United States District Court, S.D. California
GERALD MCGHEE, An Individual, On Behalf of Himself and All Others Similarly Situated, Plaintiff,
NORTH AMERICAN BANCARD, LLC, Defendant.
ORDER: (1) DENYING DEFENDANT'S MOTION TO COMPEL
ARBITRATION, (Doc. No. 13); AND (2) GRANTING
DEFENDANT'S REQUEST TO STRIKE
DECLARATION FILED CONCURRENTLY WITH MOTION TO COMPEL, (Doc.
before the Court is Defendant North American Bancard,
LLC's (“NAB”) motion to compel arbitration.
(Doc. No. 13.) Plaintiff Gerald McGhee (“McGhee”)
opposes the motion. (Doc. No. 23.) Having reviewed the
parties' arguments in light of controlling authority, and
pursuant to Local Civil Rule 7.1.d.1, the Court finds the
matter suitable for disposition without oral argument. For
the reasons set forth below, the Court
DENIES NAB's motion.
facts underlying this dispute are simple and largely
undisputed. NAB is the provider of mobile credit card
processing services called “PayAnywhere.” McGhee,
a merchant, acquired a card reader from NAB, but never used
it. After more than one year, NAB began deducting a monthly
non-use fee from McGhee's bank account. Despite
contacting NAB to stop the charges and demand a refund, NAB
continued to charge McGhee for several months and has refused
to issue him a refund.
instituted this lawsuit on March 24, 2017, by filling the
class action complaint. (Doc. No. 1.) McGhee brings this
nationwide putative class action on behalf of “[a]ll
persons in the United States charged a Fee as a result of
obtaining [NAB]'s Card Reader beginning at the start of
the applicable statute of limitations period and ending on
the date as determined by the Court . . . .” (Doc. No.
1 ¶ 20.) On May 15, 2017, NAB filed the instant motion
to compel arbitration, asserting that McGhee agreed to
arbitrate his claims when he signed up for NAB's
services. (Doc. No. 13.) McGhee filed an opposition, (Doc.
No. 23), and NAB replied, (Doc. No. 25). This order
Federal Arbitration Act governs the enforcement of
arbitration agreements involving interstate commerce. 9
U.S.C. § 2. Pursuant to § 2 of the FAA, an
arbitration agreement is “valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.”
Id. The FAA permits “[a] party aggrieved by
the alleged failure, neglect, or refusal of another to
arbitrate under a written agreement for arbitration [to]
petition any United States district court . . . for an order
directing that such arbitration proceed in the manner
provided for in [the] agreement.” Id. §
the liberal federal policy favoring arbitration, the FAA
“mandates that district courts shall direct
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). Thus, in a motion to compel
arbitration, the district 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, 673 F.3d 947, 955-56 (9th Cir. 2012) (citing
Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207
F.3d 1126, 1130 (9th Cir. 2000)). If these factors are met,
the court must enforce the arbitration agreement in
accordance with its precise terms. Id.
generally applicable defenses to contract, such as fraud,
duress, or unconscionability, may invalidate arbitration
agreements, the FAA preempts state law defenses that apply
only to arbitration or that derive their meaning from the
fact that an agreement to arbitrate is at issue. AT&T
Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011).
There is generally a strong policy favoring arbitration,
which requires any doubts to be resolved in favor of the
party moving to compel arbitration. Moses H. Cone Mem.
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25
(1983). However, where a party challenges the existence of an
arbitration agreement, “the presumption in favor of
arbitrability does not apply.” Goldman, Sachs &
Co. v. City of Reno, 747 F.3d 733, 742 (9th Cir. 2014).
asserts that when McGhee signed up for NAB's credit card
processing services, McGhee was required to accept the
“Terms and Conditions” by clicking on a button
next to the words “I have read and agree to the Terms
and Conditions.” (Doc. No.13 at 9.) Because he agreed
to the Terms and Conditions by checking the box, NAB argues
he also agreed to the User Agreement, a hyperlink to which
was contained on the Terms and Conditions page. (Id.
at 9-10.) In turn, the User Agreement contains the
arbitration clause that NAB now invokes. (Id. at
10-11; Doc. No. 19 at 2-3 ¶¶ 4, 6-8.) That
arbitration clause states, in pertinent part, the following:
22. Disputes: PA [PayAnywhere] and you each
agreement that any dispute or claim arising out of or
relating to this Agreement or the Services (each, a
‘Dispute'), shall be settled by following
the procedures: . . .
c. IN THE ABSENCE OF RESOLVING THE DISPUTE, AND INSTEAD OF
SUING IN COURT, PA AND YOU AGREE TO SETTLE AND RESOLVE FULLY
AND FINALLY ALL DISPUTES EXCLUSIVELY BY ARBITRATION . . . .
THE AGREEMENT TO HAVE DISPUTES RESOLVED BY ARBITRATION IS
MADE WITH THE UNDERSTANDING THAT EACH PARTY IS IRREVOCABLY,
KNOWINGLY AND INTELLIGENTLY WAIVING AND RELEASING ITS RIGHT
TO LITIGATE DISPUTES THROUGH A COURT AND TO HAVE A JUDGE OR
JURY DECIDE DISPUTES.
No. 19 at 36.) Based on this arbitration clause, NAB argues
that because McGhee clicked the box stating he accepted the
Terms and Conditions, he agreed to binding arbitration. (Doc.
No. 13 at 12.) Thus, NAB asserts the Court must compel the
parties to arbitrate McGhee's claims. (Id. at
15.) In opposition, McGhee makes two arguments: (1) the User
Agreement was a “browsewrap” agreement that
cannot be enforced; and (2) even if the User Agreement is
enforceable, the claims brought in this case fall outside the
arbitration clause's purview. (Doc. No. 23.) Because the
Court finds McGhee did not assent to the User Agreement, the
Court does not reach McGhee's argument that his claims do
not fall within the arbitration clause's scope.
facts of this case were as simple as NAB suggests, it would
present a clear-cut case of assent to a modified clickwrap
agreement. The Ninth Circuit recently explained the spectrum
of ways website operators attempt to establish mutual
manifestation of assent.At one end of this spectrum are
“‘clickwrap' (or ‘click-through')
agreements, in which website users are required to click on
an ‘I agree' box after being presented with a list
of terms and conditions of use[.]” Nguyen v. Barnes
& Noble Inc., 763 F.3d 1171, 1175-76 (9th Cir.
2014). At the other end of the spectrum are
“‘browsewrap' agreements, where a
website's terms and conditions of use are generally
posted on the website via a hyperlink at the bottom of the
screen. . . . Unlike a clickwrap agreement, a browsewrap