Court Opinion

ID: 4694807
Source: CourtListenerOpinion
Date Created: 2021-06-11 17:03:09.483614+00
Date Added: 2024-06-11T08:05:31.745791
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

BILL HANSEN,                             No. 20-15272
                  Plaintiff-Appellee,
                                           D.C. No.
                v.                      2:19-cv-00179-
                                          KJM-DMC
LMB MORTGAGE SERVICES, INC.,
DBA Lowermybills.com; CPL
ASSETS, LLC, DBA Core Digital              OPINION
Media,
            Defendants-Appellants,

                and

DIGITAL MEDIA SOLUTIONS, LLC,
DBA DCMG,
                      Defendant.

     Appeal from the United States District Court
         for the Eastern District of California
  Kimberly J. Mueller, Chief District Judge, Presiding

       Argued and Submitted February 1, 2021
             San Francisco, California

                  Filed June 11, 2021
2              HANSEN V. LMB MORTGAGE SVCS.

Before: Sandra S. Ikuta and Jacqueline H. Nguyen, Circuit
         Judges, and Richard K. Eaton,* Judge.

                      Opinion by Judge Ikuta

                            SUMMARY**

                             Arbitration

   The panel vacated the district court’s order denying a
motion to compel arbitration under the Federal Arbitration
Act and remanded for further proceedings in an action
brought under the Telephone Consumer Protection Act.

     Defendants moved to compel arbitration based on
plaintiff’s assent to the arbitration agreement in the terms of
use for defendants’ website or, in the alternative, holding him
to the arbitration agreement if his mother formed the
arbitration agreement. The district court concluded that the
existence of an agreement to arbitrate was in issue, and a jury
trial was required to resolve factual disputes, but the district
court also denied defendants’ motion to compel arbitration.

   Agreeing with the majority of other circuits that had
considered the issue, the panel held that, although the district
court’s order was premature and nonfinal, the panel had

    *
      The Honorable Richard K. Eaton, Judge of the United States Court
of International Trade, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
            HANSEN V. LMB MORTGAGE SVCS.                      3

jurisdiction over the district court’s order under 9 U.S.C.
§ 16, which provides jurisdiction over all orders denying a
motion to compel arbitration.

    The panel nonetheless concluded that, in order to comply
with § 4 of the Federal Arbitration Act, it must vacate the
district court’s order denying the motion to compel arbitration
as improperly issued and remand to the district court to
proceed to trial. The panel concluded that the district court
contravened § 4 when it issued a nonfinal ruling on the
motion to compel arbitration. Agreeing with other circuits,
that panel held that, under § 4, once a district court concludes
that there are genuine disputes of material fact as to whether
the parties formed an arbitration agreement, the court must
proceed without delay to a trial on arbitrability and hold any
motion to compel arbitration in abeyance until the factual
issues have been resolved. Thus, a party’s appeal of a district
court’s nonfinal order determining that there are genuine
issues of material fact and denying a motion to compel
arbitration constitutes an end-run around the limitations in
§ 4. The panel vacated the district court’s erroneous denial of
the motion to compel and remanded for the district court to
proceed summarily to trial on the question whether the
plaintiff was bound by the arbitration agreement.
4           HANSEN V. LMB MORTGAGE SVCS.

                         COUNSEL

Jeffrey R. Johnson (argued), Yaakov M. Roth, and Andrew
J. M. Bentz, Jones Day, Washington, D.C.; John A. Vogt and
Edward S. Chang, Jones Day, Irvine, California; for
Defendants-Appellants.

David W. Hall (argued), Hedin Hall LLP, San Francisco,
California; Frank S. Hedin, Hedin Hall LLP, Miami, Florida;
for Plaintiff-Appellee.

                         OPINION

IKUTA, Circuit Judge:

    LMB Mortgage Services, Inc. and CPL Assets, LLC
(collectively, LMB), appeal the district court’s determination
that there were genuine disputes of material fact as to whether
Bill Hansen was bound to an arbitration agreement. Because
the district court mistakenly issued a nonfinal order denying
LMB’s motion to compel arbitration, while stating its intent
to schedule a trial to resolve the factual issues, we have
jurisdiction to consider this appeal. But in order to ensure
consistency with the procedures required by 9 U.S.C. § 4, we
vacate the district court’s order and remand for further
proceedings.

                               I

   LMB, doing business as LowerMyBills.com, maintained
a website for persons interested in refinancing their
mortgages. In March 2014, the website collected information
from a visitor identified as Willena Hansen. The visitor input
            HANSEN V. LMB MORTGAGE SVCS.                     5

a name, a telephone number, an email address, the address of
a property that Willena Hansen owned with her son Bill
Hansen and his wife, the current value of that property, its
mortgage balance, and the interest rate. The telephone
number that the visitor input belonged to Bill Hansen.

    Directly below this section for inputting visitor
information, a visitor could click a button containing the text
“Click to See Your Free Results!” (the “submit button”).
Below this submit button is text stating: “By clicking the
[submit] button, you agree to the Terms of Use and Privacy
Policy, to be matched with up to 5 participants [in the lending
program], and consent . . . for us and/or them to contact you
(including through automated or prerecorded means) via
telephone, mobile device (including SMS and MMS), and/or
e-mail about lending information, even if you are on a
corporate, state or national Do Not Call Registry.” The
Terms of Use included an arbitration agreement.

   In November 2018, Bill received a text message stating:

       willena – Regarding your monthly payment
       for your Roseville home.

       Come back and see your potential savings in
       2 minutes.

       **[hyperlink]**

       LMB Reply STOP to stop

After receiving this message, Bill brought a putative class
action against LMB for a violation of the Telephone
Consumer Protection Act (TCPA), 47 U.S.C. § 227, which
6           HANSEN V. LMB MORTGAGE SVCS.

prohibits companies from transmitting autodialed text
messages and calls without the recipient’s consent. LMB
moved to compel arbitration based on Bill Hansen’s assent to
the arbitration agreement in the Terms of Use or, in the
alternative, holding Bill Hansen to the arbitration agreement
if Willena Hansen formed the arbitration agreement.

     The district court reviewed this motion to compel
arbitration under the Federal Arbitration Act (FAA), 9 U.S.C.
§§ 1–16. The procedure for addressing such a motion is set
forth in 9 U.S.C. § 4. Under § 4, in response to a motion to
compel arbitration, the district court must “hear the parties.”
Id. If the court is “satisfied that the making of the agreement
for arbitration or the failure to comply therewith is not in
issue, the court shall make an order directing the parties to
proceed to arbitration in accordance with the terms of the
agreement.” Id. But “[i]f the making of the arbitration
agreement or the failure, neglect, or refusal to perform the
same be in issue, the court shall proceed summarily to the
trial thereof.” Id. In applying this language, district courts
rely on the summary judgment standard of Rule 56 of the
Federal Rules of Civil Procedure. See, e.g., Tabas v.
MoviePass, Inc., 401 F. Supp. 3d 928, 936 (N.D. Cal. 2019);
Lopez v. Terra’s Kitchen, LLC, 331 F. Supp. 3d 1092, 1097
(S.D. Cal. 2018); Concat LP v. Unilever, PLC, 350 F. Supp.
2d 796, 804 (N.D. Cal. 2004). The summary judgment
standard is appropriate because the district court’s order
compelling arbitration “is in effect a summary disposition of
the issue of whether or not there had been a meeting of the
minds on the agreement to arbitrate.” Par-Knit Mills, Inc. v.
Stockbridge Fabrics Co., 636 F.2d 51, 54 n.9 (3d Cir. 1980),
               HANSEN V. LMB MORTGAGE SVCS.                               7

abrogated on other grounds by Aliments Krispy Kernels, Inc.
v. Nichols Farms, 851 F.3d 283, 287–88 (3d Cir. 2017).1

    The district court may decide the case in a bench trial if
the party opposing arbitration does not demand a jury trial.
See 9 U.S.C. § 4. But if a jury trial is demanded, “the court
shall make an order referring the issue or issues to a jury in
the manner provided by the Federal Rules of Civil Procedure,
or may specially call a jury for that purpose.” Id.

    In this case, Bill Hansen opposed LMB’s motion to
compel arbitration and demanded a jury trial if the court
found that the making of the arbitration agreement was in
issue. Pursuant to § 4, the district court held a hearing in
which the parties presented evidence concerning whether they
had formed an arbitration agreement. Hansen declared under
penalty of perjury that he never visited the LMB website, that
he did not bind himself to the arbitration agreement by
clicking the submit button, and that Willena Hansen told him
before she passed away that although she may have visited an
LMB website, “she did not believe she had ever clicked a
button to actually submit any of the information she had
entered into such a webpage.” LMB submitted evidence to
show that, based on LMB records, either Hansen or his
mother had clicked the submit button.

    1
      The weight of authority favors this conclusion. See Camara v.
Mastro’s Rests. LLC, 952 F.3d 372, 373 (D.C. Cir. 2020); Berkeley Cnty.
Sch. Dist. v. Hub Int’l Ltd., 944 F.3d 225, 234 (4th Cir. 2019); Meyer v.
Uber Techs., Inc., 868 F.3d 66, 74 (2d Cir. 2017); BOSC, Inc. v. Bd. of
Cnty. Comm’rs of Cnty. of Bernalillo, 853 F.3d 1165, 1176–77 (10th Cir.
2017); Bazemore v. Jefferson Cap. Sys., LLC, 827 F.3d 1325, 1333 (11th
Cir. 2016); Soto v. State Indus. Prods., Inc., 642 F.3d 67, 72 n.2 (1st Cir.
2011); Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002).
8           HANSEN V. LMB MORTGAGE SVCS.

    After considering this evidence, the district court
determined that “the existence of an agreement to arbitrate”
was “in issue.” It concluded that there was a genuine dispute
of material fact as to whether Bill Hansen clicked the submit
button and agreed to the Terms of Use. Further, it held that
even assuming Willena Hansen had agreed to LMB’s Terms
of Use, there was a genuine issue of material fact as to
whether Bill Hansen was bound to the arbitration agreement
with LMB under a third-party beneficiary theory. Having
concluded that the question whether Bill Hansen was bound
by LMB’s arbitration agreement was “in issue,” the district
court held that a jury trial was required to resolve the factual
disputes. But the court also ordered that “[d]efendants’
motion to compel arbitration and stay the case . . . is
DENIED.”

   LMB appealed, arguing that the district court erred in
holding that there were disputed issues of material fact as to
whether Hansen was bound to the arbitration agreement.

                               II

    We first address the question whether we have
jurisdiction over this appeal, because “we are obliged to
inquire sua sponte whenever a doubt arises as to the existence
of federal jurisdiction.” Mt. Healthy City Sch. Dist. Bd. of
Educ. v. Doyle, 429 U.S. 274, 278 (1977).

    The district court’s order denying the motion to compel
arbitration was nonfinal. The denial was merely for docket
management purposes, because it did not reach the merits of
the question whether Hansen was bound to the arbitration
agreement. Indeed, under § 4, a court is not authorized to
dispose of a motion to compel arbitration until after factual
              HANSEN V. LMB MORTGAGE SVCS.                           9

disputes have been resolved, and so the court was compelled
to reserve its ruling on the merits. In other words, in denying
the motion to compel, the district court did not conclusively
rule on whether Hansen was bound to an arbitration
agreement, but merely concluded that it could not resolve the
issue as a matter of law.

      Although the district court’s order was premature and
nonfinal, we conclude that we have jurisdiction over the
district court’s order. In enacting the FAA, Congress gave
courts of appeals jurisdiction over specified interlocutory
orders relating to arbitration. See 9 U.S.C. § 16. Section 16
provides that “[a]n appeal may be taken from– (1) an order
. . . (B) denying a petition under section 4 of this title to order
arbitration to proceed.” 9 U.S.C. § 16(a)(1)(B). On its face,
this language gives us jurisdiction over any order denying a
motion to compel arbitration; it does not differentiate
between final and nonfinal orders.2 Therefore, denial of a
motion to compel arbitration is immediately appealable even
if the district court “intended to reconsider the question of
arbitrability following further fact-finding and possibly a
trial.” Boomer v. AT & T Corp., 309 F.3d 404, 412 (7th Cir.
2002). The broader context of § 16 supports this reading of
§ 16(a)(1)(B). Section 16(a)(3) gives appellate courts
jurisdiction over “a final decision with respect to an
arbitration that is subject to this title.” If we interpreted
§ 16(a)(1)(B) as applying only to final decisions to deny
motions to compel arbitration, § 16(a)(3)’s reference to “final
decisions” would be surplusage. See Boomer, 309 F.3d

    2
      The parties do not argue, and we do not address, whether we have
jurisdiction over the district court’s order under § 16(a)(1)(A), which
provides “[a]n appeal may be taken from– (1) an order– (A) refusing a
stay of any action under section 3 of this title.”
10            HANSEN V. LMB MORTGAGE SVCS.

at 412–13. Therefore, “[t]he more natural reading” of
§ 16(a)(1)(B) is “to treat all orders declining to compel
arbitration as reviewable.” Sandvik AB v. Advent Int’l Corp.,
220 F.3d 99, 103 (3d Cir. 2000).

    The majority of our sister circuits that have considered
this issue agree that § 16 provides jurisdiction over all orders
denying a motion to compel arbitration, even if they are
nonfinal and the district court has reserved ruling on the
merits. See, e.g., id. at 102; Boomer, 309 F.3d at 412;
McLaughlin Gormley King Co. v. Terminix Int’l Co., L.P.,
105 F.3d 1192, 1193 (8th Cir. 1997); Snowden v. CheckPoint
Check Cashing, 290 F.3d 631, 635–36 (4th Cir. 2002);
Microchip Tech. Inc. v. U.S. Philips Corp., 367 F.3d 1350,
1355 (Fed. Cir. 2004); Jin v. Parsons Corp., 966 F.3d 821,
823–24 (D.C. Cir. 2020).3

    Therefore, even though the district court’s order merely
removed the pending motion from its docket and did not
resolve the question whether the arbitration provision in
LMB’s Terms of Use was binding, we conclude that we
nevertheless have jurisdiction to consider LMB’s appeal of
this order.

     3
      Only the Sixth Circuit has taken a different approach, holding that
a district court’s order denying a motion to compel arbitration while
reserving judgment on the merits does not provide jurisdiction under
§ 16(a)(1)(B) because it was a “purely ministerial order, serving
housekeeping or docket management purposes.” Taylor v. Pilot Corp.,
955 F.3d 572, 579–82 (6th Cir. 2020). We decline to follow this approach
because § 16(a)(1)(B) does not distinguish between “ministerial” orders
and orders resolving the merits.
            HANSEN V. LMB MORTGAGE SVCS.                    11

                              III

    Although we are satisfied that we have jurisdiction, we
conclude that, in order to comply with § 4, we must vacate
the district court’s order denying the motion to compel
arbitration as improperly issued and remand to the district
court to proceed to trial. Our reasoning is as follows.

     The district court contravened § 4 when it issued
a nonfinal ruling on the motion to compel arbitration.
Section 4 makes clear that “[i]f the making of the arbitration
agreement or the failure, neglect, or refusal to perform the
same be in issue, the court shall proceed summarily to the
trial thereof.” 9 U.S.C. § 4. Although the statute does not
define “summarily,” an action is performed summarily when
it is “done or occurring without delay or formality: quickly
executed.” Summary, Webster’s Third New International
Dictionary 2289 (2002); see also Summarily, Webster’s Third
New International Dictionary 2289 (2002) (“Summarily”
means “in a summary manner or form.”). To implement this
language, once a district court concludes that there are
genuine disputes of material fact as to whether the parties
formed an arbitration agreement, the court must proceed
without delay to a trial on arbitrability and hold any motion
to compel arbitration in abeyance until the factual issues have
been resolved. Our sister circuits agree. See Jin, 966 F.3d
at 826; Berkeley Cnty. Sch. Dist. v. Hub Int’l Ltd., 944 F.3d
225, 242 (4th Cir. 2019); Neb. Mach. Co. v. Cargotec Sols.,
LLC, 762 F.3d 737, 743–44 (8th Cir. 2014); Howard v.
Ferrellgas Partners, L.P., 748 F.3d 975, 978 (10th Cir. 2014).

    Nothing in § 16 – or § 4 – authorizes appellate courts to
adjudicate the district court’s decision that it cannot make a
final ruling on the motion to compel until genuine issues of
12               HANSEN V. LMB MORTGAGE SVCS.

material fact over the making of the arbitration agreement
have been resolved at trial. Therefore, a party’s appeal of a
district court’s nonfinal order determining that there are
genuine issues of material fact and denying a motion to
compel constitutes an end-run around the limitations in § 4.
Allowing such an appeal would defeat § 4’s mandate that the
district court should “proceed summarily to the trial,”
9 U.S.C. § 4, and would “frustrate[] the statutory policy of
rapid and unobstructed enforcement of arbitration
agreements.” Moses H. Cone Mem’l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 23 (1983). Further, assessing the
merits of an appeal before the district court conducted a trial
on the genuine factual disputes over arbitrability would be “a
pointless and wasteful burden on the supposedly summary
and speedy procedures prescribed by the [FAA].” Id. at 27.

    Here, LMB challenges the district court’s determination
that there are genuine disputes of material fact on
arbitrability. Therefore, to further “Congress’s clear intent,
in the [FAA], to move the parties to an arbitrable dispute out
of court and into arbitration as quickly and easily as
possible,” id. at 22, we vacate the district court’s erroneous
denial of the motion to compel and remand for the district
court to “proceed summarily to the trial” on the question
whether Bill Hansen is bound by the arbitration agreement.

     VACATED AND REMANDED.4

     4
         Each party shall bear its own costs on appeal.