United States District Court, D. Arizona
February 4, 2015
Cathy Bopp, Plaintiff,
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.
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.
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)).
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 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.
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. 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 Order, and consequently, Plaintiff's motions will also be denied as moot. Accordingly,
IT IS ORDERED that Defendant's Motion to Dismiss (Doc. 25) is denied.
IT IS FURTHER ORDERED that Plaintiff's Motion for Discovery Dispute Resolution (Doc. 27), Motion to Strike (Doc. 29), and Motion for Extension of Time (Doc. 34) are denied as moot.
RULE 16 CASE MANAGEMENT ORDER
Pursuant to the Court's Order (Doc. 35), the Court enters the following superseding Rule 16 Case Management Order.
IT IS ORDERED:
All parties must abide by the Federal Rules of Civil Procedure and the Local Rules of Civil Procedure (" LRCiv" or " Local Rules"), Rules of Practice of the U.S. District Court for the District of Arizona. To the extent that the Federal Rules of Civil Procedure differ from the Local Rules, the Federal Rules of Civil Procedure shall govern.
II. JOINING PARTIES AND AMENDING PLEADINGS
The deadline for joining parties, amending pleadings, and filing supplemental pleadings is thirty (30) days from the date of this Order.
All Initial Disclosures as defined
in Rule 26(a) of the Federal Rules of Civil Procedure were exchanged on June 20,
Class Certification Discovery Deadline:
All discover for class certification discovery, including discovery by subpoena, shall be completed on or before April 6, 2015.
All discovery must be completed on or before August 24, 2015.
Written Discovery Limitations:
Each side may propound up to 25 interrogatories, including subparts. The parties are also limited to 25 requests for production of documents, including subparts, and 25 requests for admissions, including subparts. All interrogatories, requests for production of documents, and requests for admissions shall be served at least forty-five (45) days before the discovery deadline. Responses to discovery requests must be stated with specificity, and the parties are cautioned that the Federal Rules of Civil Procedure do not permit general or boilerplate objections.
All depositions shall be scheduled to commence at least five (5) working days prior to the discovery deadline. A deposition commenced five (5) days prior to the deadline may continue up until the deadline, as necessary.
Plaintiff shall provide full and complete expert disclosures as required by Rule 26(a)(2)(A)-(C) of the Federal Rules of Civil Procedure no later than July 20, 2015. Defendant shall provide full and complete expert disclosures as required by Rule 26(a)(2)(A)-(C) of the Federal Rules of Civil Procedure no later than July 20, 2015. Rebuttal expert disclosures, if any, shall be made no later than August 3, 2015. Rebuttal experts shall be limited to responding to opinions stated by initial experts. Absent truly extraordinary circumstances, parties will not be permitted to supplement their expert reports after these dates.
Expert depositions shall be completed no later than August 24, 2015. As with fact witness depositions, expert depositions shall be scheduled to commence at least five (5) working days before the deadline.
Motions on discovery matters are strongly discouraged . Parties shall not present any discovery dispute without first seeking to resolve the matter through personal consultation and sincere effort as required by LRCiv 7.2(j). If the parties cannot reach a resolution, they may jointly request Court assistance by filing a Joint Motion for Discovery Dispute Resolution . The motion shall set forth a joint statement of the discovery dispute and shall not exceed three (3) pages in length. The parties shall also attach to their motion written certification of compliance with LRCiv 7.2(j). Absent extraordinary circumstances, the Court will not entertain fact discovery disputes after the deadline for completion of fact discovery, and will not entertain expert discovery disputes after the deadline for completion of expert discovery.
IV. CLASS CERTIFICATION
Class Certification Briefing:
Plaintiff shall file any motion for class certification by May 18, 2015. Defendant shall file a response by June 1, 2015. Plaintiff shall file a reply by June 8, 2015.
The hearing on class certification set for February 20, 2015 is vacated.
A hearing on class certification will be held on May 27, 2015 at 10:00 a.m. in the Sandra Day O'Connor United States Courthouse, located at 401 West Washington Street, Phoenix, Arizona 85003, 5th Floor, Courtroom 501. Any motion for class decertification shall be filed by July 20, 2015.
Dispositive Motion Deadline:
Dispositive motions shall be filed no later than October 26, 2015.
Dispositive Motion Limitations:
Absent leave of Court, no party
shall file more than one motion for summary judgment. To obtain leave of Court,
a party shall file a motion setting forth the reasons justifying the filing of
more than one summary judgment motion.
The parties shall not notice oral argument on any motion. Instead, a party seeking oral argument shall place the words " Oral Argument Requested" immediately below the title of the motion. See LRCiv 7.2(f). The Court will issue an order scheduling oral argument as it deems appropriate.
A paper copy of any document exceeding ten (10) pages in length shall be submitted to chambers promptly following its electronic filing. Paper copies of documents which are too large for stapling must be submitted in a three-ring binder. Electronic copies of proposed orders or findings shall be emailed to chambers in Microsoft Word® format at Logan_Chambers@azd.uscourts.gov.
All parties are specifically admonished that " [i]f a motion does not conform in all substantial respects with the requirements of [the Local Rules], or if the opposing party does not serve and file the required answering memoranda... such noncompliance may be deemed a consent to the denial or granting of the motion and the Court may dispose of the motion summarily." LRCiv 7.2 (emphasis added).
VI. SETTLEMENT DISCUSSIONS
All parties and their counsel shall meet in person and engage in good faith settlement talks no later than May 1, 2015. Upon completion of such settlement talks, and in no event later than five (5) working days after the deadline for settlement talks, the parties shall file with the Court a joint report on settlement talks executed by or on behalf of all counsel. The report shall inform the Court that good faith settlement talks have been held and shall report on the outcome of such talks. The parties shall indicate whether assistance from the Court is needed in seeking settlement of the case. The parties shall promptly notify the Court at any time when settlement is reached during the course of this litigation.
VII. FINAL PRETRIAL CONFERENCE
If no dispositive motions are pending before the Court after the dispositive motion deadline has passed, Plaintiff shall file and serve a Notice of Readiness for Final Pretrial Conference within seven (7) days of the dispositive motion deadline. If a dispositive motion is pending before the Court following the dispositive motion deadline, Plaintiff shall file and serve a Notice of Readiness for Final Pretrial Conference within seven (7) days of the resolution of the dispositive motion. Following the filing of the Notice, the Court will issue an Order Setting Final Pretrial Conference that: (1) sets deadlines for briefing motions in limine; (2) includes a form for the completion of the parties' joint proposed Final Pretrial Order; and (3) otherwise instructs the parties concerning their duties in preparing for the Final Pretrial Conference. A firm trial date will be set at the Final Pretrial Conference.
The parties are advised that the Court intends to enforce the deadlines and guidelines set forth in this Order, and they should plan their litigation activities accordingly. The Court emphasizes that it has a strict policy not to extend the dispositive motion deadline beyond the two-year anniversary of the date of commencement of an action. Even if all parties stipulate to an extension, the Court will not extend the deadlines absent good cause to do so. As a general matter, the pendency of settlement discussions or the desire to schedule mediation does not constitute good cause.