Opinion
Case No.: SACV 22-00102-CJC (KESx)
2022-09-21
Jeanette SOLIS, et al., Plaintiffs, v. EXPERIAN INFORMATION SOLUTIONS, INC., Defendant.
Christiane C. Kinney, Kinney Law PC, Los Angeles, CA, Matthew Michael Loker, Loker Law APC, Arroyo Grande, CA, Jonathan F. Raburn, Pro Hac Vice, McCarty and Raburn A. Consumer Law Firm PLLC, Granbury, TX, for Plaintiffs David Cantong, Jason Barrow. Angela M. Taylor, John A. Vogt, Jones Day, Irvine, CA, Justin Edward White, Pro Hac Vice, Allyson Catarina Arias, Jones Day, Houston, TX, for Defendant.
Christiane C. Kinney, Kinney Law PC, Los Angeles, CA, Matthew Michael Loker, Loker Law APC, Arroyo Grande, CA, Jonathan F. Raburn, Pro Hac Vice, McCarty and Raburn A. Consumer Law Firm PLLC, Granbury, TX, for Plaintiffs David Cantong, Jason Barrow. Angela M. Taylor, John A. Vogt, Jones Day, Irvine, CA, Justin Edward White, Pro Hac Vice, Allyson Catarina Arias, Jones Day, Houston, TX, for Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION [Dkt. 53]
CORMAC J. CARNEY, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION & BACKGROUND
On July 18, 2019, several plaintiffs, including David Cantong (now the only remaining plaintiff), brought individual claims under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681-1681x, against Experian Information Solutions, Inc., in the U.S. District Court for the Eastern District of Texas. (See Dkt. 1 [Complaint]; Dkt. 2 [Amended Complaint].) After the case was transferred to the Central District of California, this Court granted a motion to file an amended complaint to include class allegations against Experian. (See Dkt. 48 [Order Granting Plaintiffs' Motion for Leave to Amend, hereinafter "Order"].) Now before the Court is Experian's motion to compel arbitration pursuant to an arbitration agreement in the Terms of Use for an Experian service, CreditWorks, that Cantong allegedly agreed to. (See Dkt. 53-1 [Memorandum of Law in Support of Experian Information Solutions, Inc.'s Motion to Compel Arbitration].) For the following reasons, Experian's motion is GRANTED.
Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing set for September 26, 2022, is hereby vacated and removed from the calendar.
II. LEGAL STANDARD
Under the Federal Arbitration Act ("FAA"), "[a] written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy . . . 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. The FAA is "a congressional declaration of a liberal federal policy favoring arbitration agreements." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). In light of this, "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Id. at 24-25, 103 S.Ct. 927. 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, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). This Court's role is limited to determining "(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Kilgore v. KeyBank, Nat'l Ass'n, 718 F.3d 1052, 1058 (9th Cir. 2013) (en banc) (citation omitted); see also 9 U.S.C. § 2.
III. DISCUSSION
The parties do not dispute the existence of a valid agreement conferring a right to compel arbitration between Experian and Cantong. Instead, the dispute centers on two issues: first, whether Cantong's FCRA claims are within the scope of the arbitration agreement, and second, whether Experian waived its right to compel arbitration. The Court concludes that any scope issues are for the arbitrator to decide and that even if Experian waived arbitration, Cantong's recently amended complaint adding class allegations revived Experian's right to compel arbitration.
A. Arbitrability
Cantong argues that arbitration is "preclude[d]" because his claims are "indisputably outside the scope of the purported arbitration agreement[ ]." (Dkt. 56 [Plaintiff David Cantong's Opposition to Defendant Experian Information Solution, Inc.'s Motion to Compel Arbitration, hereinafter "Opp."] at 4-5.) That issue, however, is not for the Court to decide, as the agreement here provides that the arbitrator adjudicates arbitrability issues.
"The question whether the parties have submitted a particular dispute to arbitration, i.e., the 'question of arbitrability,' is 'an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise.' " Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (alteration in original) (citation omitted). If the parties have so provided, the court cannot decide arbitrability issues—even where the arbitrability of a claim appears "wholly groundless." Henry Schein, Inc. v. Archer & White Sales, Inc., — U.S. —, 139 S. Ct. 524, 529, 202 L.Ed.2d 480 (2019). Agreements specifying, for example, that an arbitrator decides "the validity or application of any of the provisions of" the agreement, Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 2011), or the "enforceability, revocability or validity of the Arbitration Provision or any portion of the Arbitration Provision," Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1209 (9th Cir. 2016), generally meet the "clear and unmistakable" threshold.
The Terms of Use are similarly clear that the arbitrator decides "scope" issues—i.e., which claims are subject to the agreement. The agreement states that "[a]ll issues are for the arbitrator to decide, including the scope and enforceability of this arbitration provision . . . , and the arbitrator shall have exclusive authority to resolve any such dispute relating to the scope and enforceability of this arbitration provision." (Dkt. 53-2 [Declaration of David Williams in Support of Experian Information Solutions, Inc.'s Motion to Compel Arbitration] at Ex. 3 [Terms of Use Agreement, hereinafter "TOU"].) Indeed, other courts have reached the same conclusion regarding Experian's Terms of Use. See, e.g., Stephens v. Experian Info. Sols., Inc., 614 F. Supp. 3d 735, 743, No. 22-00046 (D. Haw. July 13, 2022). Cantong may raise his arguments before the arbitrator, but it would be improper for this Court to entertain them.
B. Waiver
Cantong also argues that "this matter has been pending for more than three years" and "Experian's litigation tactics in this Court since then justify a finding that Experian waived any opportunity it may have had to compel arbitration." (Opp. at 8.) In reply, Experian argues that "the question of waiver has been delegated to an arbitrator to decide." (Dkt. 58 [Reply Memorandum in Support of Motion of Experian Information Solutions, Inc. to Compel Arbitration] at 6.) Experian further argues that it nonetheless "did not waive its right to compel arbitration," (id. at 8), and even if it did, "Cantong's amended complaint revived [its] right to compel arbitration," (id. at 11).
To start, this Court—not the arbitrator—must decide if Experian waived its right to compel arbitration. Whether a party has waived such a right through litigation conduct "is presumptively for a court and not an arbitrator to decide." Martin v. Yasuda, 829 F.3d 1118, 1123 (9th Cir. 2016). As Yasuda noted, the presumption is not overcome even with an agreement stating "that '[a]ny controversy . . . involving the construction or application of the terms, provisions, or conditions of this Agreement or otherwise arising out of or related to this Agreement shall likewise be settled by arbitration' " or that "[a]ll determinations as to the scope, enforceability and effect of this arbitration agreement shall be decided by the arbitrator, and not by a court." Id. at 1124 (alterations in original) (citation omitted). The language in the Terms of Use—"[a]ll issues are for the arbitrator to decide, including the scope and enforceability," (TOU)—is likewise insufficient to overcome the presumption. To the extent that "all issues . . . including" might be more expansive than the agreements that Yasuda considered, the language here is not so "clear" and "unmistakable" to encompass waiver through litigation conduct.
The Court need not—and therefore does not—decide whether Experian in fact waived its right to compel arbitration, because Cantong's amended complaint revived the right even if it were waived. "[T]he filing of an amended complaint does not automatically revive all defenses or objections that the defendant may have waived in response to the initial complaint." Krinsk v. SunTrust Banks, Inc., 654 F.3d 1194, 1202 (11th Cir. 2011). That principle applies to the right to compel arbitration. See id. "[C]ourts will permit the defendant to rescind his earlier waiver, and revive [the] right to compel arbitration, only if it is shown that the amended complaint unexpectedly changes the scope or theory of the plaintiff's claims." Id.; see also Manasher v. NECC Telecom, 310 F. App'x 804, 807 (6th Cir. 2009) ("[W]e hold that the additional claims contained in the amended complaint did not substantially alter the scope or theory of this matter in such a way as to revive the defendant's right to compel arbitration . . . ."). Thus, in Krinsk, the defendant's right to compel arbitration was revived even though the new complaint "merely assert[ed] new claims based on the same operative facts" because the complaint "greatly broadened the potential scope of this litigation by opening the door to thousands—if not tens of thousands—of new class plaintiffs not contemplated in the original class definition." See 654 F.3d at 1203.
The same concept applies here. Cantong amended the complaint to include class allegations when the previous complaint contained only individual claims. (See Dkt. 39 [Plaintiffs' Notice of Motion and Motion for Leave to Amend Complaint; Memorandum of Points and Authorities]; Dkt. 50 [Amended Class Action Complaint].) That alteration in the scope of potential liability justifies revival of Experian's right to arbitration. Experian made it clear at the time that Cantong sought to amend that it wished to invoke its right to compel arbitration. (See Dkt. 42 [Defendant Experian Information Solutions, Inc.'s Opposition to Plaintiffs' Motion for Leave to Amend Complaint]; Order.) And Experian did not dillydally in filing the present motion. Accordingly, even if Experian waived its right to compel arbitration, its right was subsequently revived.
IV. CONCLUSION
For the foregoing reasons, Experian's motion to compel arbitration is GRANTED. Pursuant to 9 U.S.C. § 3, this case is hereby STAYED pending the outcome of arbitration.