YVONNE GONZALEZ ROGERS, District Judge.
Plaintiff Arlene Bell-Sparrow, proceeding pro se, brings this action against defendants SFG*Proschoicebeauty, MTZ*Carenature, and Citibank, N.A. ("Citibank"). (See Dkt. No. 1 ("Compl.").) Plaintiff asserts the following seventeen causes of action: (1) negligent misrepresentation; (2) deceptive business practice; (3) unauthorized credit card charges; (4) unlawful, unfair, and fraudulent business practices in violation of California Business and Professions Code section 17200; (5) violation of the California Consumers Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 17500 et seq.; (6) failure to disclose material terms of offer; (7) violation of the Federal Trade Commission Act, 15 U.S.C. § 45(a); (8) violation of the Restore Online Shoppers' Confidence Act ("ROSCA"), 15 U.S.C. § 8404; (9) violation of ROSCA — Auto Renewal Continuity Plan; (10) violation of the Electronic Funds Transfer Act, 15 U.S.C. § 1693 et seq.; (11) violation of Express Warranties Article 2 Section 2-313; (12) violation of California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq.; (13) breach of the covenant of good faith and fair dealing; (14) promissory estoppel; (15) false advertising; (16) adhesion and unconscionable contract; and (17) invasion of privacy and seclusion. (Id. ¶¶ 41-148.)
Now before the Court is defendant Citibank's motion to compel arbitration and stay the instant action pursuant to 9 U.S.C. section 3. (Dkt. No. 12 ("MTC").) Having carefully considered the pleadings in this action and the papers and exhibits submitted, and for the reasons set forth below, the Court
Plaintiff Arlene Bell-Sparrow opened an account with Citibank in June 2017. (See Declaration of Christy G. Bennett ISO MTC ("Bennett Decl.") ¶ 6, Dkt. No. 12-2 at ECF pp. 1-3.) Plaintiff used her Citibank credit card to purchase facial cream from defendant MTZ*Carenature on October 30, 2017. (Compl. ¶ 3.) She alleges that her single purchase caused her to accrue an unauthorized credit card debt of $871.79. (Id.) After plaintiff opened her account with Citibank, she received a credit card agreement in the mail, between Citibank and plaintiff, along with her credit card. (Bennett Decl. ¶ 6; see also Citibank Card Agreement ("Credit Card Agreement"), Dkt. No. 12-2 at ECF pp. 5-19.) Plaintiff never signed the Credit Card Agreement, which contains a South Dakota choice-of-law provision and an arbitration provision. (Opp. at 6; Credit Card Agreement at 9-10 ("Arbitration Agreement").) In pertinent part, the Arbitration Agreement provides as follows:
(Arbitration Agreement at 9-10 (emphases removed).)
On November 5, 2018, plaintiff filed the instant suit based upon diversity jurisdiction. (See Compl. ¶ 26.) On December 18, 2018, Citibank filed the instant motion to compel arbitration and stay the action, along with a declaration of Citibank employee Christy G. Bennett. On January 18, 2019, plaintiff filed two "objections," one to Citibank's motion, (Dkt. No. 30 ("MTC Objection")), and one to the Bennett Declaration, (Dkt. No. 31 ("Decl. Objection").) Citibank filed its reply in support of its motion on January 29, 2019. (Dkt. No. 36 ("Reply").) Despite her previously filed "objection" to the motion, plaintiff filed a separate "reply in opposition to Citibank['s] motion to compel" on February 8, 2019.
Defendants SFG*Proschoicebeauty and MTZ*Carenature have not appeared. With respect to the former, plaintiff apparently served the incorrect company and still has not effectuated service on the proper defendant. (See Dkt. No. 13 at ECF p. 7 (indicating that "the entity that [plaintiff] named as a defendant in this lawsuit" is a different company than plaintiff served).) As for the latter, the proof of service indicates that "FedEx certified mailed packet to address provided [by plaintiff]" but that it was "returned as undeliverable." (See Dkt. No. 15.)
The Federal Arbitration Act (the "FAA") requires a district court to stay judicial proceedings and compel arbitration of claims covered by a written and enforceable arbitration agreement. 9 U.S.C. § 3. A party may bring a motion in a federal district court to compel arbitration. Id. § 4. The FAA reflects "both a liberal federal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (internal quotation marks and citations omitted). "In accordance with that policy, `doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.'" Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1072 (9th Cir. 2013) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)). The FAA broadly provides that an arbitration clause in a contract involving a commercial transaction "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2.
In ruling on a motion to compel arbitration, a court's role is typically limited to determining whether: (i) an agreement exists between the parties to arbitrate; (ii) the claims at issue fall within the scope of the agreement; and (iii) the agreement is valid and enforceable. Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). However, "if there is a genuine dispute of material fact as to any of these queries, a [d]istrict [c]ourt should apply a `standard similar to the summary judgment standard of Fed.R.Civ.P. 56.'" Ackerberg v. Citicorp USA, Inc., 898 F.Supp.2d 1172, 1175 (N.D. Cal. 2012) (quoting Concat LP v. Unilever, PLC, 350 F.Supp.2d 796, 804 (N.D. Cal. 2004)); see also Starke v. SquareTrade, Inc., 913 F.3d 279, 281 n.1 (2d Cir. 2019) (same). Once a court is satisfied that the parties entered into an enforceable arbitration agreement covering the subject of their litigation, the Court must promptly compel arbitration. 9 U.S.C. § 4. 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." Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (emphasis in original). Generally, if a contract contains an arbitration provision, arbitrability is presumed, and "doubts should be resolved in favor of coverage." AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986).
"Both the arbitrability of the merits of a dispute and the question of who has the primary power to decide arbitrability depend on the agreement of the parties." Goldman, Sachs & Co. v. Reno, 747 F.3d 733, 738 (9th Cir. 2014) (citing First Option of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995)); see also Oracle, 724 F.3d at 1072. However, these questions are decided by the arbitrator instead of the court where "the parties clearly and unmistakably" express that intention. AT&T Techs., 475 U.S. at 649; see also Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010) ("[P]arties can agree to arbitrate `gateway' questions of `arbitrability,' such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.").
When a court compels arbitration, as "a matter of its discretion to control its docket," it may stay litigation among non-arbitrating parties pending the outcome of arbitrable claims or a parallel arbitration. Moses H. Cone Mem'l Hosp., 460 U.S. at 20 n.23; see also, e.g., BrowserCam, Inc. v. Gomez, Inc., No. 08-CV-02959-WHA, 2009 WL 210513, at *3 (N.D. Cal. Jan. 27, 2009) (it is "within a district court's discretion whether to stay, `for [c]onsiderations of economy and efficiency,' an entire action, including issues not arbitrable, pending arbitration.") (quoting United States ex rel. Newton v. Neumann Caribbean Int'l., Ltd., 750 F.2d 1422, 1427 (9th Cir. 1985)).
Citibank moves the Court to compel arbitration of plaintiff's claims in the instant action, pursuant to the Arbitration Agreement contained in the Credit Card Agreement. Plaintiff opposes arbitration.
As a preliminary matter, if an arbitration agreement delegates the question of arbitrability to the arbitrator, a party opposing arbitration may only challenge the delegation provision itself as unconscionable. Brennan v. Opus Bank, 796 F.3d 1125, 1128 (9th Cir. 2015). Here, Citibank's briefs are silent as to whether there is clear and unmistakable delegation of the arbitrability issue in the Arbitration Agreement. The Court deems Citibank's silence in this regard as a concession that there is not. Thus, it is for the Court to determine whether the agreement to arbitrate is enforceable and encompasses plaintiff's claims.
The Court's first inquiry is whether plaintiff entered into an arbitration agreement with Citibank. This inquiry necessarily requires the Court to discuss the enforceability of the Credit Card Agreement under the rubric of the applicable state's contract law. As such, the Court must decide whether South Dakota law is the applicable substantive law. Citibank contends, and plaintiff does not dispute, that South Dakota law applies based on the Credit Card Agreement's choice-of-law provision.
A forum state's substantive law applies to the choice-of-law rule determination where jurisdiction in the case is based on diversity jurisdiction. See Ferens v. John Deere Co., 494 U.S. 516, 524-25 (1990); Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-79 (1938); Muldoon v. Tropitone Furniture Co., 1 F.3d 964, 966 (9th Cir. 1993). Because plaintiff initiated this lawsuit in California, the Court applies California's choice-of-law rules. See Bridge Fund Capital Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1002 (9th Cir. 2010). "When an agreement contains a choice of law provision, California courts apply the parties' choice of law unless the analytical approach articulated in § 187(2) of the Restatement (Second) of Conflict of Laws . . . dictates a different result." Id. (quoting Hoffman v. Citibank (S.D.), N.A., 546 F.3d 1078, 1082 (9th Cir. 2008) (per curiam)). "Under the Restatement approach, the court must first determine `whether the chosen state has a substantial relationship to the parties or their transaction, . . . or whether there is any other reasonable basis for the parties' choice of law.'" Bridge Fund, 622 F.3d at 1002 (quoting Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459, 466 (1992)). "If . . . either test is met, the court must next determine whether the chosen state's law is contrary to a fundamental policy of California." Bridge Fund, 622 F.3d at 1002 (quoting Nedlloyd Lines B.v., 3 Cal. 4th at 466) (emphasis in original).
Here, the Credit Card Agreement contains a governing law provision stating that "[f]ederal law and the law of South Dakota govern the terms and enforcement of this Agreement" because the credit on plaintiff's account extended from South Dakota. (See Credit Card Agreement at 10; Bennett Decl. ¶ 1.) Accordingly, the Court finds that South Dakota has a substantial relationship to this dispute, and application of South Dakota law would not be contrary to any fundamental policy of California. As such, the Court will apply South Dakota law to determine whether Citibank's contract requires plaintiff to pursue her claims against Citibank through arbitration.
Though not entirely clear, plaintiff appears to argue that she has a right to a jury trial because "the existence of a binding arbitration agreement is disputed." (MTC Objection at 8.) However, plaintiff does not, in fact, dispute that the Arbitration Agreement exists. Namely, she does not dispute that she received the Credit Card Agreement with Citibank or argue that the Credit Card Agreement did not contain the Arbitration Agreement at issue. (See id.) Plaintiff also produced no evidence to suggest that Citibank's exemplar contract is not the same agreement that Citibank mailed with her credit card and that consequently governed her account with Citibank.
Under South Dakota law, plaintiff entered into the Credit Card Agreement containing the Arbitration Agreement once she used her credit card. Specifically, South Dakota's statute governing contracts between a card holder and issuer states:
S.D. Codified Laws § 54-11-9. Plaintiff never cancelled her account with Citibank, and her account remained "open and active" as of December 17, 2018. (Bennett Decl. ¶ 7.)
Plaintiff avers that Citibank's binding Arbitration Agreement is invalid because it amounts to an unconscionable contract of adhesion and was not the result of a bargained-for exchange. (See Opp. at 4.)
The party seeking to avoid arbitration bears the "burden of establishing that the arbitration clause at issue . . . is unconscionable." Rogers v. Royal Caribbean Cruise Line, 547 F.3d 1148, 1158 (9th Cir. 2008). South Dakota law requires a showing of both procedural and substantive unconscionability to render a contract unenforceable. See Hoffman, 546 F.3d at 1083 n.2 (citing Nygaard v. Sioux Valley Hosps. & Health Sys., 731 N.W.2d 184, 195 (S.D. 2007)). In making its determination, the Court focuses on "both overly harsh or one-sided terms, i.e., substantive unconscionability; and how the contract was made (which includes whether there was a meaningful choice), i.e., procedural unconscionability." Nygaard, 731 N.W.2d at 194-95 (internal quotation marks omitted).
With respect to the former, a contract is generally substantively unconscionable under South Dakota law only "when the inequality of the bargain is such as to shock the conscience" of the court. Tsiolis v. Hatterscheidt, 187 N.W.2d 104, 106 (S.D. 1971) (citation omitted); see also Davis v. O'Melveny & Myers, 485 F.3d 1066, 1075 (9th Cir. 2007) ("Substantive unconscionability . . . focuses on the terms of the agreement and whether those terms are so one-sided as to shock the conscience."). Here, plaintiff argues that the Arbitration Agreement is unconscionable because it is one-sided, provides no "opt-out clauses," and plaintiff had "no realistic opportunity to look elsewhere for a more favorable contract." (Opp. at 4-5.) However, she fails to establish that the Arbitration Agreement contains "overly harsh or one-sided terms" which "shock the conscience" and therefore has not met her burden for establishing substantive unconscionability. Her bald assertion that the Arbitration Agreement is "unconscious" does not suffice. (Id. at 5.)
As for procedural unconscionability, plaintiff argues that the binding Arbitration Agreement represents an unconscionable contract of adhesion. (See id.) As an initial matter, contracts of adhesion are not per se procedurally unconscionable under South Dakota law. See Rozenboom v. Nw. Bell Tel. Co., 358 N.W.2d 241, 245 (S.D. 1984) ("We do not suggest that simply because this contract is standardized and preprinted, ipso facto, it is unenforceable as a contract of adhesion."); see also Concepcion, 563 U.S. at 346-47 (acknowledging that "the times in which consumer contracts were anything other than adhesive are long past").
The Arbitration Agreement expressly states that plaintiff "may reject this arbitration provision by sending a written rejection . . . within 45 days of Account opening." (Arbitration Agreement at 10.) Accordingly, plaintiff had a sufficiently "meaningful choice" in creating the contract with Citibank and assented to its terms when she failed to opt out. See Baldwin v. Nat'l Coll., 537 N.W.2d 14, 18 (S.D. 1995) (finding that a contract was not adhesive because it "was not presented in a `take-it-or-leave-it' fashion") (citing Rozenboom, 358 N.W.2d at 245); accord Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1212 (9th Cir. 2016) ("An arbitration agreement is not adhesive if there is an opportunity to opt out of it.") (citing Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198, 1199 (9th Cir. 2002)). Therefore, the arbitration agreement is not procedurally unconscionable.
Under South Dakota law, contract formation requires "a meeting of the minds or mutual assent on all essential terms." Am. Prairie Constr. Co. v. Hoich, 594 F.3d 1015, 1023 (8th Cir. 2010) (quoting Jacobson v. Gulbransen, 623 N.W.2d 84, 90 (S.D. 2001)). "The existence of mutual consent is determined by considering the parties' words and actions." Hoich, 594 F.3d at 1023 (quoting Vander Heide v. Boke Ranch, Inc., 736 N.W.2d 824, 832 (S.D. 2007)). Here, plaintiff assented to Citibank's binding Arbitration Agreement when she accepted and began using her credit card. See S.D. Codified Laws § 54-11-9. Crucially, plaintiff does not dispute that she received the Credit Card Agreement with Citibank, that the contract contained a binding arbitration agreement, and that she continued using her credit card for at least 30 days without cancelling her account.
Plaintiff argues that Citibank's arbitration agreement violates her Seventh Amendment right to a jury trial and that the arbitration fees violate her due process right to an accessible arbitral forum. (Opp. at 10-11; MTC Objection at 9.) Plaintiff does not persuade.
As to the former, in general "a party has `an absolute right to a jury trial unless a jury has been waived.'" Kam-Ko Bio-Pharm Trading Co. Ltd-Australasia v. Mayne Pharma (USA) Inc., 560 F.3d 935, 942 (9th Cir. 2009) (citing Pac. Indem. Co. v. McDonald, 107 F.2d 446, 448 (9th Cir. 1939)). "The right to a jury trial in federal court is governed by federal law and, under federal law, parties may contractually waive their right to a jury trial." Applied Elastomerics, Inc. v. Z-Man Fishing Prods., Inc., 521 F.Supp.2d 1031, 1044 (N.D. Cal. 2007) (citation omitted). "Federal law . . . permits such waivers as long as each party waived its rights knowingly and voluntarily." In re Cty. of Orange, 784 F.3d 520, 523, 529 n.4 (9th Cir. 2015) (noting that the FAA "permits pre-dispute jury trial waivers") (citing Palmer v. Valdez, 560 F.3d 965, 968 (9th Cir. 2009)). Here, plaintiff waived her right to a jury trial when she used Citibank's credit card under the terms of the Credit Card Agreement, which thereby equates to knowing assent to the terms of the same. Further, she did not opt out of the Arbitration Agreement. See Arbitration Agreement at 9; see also, e.g., Kilgore v. Keybank, Nat'l Ass'n, 673 F.3d 947, 964 (9th Cir. 2012) (enforcing an arbitration provision that clearly states that plaintiffs "would waive if they did not opt-out . . . the right to a jury trial"); Devries v. Experian Info. Sols., Inc., No. 16-cv-02953-WHO, 2017 WL 733096, at *2 (N.D. Cal. Feb. 24, 2017) (upholding the validity of a similar arbitration agreement with a jury trial waiver).
Moreover, "[w]hen a party seeks to have an arbitration agreement declared invalid on the basis of prohibitive expense, that party bears the burden of proving that the contract is unenforceable." Kam-Ko, 560 F.3d at 940 (citing Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 92 (2000) (holding that the party resisting arbitration "bears the burden of showing the likelihood of incurring such costs")). Here, plaintiff asserts that "she cannot pay a AAA arbitration, due to the cost of arbitration." (MTC Objection at 9.) However, she has not shown any likelihood of incurring prohibitive costs. The Arbitration Agreement provides that "[Citibank] will pay [plaintiff's] share of the arbitration fee for an arbitration of Claims of $75,000 or less if they are unrelated to debt collection." (Arbitration Agreement at 9.) Moreover, "even if [p]laintiff were asserting a claim above $75,000," Citibank indicates that it is "willing to pay the arbitration fee." (Reply at 7 (emphasis supplied).) Therefore, plaintiff will not incur prohibitive expenses from pursuing her claims against Citibank through arbitration.
Having found that an agreement to arbitrate exists, the Court's next determination is whether the agreement encompasses the dispute at issue. Cox v. Ocean View Hotel Corp., 533 F.3 1114, 1119 (9th Cir. 2008). Generally, an "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." AT&T Techs., Inc., 475 U.S. at 650 (citation omitted). If the arbitration agreement is broad and lacks "any express provision excluding a particular grievance from arbitration," then "only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail." Id. (citation omitted). Moreover, the party "resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration." Green Tree, 531 U.S. at 91-92.
Here, the Arbitration Agreement is broad and extends to "any claim, dispute or controversy between [plaintiff] and [Citibank] arising out of or related to [plaintiff's] Account, a previous related Account, or [plaintiff's and Citibank's] relationship." (Arbitration Agreement at 9.) Apart from a few narrow exceptions, the agreement plainly states that "all Claims are subject to arbitration, no matter what legal theory they're based on or what remedy . . . they seek[.]" (Id.) Plaintiff's cursory "objection" to Citibank's assertion that plaintiff's claims fall within the scope of the Arbitration Agreement fails to meet her burden to show that her claims are unsuitable for arbitration.
For the foregoing reasons, Citibank's motion to compel arbitration is
The Court
Plaintiff is
The Court hereby
The Court advises plaintiff that a Handbook for Pro Se Litigants, which contains helpful information about proceeding without an attorney, is available in the Clerk's office or through the Court's website, http://cand.uscourts.gov/pro-se.
The Court also advises plaintiff that additional assistance may be available by making an appointment with the Legal Help Center.
This Order terminates Docket Number 12.
Moreover, the parties mutually agreed to forfeit their trial rights if either party elected to pursue arbitration, which serves as adequate alternative consideration. See Arbitration Agreement at 9; McNamara v. Yellow Transp., Inc. 570 F.3d 950, 956-57 (8th Cir. 2009) (finding that, under South Dakota law, "the parties' mutual agreement to relinquish trial rights serves as adequate alternative consideration").