Hale v. Heath

          ORDER ON MOTION TO COMPEL ARBITRATION

          BARRY TED MOSKOWITZ United States District Judge.

         Plaintiff Nathan Hale filed this putative class action bringing claims under the Telephone Consumer Protection Act against attorney John Heath, doing business as Lexington Law Firm. Hale’s claims depend on allegations that Heath called him without his consent using an automatic telephone dialing system.

         Heath then filed a motion to compel arbitration. No class has been certified, nor is a motion for class certification pending.

         Heath’s Motion

         Heath presents evidence that on March 11, 2015, Hale visited the website web2carz.com, which he used to request a car loan. After submitting his loan request, the evidence says, he was directed to an acknowledgment web page, which asked if he would like to contact or be contacted by a representative from the Lexington Law Firm about credit repair. The evidence also suggests he completed registration and clicked a button marked “Get Your Free Consultation.” A link to the terms of use appeared above the link. The terms included the arbitration clause that Heath now seeks to enforce.

         The only part of this evidence Heath disputes is whether he was directed to the second web page - the one regarding credit repair - and whether he completed and submitted the credit repair registration. His primary arguments are that he never entered into the agreement, or that it is unenforceable. Specifically, he argues there was no mutual assent to the agreement both because it was too inconspicuous and because he did not intend to be bound by it. He also argues it is a contract of adhesion that is both procedurally and substantively unconscionable.

         Legal Standards

         The parties agree, as does the Court, that the agreement is governed by the Federal Arbitration Act (FAA). Under the FAA, arbitration agreements are just as valid and enforceable as other contracts. See 9 U.S.C. § 2. If an agreement falls under the FAA, the Court “must issue an order compelling arbitration if the following two-pronged test is satisfied: (1) a valid agreement to arbitrate exists; and (2) that agreement encompasses the dispute at issue.” United Computer Systems v. AT&T Corp., 298 F.3d 756, 766 (9th Cir. 2002); see also 9 U.S.C. §§ 2, 4.

         The FAA embodies a “liberal federal policy favoring arbitration agreements, ” and “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). Any ambiguities in the language of an agreement should be resolved in favor of arbitration. EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002). But the policy favoring arbitration does not apply to the question of whether there is a valid arbitration agreement in the first place. See Comer v. Micor, Inc., 436 F.3d 1098, 1104 n.11 (9th Cir. 2006). Rather, the Court applies ordinary state contract law principles to make this determination. Waffle House. 534 U.S. at 293; Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9^th Cir. 2003). Arbitration agreements, therefore, are “subject to all defenses to enforcement that apply to contracts generally.” Id.

         When deciding any factual issues raised in a motion to compel arbitration, the Court applies a summary judgment-like standard. See Amaya v. Spark Energy Gas, LLC, 2016 WL 1410755, slip op. at *3 (N.D. Cal., Apr. 11, 2016). The burden of proof falls on the party asserting jurisdiction and contesting arbitration. See Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 227 (1987).

         Discussion

         Which State Law Governs the Contract

         Hale argues that the law of California, where he allegedly entered into the contract, governs. Heath, citing the terms of service, argues that federal or Utah law governs. Because federal arbitration law generally looks to state contract principles to determine if a contract was validly entered into, this would mean the Court would apply Utah law.

         Whether the agreement was validly entered into is a threshold question. If it was not, its choice of law provisions also would not apply. The Court therefore initially assumes California law applies. But, as discussed below, it does not really ...