. As part of the financing application, each plaintiff agreed to arbitrate any dispute "arising from or relating to the credit offered or provided to" them. After discovering that Bluestem allegedly engaged in unscrupulous business practices, the plaintiffs brought these class action suits against Bluestem, asserting a number of claims under federal and state laws. The cases were consolidated, and Bluestem moved to compel arbitration. The district court granted the motion in part and denied it in part. Bluestem appeals, arguing that all of the plaintiffs’ claims fall within the scope of the arbitration clauses. We agree and therefore reverse the district court and order arbitration of all plaintiffs’ claims.

I.

Bluestem sells consumer goods via traditional mail and telephone orders or online using two websites, Fingerhut and Gettington. Despite a remarkably similar appearance between the websites, they differ in two significant ways: First, the price of an item offered on Fingerhut is generally higher than the price of that same item on Gettington. Second, the primary price for an item on the Fingerhut website is displayed in terms of a monthly payment, whereas the price displayed on the Gettington website is a single, lump-sum amount.¹

Bluestem partners with independent financial institutions to provide credit lines to consumers for purchases made from Fingerhut. That partner was MetaBank prior to July 2012 and WebBank thereafter. These financing options were displayed on the Fingerhut website and in printed advertisements, and customers were able to apply online or over the phone. During the application process, all consumers agreed to one of two arbitration clauses relevant to the present case. The 2010 credit agreement—applicable to Parm, Bowers, and the class members they represent—states as follows:

[I]f a dispute of any kind arises out of this Agreement, either you or we, at our sole discretion, can choose to have that dispute resolved by binding arbitration. ... Any claim, dispute or controversy, (whether in contract, regulatory, tort or otherwise, whether pre-existing, present or future and including constitutional, statutory, common law, intentional tort and equitable claims) arising from or relating to the credit offered or provided to you; the actions of yourself, us or third parties; or the validity of this Arbitration provision (individually and collectively, a "Claim"), must, after an election by you or us, be resolved by binding arbitration.

The 2013 and 2014 Agreements—applicable to Arce, Osorio, and the class members they represent—reads:

[E]ither you or we, at our sole discretion, can choose to have any dispute arising out of or relating to this Agreement or our relationship resolved by binding arbitration.

....

For purposes of this Arbitration provision, "dispute" shall be construed as broadly as possible, and shall include any claim, dispute or controversy (whether in contract, regulatory, tort or otherwise, whether preexisting, present or future and including constitutional, statutory, common law, intentional tort and equitable claims) arising from or relating to this Agreement, the credit offered or provided to you, or the goods or services you purchase; the actions of yourself, us, or third parties; or the validity of this Agreement or this Arbitration provision. It includes disputes brought as counterclaims, cross claims, or third party claims.

The agreements further state that the contracting party would be bound by the terms contained therein from the time he or she first used the credit. Each of the plaintiffs was approved for a line of credit with one of the banks and proceeded to use that financing to purchase goods via Fingerhut.

The plaintiffs brought these actions,² alleging that Bluestem engaged in a targeted advertising campaign, whereby it directed people with lower income and credit scores to Fingerhut and people with higher income and credit scores to Gettington. The plaintiffs further alleged that Bluestem imposed hidden finance charges that exceed maximum statutory limits in a manner violative of a number of state and federal usury, contract, truth-in-lending, and deceptive marketing laws. Bluestem moved to compel arbitration under the agreements the plaintiffs signed, and the district court granted this motion in part, thereby compelling arbitration of only a subset of the claims.

As is relevant to this appeal, the court found that three groups of claims fall outside the scope of the respective credit agreements and thus are not subject to arbitration. First, it found that the state usury counts survive Bluestem’s motion "to the extent ... [they] allege that the hidden finance charges violate state law regardless of the interest rates charged under the credit agreements." Second, to the extent that the plaintiffs’ state and federal counts allege that "Bluestem should have disclosed that the prices included hidden finance charges," the court concluded that "these claims do not relate to the revolving credit accounts in any way." Finally, it held that "to the extent that Plaintiffs claim unjust enrichment solely in relation to Bluestem’s sale of goods and pricing for those goods—as opposed to the Banks’ provision of credit through the revolving credit accounts—these claims do not arise out of or relate to the credit agreements or the Plaintiffs’ relationship with the Banks." Bluestem appeals.

II.

Bluestem contends that the district court erred in its determination that the plaintiffs’ state-law usury counts, state and federal financial-disclosure counts, and state-law unjust enrichment counts were not arbitrable. We review this challenge de novo. Cicle v. Chase Bank USA, 583 F.3d 549, 553 (8th Cir. 2009). There is no challenge to Bluestem’s ability to enforce the agreements, nor do the appellees contend that the agreements themselves are invalid.

Two questions are pertinent when reviewing an order denying a motion to compel arbitration: (1) whether the parties entered a valid arbitration agreement, and, (2) if so, whether the parties’ particular "dispute falls within the scope of the arbitration agreement." Unison Co. v. Juhl Energy Dev., Inc., 789 F.3d 816, 818 (8th Cir. 2015) (emphasis omitted). "[S]tate contract law governs the threshold question of whether an enforceable arbitration agreement exists between litigants; if an enforceable agreement exists, the federal substantive law of arbitrability governs whether the litigants’ dispute falls within the scope of the arbitration agreement." Donaldson Co. v. Burroughs Diesel, Inc., 581 F.3d 726, 731 (8th Cir. 2009). Given the appellees’ concession that there is a valid arbitration agreement,³ we are concerned only with whether the current dispute falls within the agreements’ scope.

It is a "fundamental principle that arbitration is a matter of contract." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (internal quotation marks omitted). Accordingly, "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002). But where a valid arbitration agreement exists, "[w]e must liberally construe" it, "resolving any doubts in favor of arbitration ... unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." Unison Co., 789 F.3d at 818 (second alteration in original) (internal quotation marks omitted). The specific inquiry before us, then, is whether the arbitration clauses are susceptible to an interpretation that covers the three subsets of claims the district court exempted from arbitration. Cf. id.; see also AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ("[A]n order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." (internal quotation marks omitted) ).

In resolving this issue, the first question is "whether the arbitration clause is broad or narrow." Unison Co., 789 F.3d at 818 (quoting Fleet Tire Serv. of N. Little Rock v. Oliver Rubber Co., 118 F.3d 619, 621 (8th Cir. 1997) ). "If the clause is broad, the liberal federal policy favoring arbitration agreements requires that a district court send a claim to arbitration ... as long as the underlying factual allegations simply touch matters covered by the arbitration provision." Id. (second alteration in original) (internal quotation marks omitted); see also United Steelworkers of Am. v. Duluth Clinic, Ltd., 413 F.3d 786, 789 (8th Cir. 200...