Court Opinion

ID: 9840453
Source: CourtListenerOpinion
Date Created: 2023-09-18 17:00:49.522896+00
Date Added: 2024-06-11T10:46:30.874536
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        SEP 18 2023
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

DEAN WEBB, an individual; EDGAR                 No.    22-56153
GARCIA, an individual, on behalf of
themselves and all others similarly situated,   D.C. No.
                                                8:22-cv-00699-CJC-ADS
                Plaintiffs-Appellees,

 v.                                             MEMORANDUM*

AUTO KNIGHT MOTOR CLUB, INC., a
California Corporation,

                Defendant-Appellant,

and

DEALER LOYALTY PROTECTION, INC.,
a Wyoming Corporation; et al.,

                Defendants.

DEAN WEBB, an individual; EDGAR                 No.    22-56169
GARCIA, an individual, on behalf of
themselves and all others similarly situated,   D.C. No.
                                                8:22-cv-00699-CJC-ADS
                Plaintiffs-Appellees,

 v.

DEALER LOYALTY PROTECTION, INC.,

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
a Wyoming Corporation; RICHARD
BENEVENTO, an individual and Corporate
Agent,

                Defendants-Appellants,

and

AUTO KNIGHT MOTOR CLUB, INC., a
California Corporation; et al.,

                Defendants.

DEAN WEBB, an individual; EDGAR                 No.   22-56177
GARCIA, an individual, on behalf of
themselves and all others similarly situated,   D.C. No.
                                                8:22-cv-00699-CJC-ADS
                Plaintiffs-Appellees,

 v.

PELICAN INVESTMENT HOLDINGS
GROUP, LLC, DBA AAP, a Delaware
Limited Liability Company,

                Defendant-Appellant,

and

DEALER LOYALTY PROTECTION, INC.,
a Wyoming Corporation; et al.,

                Defendants.

DEAN WEBB, an individual; EDGAR                 No.   22-56193
GARCIA, an individual, on behalf of
themselves and all others similarly situated,   D.C. No.
                                                8:22-cv-00699-CJC-ADS

                                          2
                Plaintiffs-Appellees,

 v.

SING FOR SERVICE, LLC, DBA MEPCO,
an Illinois Limited Liability Company,

                Defendant-Appellant,

and

DEALER LOYALTY PROTECTION, INC.,
a Wyoming Corporation; et al.,

                Defendants.

                   Appeal from the United States District Court
                      for the Central District of California
                   Cormac J. Carney, District Judge, Presiding

                      Argued and Submitted August 15, 2023
                            San Francisco, California

Before: CALLAHAN and BADE, Circuit Judges, and ANTOON,** District Judge.

      Defendants-Appellants challenge the district court’s denial of their motion to

stay Plaintiffs-Appellees’ consumer protection lawsuit pending arbitration. We

have jurisdiction under 9 U.S.C. § 16(a)(1)(A), see Arthur Andersen LLP v.

Carlisle, 556 U.S. 624, 627 (2009), and we review de novo the denial of a motion

to stay under 9 U.S.C. § 3, Blair v. Rent-A-Ctr., Inc., 928 F.3d 819, 832 (9th Cir.

      **
            The Honorable John Antoon II, United States District Judge for the
Middle District of Florida, sitting by designation.

                                          3
2019). We vacate and remand for further proceedings.1

       After Plaintiffs filed a putative class action against Defendants in a

California state court, Defendants removed it to federal court and moved for a stay

pending arbitration under 9 U.S.C. § 3. In their stay motion, which was

accompanied by a sworn declaration and supporting documents, Defendants

asserted two theories of the existence of a valid arbitration agreement between the

parties. First, Defendants argued that Plaintiffs entered into a valid “clickwrap

agreement” with Defendants when they affirmatively assented by downloading that

agreement and clicking a button to indicate their agreement to the terms and

conditions. Second, Defendants put forth an “accept or return” theory—that

Plaintiffs accepted the written contract that Defendants sent to them when they did

not reject it or opt out.

       Plaintiffs did not respond to Defendants’ initial motion to stay, and the

district court granted that motion. In doing so, the court expressly found “that

there is an agreement to arbitrate” because Defendants “offered sufficient facts to

show that the Agreement is an enforceable ‘clickwrap’ agreement, routinely upheld

by California courts.” But Plaintiffs then moved to vacate the order granting the

stay on the basis that their failure to file a response was due to excusable neglect.

The district court granted Plaintiffs’ motion and vacated its order granting the stay.

       1
           Defendants-Appellants’ Request for Judicial Notice (Dkt. 13) is denied.

                                           4
      Defendants filed a second motion to stay under 9 U.S.C. § 3, asserting the

same two theories—“clickwrap” and “accept or return”—and again attached a

declaration and supporting documents. This time, Plaintiffs responded with a

memorandum of law, declarations, and evidence of their own. The district court

denied the motion to stay, and Defendants filed this appeal.

      In denying the second motion to stay, the district court summarized the

competing evidence submitted by the parties regarding the existence of an

agreement to arbitrate. But the court did not resolve that competing evidence, and

the court’s rationale for denying the stay is contained in three sentences of the

appealed order:

      [T]he parties agree that Plaintiffs did not see th[e agreement] until after
      they had paid Defendants over the phone for purported extended
      warranties. And the agreement Defendants submit . . . looks markedly
      different than [Plaintiff] Webb’s copy of the agreement. Under these
      circumstances, giving Plaintiffs the benefit of all reasonable doubts and
      inferences, Defendants have not proven by a preponderance of the
      evidence that the parties mutually consented to form an agreement to
      arbitrate.

As Defendants correctly assert, these statements do not explain why either of

Defendants’ theories of assent fails.

      First, the fact that Plaintiffs did not see a written agreement until after they

had paid Defendants on the phone for purported extended warranties is not

determinative of either of Defendants’ theories of assent. See Norcia v. Samsung

Telecomms. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017) (explaining that

                                           5
federal courts “‘apply ordinary state-law principles that govern the formation of

contracts’ to decide whether an agreement to arbitrate exists” (quoting First

Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995))); Salgado v. Carrows

Rests., Inc., 244 Cal. Rptr. 3d 849, 853 (Ct. App. 2019) (explaining that California

courts have rejected “the ‘contention that an agreement to arbitrate a dispute must

pre-date the actions giving rise to the dispute’” and holding that “[a]n arbitration

agreement may be applied retroactively to transactions which occurred prior to

execution of the arbitration agreement” (first quoting Zink v. Merrill Lynch, Pierce,

Fenner & Smith, Inc., 13 F.3d 330, 332 (10th Cir. 1993); and then quoting Merrill

Lynch, Pierce, Fenner & Smith, Inc. v. King, 804 F. Supp. 1512, 1514 (M.D. Fla.

1992))). Neither the district court nor Plaintiffs cite any authority undermining the

validity of the “clickwrap” and “accept or return” theories based on making an

initial payment before assenting to an agreement. Second, the supposed “marked[]

differen[ces]” between the parties’ two versions of the agreement boil down to

variations in the cover pages rather than in their material terms.

      In sum, rather than make factual findings and legal conclusions as it did in

the order granting Defendants’ initial motion to stay, in the appealed order the

district court did not grapple with the parties’ competing evidence on the factual

                                          6
questions germane to whether an agreement to arbitrate exists.2 The court did not

explain why a valid “clickwrap” agreement did not exist, nor did it address—

legally or factually—Defendants’ “accept or return” theory of contracting.

      Accordingly, we vacate the district court’s order and remand for further

proceedings consistent with this memorandum disposition. On remand, the district

court must, as the finder of fact, resolve the parties’ competing factual positions on

whether a valid “clickwrap” agreement exists and must evaluate the legal and

factual viability of Defendants’ “accept or return” theory.

      VACATED AND REMANDED.

      2
         We reject Plaintiffs’ suggestion that the district court sufficiently resolved
the salient factual disputes when it stated that “giving Plaintiffs the benefit of all
reasonable doubts and inferences, Defendants have not proven by a preponderance
of the evidence that the parties mutually consented to form an agreement to
arbitrate.” First, as the finder of fact on a 9 U.S.C. § 3 motion, the district court
should not have given either side “the benefit of all reasonable doubts and
inferences”—a principle that applies in favor of a nonmovant in the summary
judgment context. And second, as previously noted, the district court did not
resolve the determinative factual issues but instead grounded its ruling in
inaccurate or insignificant facts.

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