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Bopp v. Zenith Fin. Network, Inc.

United States District Court, D. Arizona

February 4, 2015

Cathy Bopp, Plaintiff,
v.
Zenith Financial Network Incorporated, Defendant

For Cathy Bopp, on behalf of herself and others similarly situated, Plaintiff: Michael L Greenwald, LEAD ATTORNEY, Greenwald Davidson PLLC, Boca Raton, FL; Russell Snow Thompson, IV, LEAD ATTORNEY, Thompson Consumer Law Group PLLC, Mesa, AZ.

For Zenith Financial Network Incorporated, Defendant: William R Mettler, Jr., LEAD ATTORNEY, William R Mettler Attorney, Chandler, AZ.

ORDER

Honorable Steven P. Logan, United States District Judge.

Before the Court is Defendant Zenith Financial Network Incorporated's Motion to Dismiss (Doc. 25), in which it to moves to dismiss Plaintiff's putative class action claims, compel her to arbitrate her individual claims, and dismiss this action. Plaintiff has also filed a Motion for Discovery Dispute Resolution (Doc. 27), Motion to Strike (Doc. 29), and Motion for Extension of Time (Doc. 34). For the reasons that follow, both parties' motions will be denied.[1]

I. Background

Plaintiff Cathy Bopp filed a class action suit under the Fair Debt Collection Practices Act (" FDCPA"), 15 U.S.C. § 1692 et seq ., and the Telephone Consumer Protection Act (" TCPA"), 47 U.S.C. § 227. (Doc. 1.) Plaintiff alleges that between August 2013 and December 2013, Defendant Zenith Financial Network Incorporated placed a series of calls and left voicemail messages on Plaintiff's cell phone in connection with a purported debt. Plaintiff claims that, in doing so, Defendant: (1) violated 15 U.S.C. § 1692d(6), because its callers failed to meaningfully disclose their identities; (2) violated 15 U.S.C. § 1692e(11), because its callers failed to disclose that the calls were from a debt collector; and (3) violated 47 U.S.C. § 227(b)(1)(A)(iii), because it used an automatic telephone dialing system and/or an artificial or pre-recorded voice to place nonemergency calls to Plaintiff's cellular telephone line without her consent. Plaintiff brings these claims against Defendant on behalf of herself and others similarly situated. (Doc. 1.)

II. Federal Arbitration Act

" With limited exceptions, the Federal Arbitration Act (FAA) governs the enforceability of arbitration agreements in contracts involving interstate commerce." Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013) (citing 9 U.S.C. § § 1, et seq .) The FAA states that " [a] written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract ... 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 reflects both a liberal federal policy favoring arbitration, and the fundamental principle that arbitration is a matter of contract." Kramer, 705 F.3d at 1126 (internal citations and quotations omitted).

The district court's role under the FAA 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." Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). " [T]he party seeking to compel arbitration, has the burden of proving the existence of an agreement to arbitrate by a preponderance of the evidence." Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 564 (9th Cir. 2014). Although a contract may contain a choice-of-law provision that governs the contract's construction, " [t]he scope of an arbitration agreement is governed by federal substantive law." Tracer Research Corp. v. Nat'l Envtl. Servs. Co., 42 F.3d 1292, 1294 (9th Cir. 1994). " [A]s a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Chiron, 207 F.3d at 1131 (9th Cir. 2000) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). But see Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733, 742 (9th Cir. 2014) (If the parties contest the existence of an arbitration agreement, rather than scope of the agreement, " the presumption in favor of arbitrability does not apply.").

Absent a valid contract defense, 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.'" Chiron, 207 F.3d at 1130 (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985)).

III. Discussion

In its motion, Defendant asserts that the underlying claims arise in connection with an electronic loan agreement, dated March 2, 2011, executed between Western Sky Financial, LLC and Plaintiff. The agreement, as submitted by Defendant, provides in relevant part:

Agreement to Arbitrate.

You agree that any Dispute, except as provided below, will be resolved by Arbitration, which shall be conducted by the Cheyenne River Sioux Trial Nation by an authorized representative in accordance with its consumer dispute rules and the terms of this Agreement.

Arbitration Defined.

Arbitration is a means of having an independent third party resolve a Dispute. A " Dispute" is any controversy or claim between you and Western Sky or the holder of the Note. The term Dispute is to be given its broadest possible meaning and includes, without limitation, all claims or demands (whether past, present, or future, including events that occurred prior to the opening of this Account), based on any legal or equitable theory (tort, contract, or otherwise), and regardless of the type of relief sought (i.e. money, injunctive relief, or declaratory relief). A Dispute includes, by way of example and without limitation, any claim based upon marketing or solicitations to obtain the loan and the handling or servicing of my account whether such Dispute is based on a tribal, federal or state constitution, statute, ordinance, regulation, or common law, and including any issue concerning the validity, enforceability, or scope of this loan or the Arbitration agreement. For purposes of this Arbitration agreement, the term " the holder" shall include Western Sky or the then-current note holder's employees, officers, directors, attorneys, affiliated companies, predecessors, and assigns, as well as any marketing, servicing, and collection representatives and agents.

...
Waiver of Rights.

YOU HEREBY AGREE THAT YOU ARE WAIVING YOUR RIGHT TO A JURY TRIAL, TO HAVE A COURT DECIDE YOUR DISPUTE, TO PARTICIPATE IN A CLASS ACTION LAWSUIT, AND TO CERTAIN DISCOVERY AND OTHER PROCEDURES THAT ARE AVAILABLE IN A LAWSUIT. The arbitrator has the ability to award all remedies available by statute, at law, or in equity to the prevailing party, except that the parties agree that the arbitrator has no authority to conduct classwide proceedings and will be restricted to resolving the individual disputes between the parties. The validity, effect, and enforceability of this waiver of class action lawsuit and class-wide Arbitration is to be determined solely by a court of competent jurisdiction located within the Cheyenne Rivers Sioux Tribal Nation, and not by the arbitrator. If the court refuses to enforce the class-wide Arbitration waiver, or if the arbitrator fails or refuses to enforce the waiver of class-wide Arbitration, the parties agree that the Dispute will proceed in tribal court and will be decided by a tribal court judge, sitting without a jury, under applicable court rules and procedures.

(Doc. 25-1.)

Based on these provisions, Defendant argues that by executing the loan agreement Plaintiff agreed to arbitrate the instant claims and waived her right to act as a class representative or bring a putative class action. Defendant further maintains that it is " the holder" which is entitled to invoke the terms of the loan agreement. (Doc. 25 at 4.) In response, Plaintiff casts a variety of arguments disputing the enforceability of the arbitration clause, including the validity of the loan agreement, the scope of the arbitration clause, and whether there is ultimate jurisdiction to arbitrate the claims. (Doc. 26.)

Even assuming arguendo that the loan agreement is valid, and that Plaintiff's category of claims would be subject to arbitration under that agreement, Defendant fails to establish one imperative fact -- that the arbitrable contract is connected to this case. Defendant submits a Bill of Sale and Assignment of Non-Performing Loans and Contract Rights (Doc. 28-1 at 4-5), in which CashCall, Inc. executes an assignment of 5, 809 unidentified loans to National Credit Adjustors, LLC. Defendant also submits a Collection Service Agreement (Doc. 28-1 at 8-22) between itself and National Credit Adjustors, LLC, in which Defendant agrees to act as an agent to collect unpaid debts. Yet, Defendant does not offer any record of its relationship to Western Sky Financial, LLC, the party which executed the loan agreement with Plaintiff. In its reply brief, Defendant passingly characterizes CashCall, Inc. as a " lending arm" of Western Sky Financial, LLC. (Doc. 28 at 4.) Defendant however does not submit any record to explain the relationship between Western Sky Financial, LLC and CashCall, Inc. Nor does Defendant explain if or how CashCall, Inc. came to own the loan that Plaintiff entered into with Western Sky Financial, LLC. To that end, Defendant has also made no meaningful showing that the loan agreement executed by Western Sky Financial, LLC, which Plaintiff purportedly defaulted on, is the same loan that was allegedly held by CashCall, Inc., was among the 5, 809 loans assigned, and was contracted for collection by Defendant.[2] Simply, Defendant has not shown that it holds any interest in the submitted loan agreement between Plaintiff and Western Sky Financial, LLC, or that the loan agreement is connected to this action.

Defendant has not proven by a preponderance of the evidence the existence of, or a relationship to, an arbitration agreement that governs this action. See Knutson, 771 F.3d at 569. Therefore, the motion to dismiss and compel arbitration will be denied. The Court will issue a separate superseding Case Management ...


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