1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 RUBEN JUAREZ, et al., Case No. 20-cv-03386-HSG
8 Plaintiffs, ORDER GRANTING IN PART AND DENYING IN PART MOTION TO 9 v. COMPEL ARBITRATION
10 SOCIAL FINANCE, INC., et al., Re: Dkt. No. 68 11 Defendants.
12 13 Pending before the Court is the motion to compel arbitration filed by Defendants Social 14 Finance Inc. and Social Finance Lending Corp (collectively, “SoFi”). Dkt. No. 68 (“Mot.”). SoFi 15 seeks to compel Plaintiff Emiliano Galicia’s claims to arbitration. Id. The Court finds this matter 16 appropriate for disposition without oral argument and the matter is deemed submitted. See Civil 17 L.R. 7-1(b). For the reasons detailed below, the Court GRANTS IN PART and DENIES IN 18 PART the motion to compel. 19 I. BACKGROUND 20 Plaintiffs Ruben Juarez and Calin Constantin Segarceanu initially filed this putative class 21 action against SoFi on May 19, 2020. See Dkt. No. 1. On May 3, 2021, Plaintiffs filed a second 22 amended complaint, adding Plaintiffs Emiliano Galicia and Josue Jimenez to the case. Dkt. No. 23 62 (“SAC”). As relevant to the pending motion, Plaintiffs allege that Mr. Galicia was born in 24 Mexico and has lived in the United States since 1994. See id. at ¶ 116. In approximately 2012, 25 Mr. Galicia obtained Deferred Action for Childhood Arrivals (“DACA”) status.1 In August 2019, 26 Mr. Galicia applied for a personal loan from SoFi to fund his real estate consulting business. Id. at 27 1 ¶¶ 120–23. However, SoFi denied his loan application because of his DACA status. See id. at 2 ¶ 124. 3 Plaintiffs allege that since this initial application, Mr. Galicia has continued to receive 4 promotional material from SoFi and “periodically checked to see whether SoFi changed its policy 5 with respect to lending to DACA recipients.” See id. at ¶ 128. In April 2021, Mr. Galicia also 6 called SoFi’s customer service number “to indicate his willingness and intent to apply for a 7 personal loan and to inquire as to whether SoFi had changed its eligibility policy for DACA 8 recipients.” See id. at ¶ 130. The customer service representative, however, indicated that DACA 9 recipients were still ineligible unless they had a co-signer who was a U.S. citizen or lawful 10 permanent resident. See id. As a result, Mr. Galicia did not complete a new loan application 11 because he believed doing so would be futile. See id. at ¶ 131. Plaintiffs allege that SoFi’s 12 policies and practices to deny loans to DACA recipients constitute unlawful discrimination. See 13 id. at ¶¶ 7, 132, 152–53. Based on these facts, Mr. Galicia asserts two causes of action for 14 (1) alienage discrimination, in violation of 42 U.S.C. § 1981; and (2) discrimination, in violation 15 of California’s Unruh Civil Rights Act, Cal. Civ. Code §§ 51 et seq. See id. at ¶¶ 178–207. 16 SoFi now moves to compel Mr. Galicia’s two claims to arbitration. See Mot. SoFi 17 previously moved to compel arbitration as to Plaintiff Juarez’s same claims for violations of 18 § 1981 and the Unruh Civil Rights Act. See Dkt. No. 38. The Court denied that motion. See Dkt. 19 No. 56. 20 II. LEGAL STANDARD 21 The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., sets forth a policy favoring 22 arbitration agreements and establishes that a written arbitration agreement is “valid, irrevocable, 23 and enforceable.” 9 U.S.C. § 2; Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018) (noting 24 federal policy favoring arbitration); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 25 U.S. 1, 24 (1983) (same). The FAA allows that a party “aggrieved by the alleged failure, neglect, 26 or refusal of another to arbitrate under a written agreement for arbitration may petition any United 27 States district court . . . for an order directing that . . . arbitration proceed in the manner provided 1 according to their terms, of private agreements to arbitrate.” Volt Info. Sciences, Inc. v. Bd. of 2 Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 476 (1989). Courts must resolve any 3 “ambiguities as to the scope of the arbitration clause itself . . . in favor of arbitration.” Id. 4 When a party moves to compel arbitration, the court must determine (1) “whether a valid 5 arbitration agreement exists” and (2) “whether the agreement encompasses the dispute at issue.” 6 Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). The 7 agreement may also delegate gateway issues to an arbitrator, in which case the court’s role is 8 limited to determining whether there is clear and unmistakable evidence that the parties agreed to 9 arbitrate arbitrability. See Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). In either 10 instance, “before referring a dispute to an arbitrator, the court determines whether a valid 11 arbitration agreement exists.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 12 530 (2019) (citing 9 U.S.C. § 2). 13 III. DISCUSSION 14 Much as it did in its prior motion to compel, SoFi states its records indicate that Mr. 15 Galicia expressly consented to arbitration in 2019 when he first submitted a loan application. See 16 Mot. at 3–6. SoFi explains that to submit an online loan application, Mr. Galicia had to register as 17 a new user and acknowledge and agree to be bound by several agreements, including an arbitration 18 agreement. See Dkt. No. 68-1 (“Thompson Decl.”) at ¶¶ 5–6, 8, & Ex. A–C. SoFi explains that 19 without affirmatively checking the “I Agree” box manifesting his consent to the arbitration 20 agreement, Mr. Galicia could not have signed in or proceeded with any loan application on the 21 website. See id. at ¶ 6; see also Thompson Decl., Ex. A. SoFi states that according to its records, 22 Mr. Galicia registered on SoFi’s website on August 7, 2019, and consented to the arbitration 23 agreement as part of that registration process. See id. at ¶ 7, & Ex. C. SoFi’s records also show 24 that Mr. Galicia “started an application” for a personal loan on August 7, 2019. See id. at ¶ 11. 25 The arbitration agreement is the same as the agreement that Mr. Juarez purportedly agreed 26 to in 2016. It states: 27 SoFi in connection with any non-mortgage loan offered by SoFi, 1 (iii) my application for any non-mortgage loan offered by SoFi, (iv) my participation in SoFi’s career services or entrepreneur 2 program, or (v) the disclosures provided to me by SoFi in connection with any non-mortgage loan that SoFi offers (collectively, “Claim”) 3 shall be, at my or your election, submitted to and resolved on an individual basis by binding arbitration under the Federal Arbitration 4 Act, 9 U.S.C. §§ 1 et seq. (the “FAA”) before the American Arbitration Association (“AAA”) under its Consumer Arbitration 5 Rules (“AAA Rules”) in effect at the time the arbitration is brought . . . . 6 7 See Thompson Decl., Ex. B. SoFi contends that Mr. Galicia’s claims related to his August 2019 8 application “fall squarely within [the] scope” of the arbitration agreement. See Mot. at 1, 10–11. 9 SoFi further urges that Mr.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 RUBEN JUAREZ, et al., Case No. 20-cv-03386-HSG
8 Plaintiffs, ORDER GRANTING IN PART AND DENYING IN PART MOTION TO 9 v. COMPEL ARBITRATION
10 SOCIAL FINANCE, INC., et al., Re: Dkt. No. 68 11 Defendants.
12 13 Pending before the Court is the motion to compel arbitration filed by Defendants Social 14 Finance Inc. and Social Finance Lending Corp (collectively, “SoFi”). Dkt. No. 68 (“Mot.”). SoFi 15 seeks to compel Plaintiff Emiliano Galicia’s claims to arbitration. Id. The Court finds this matter 16 appropriate for disposition without oral argument and the matter is deemed submitted. See Civil 17 L.R. 7-1(b). For the reasons detailed below, the Court GRANTS IN PART and DENIES IN 18 PART the motion to compel. 19 I. BACKGROUND 20 Plaintiffs Ruben Juarez and Calin Constantin Segarceanu initially filed this putative class 21 action against SoFi on May 19, 2020. See Dkt. No. 1. On May 3, 2021, Plaintiffs filed a second 22 amended complaint, adding Plaintiffs Emiliano Galicia and Josue Jimenez to the case. Dkt. No. 23 62 (“SAC”). As relevant to the pending motion, Plaintiffs allege that Mr. Galicia was born in 24 Mexico and has lived in the United States since 1994. See id. at ¶ 116. In approximately 2012, 25 Mr. Galicia obtained Deferred Action for Childhood Arrivals (“DACA”) status.1 In August 2019, 26 Mr. Galicia applied for a personal loan from SoFi to fund his real estate consulting business. Id. at 27 1 ¶¶ 120–23. However, SoFi denied his loan application because of his DACA status. See id. at 2 ¶ 124. 3 Plaintiffs allege that since this initial application, Mr. Galicia has continued to receive 4 promotional material from SoFi and “periodically checked to see whether SoFi changed its policy 5 with respect to lending to DACA recipients.” See id. at ¶ 128. In April 2021, Mr. Galicia also 6 called SoFi’s customer service number “to indicate his willingness and intent to apply for a 7 personal loan and to inquire as to whether SoFi had changed its eligibility policy for DACA 8 recipients.” See id. at ¶ 130. The customer service representative, however, indicated that DACA 9 recipients were still ineligible unless they had a co-signer who was a U.S. citizen or lawful 10 permanent resident. See id. As a result, Mr. Galicia did not complete a new loan application 11 because he believed doing so would be futile. See id. at ¶ 131. Plaintiffs allege that SoFi’s 12 policies and practices to deny loans to DACA recipients constitute unlawful discrimination. See 13 id. at ¶¶ 7, 132, 152–53. Based on these facts, Mr. Galicia asserts two causes of action for 14 (1) alienage discrimination, in violation of 42 U.S.C. § 1981; and (2) discrimination, in violation 15 of California’s Unruh Civil Rights Act, Cal. Civ. Code §§ 51 et seq. See id. at ¶¶ 178–207. 16 SoFi now moves to compel Mr. Galicia’s two claims to arbitration. See Mot. SoFi 17 previously moved to compel arbitration as to Plaintiff Juarez’s same claims for violations of 18 § 1981 and the Unruh Civil Rights Act. See Dkt. No. 38. The Court denied that motion. See Dkt. 19 No. 56. 20 II. LEGAL STANDARD 21 The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., sets forth a policy favoring 22 arbitration agreements and establishes that a written arbitration agreement is “valid, irrevocable, 23 and enforceable.” 9 U.S.C. § 2; Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018) (noting 24 federal policy favoring arbitration); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 25 U.S. 1, 24 (1983) (same). The FAA allows that a party “aggrieved by the alleged failure, neglect, 26 or refusal of another to arbitrate under a written agreement for arbitration may petition any United 27 States district court . . . for an order directing that . . . arbitration proceed in the manner provided 1 according to their terms, of private agreements to arbitrate.” Volt Info. Sciences, Inc. v. Bd. of 2 Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 476 (1989). Courts must resolve any 3 “ambiguities as to the scope of the arbitration clause itself . . . in favor of arbitration.” Id. 4 When a party moves to compel arbitration, the court must determine (1) “whether a valid 5 arbitration agreement exists” and (2) “whether the agreement encompasses the dispute at issue.” 6 Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). The 7 agreement may also delegate gateway issues to an arbitrator, in which case the court’s role is 8 limited to determining whether there is clear and unmistakable evidence that the parties agreed to 9 arbitrate arbitrability. See Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). In either 10 instance, “before referring a dispute to an arbitrator, the court determines whether a valid 11 arbitration agreement exists.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 12 530 (2019) (citing 9 U.S.C. § 2). 13 III. DISCUSSION 14 Much as it did in its prior motion to compel, SoFi states its records indicate that Mr. 15 Galicia expressly consented to arbitration in 2019 when he first submitted a loan application. See 16 Mot. at 3–6. SoFi explains that to submit an online loan application, Mr. Galicia had to register as 17 a new user and acknowledge and agree to be bound by several agreements, including an arbitration 18 agreement. See Dkt. No. 68-1 (“Thompson Decl.”) at ¶¶ 5–6, 8, & Ex. A–C. SoFi explains that 19 without affirmatively checking the “I Agree” box manifesting his consent to the arbitration 20 agreement, Mr. Galicia could not have signed in or proceeded with any loan application on the 21 website. See id. at ¶ 6; see also Thompson Decl., Ex. A. SoFi states that according to its records, 22 Mr. Galicia registered on SoFi’s website on August 7, 2019, and consented to the arbitration 23 agreement as part of that registration process. See id. at ¶ 7, & Ex. C. SoFi’s records also show 24 that Mr. Galicia “started an application” for a personal loan on August 7, 2019. See id. at ¶ 11. 25 The arbitration agreement is the same as the agreement that Mr. Juarez purportedly agreed 26 to in 2016. It states: 27 SoFi in connection with any non-mortgage loan offered by SoFi, 1 (iii) my application for any non-mortgage loan offered by SoFi, (iv) my participation in SoFi’s career services or entrepreneur 2 program, or (v) the disclosures provided to me by SoFi in connection with any non-mortgage loan that SoFi offers (collectively, “Claim”) 3 shall be, at my or your election, submitted to and resolved on an individual basis by binding arbitration under the Federal Arbitration 4 Act, 9 U.S.C. §§ 1 et seq. (the “FAA”) before the American Arbitration Association (“AAA”) under its Consumer Arbitration 5 Rules (“AAA Rules”) in effect at the time the arbitration is brought . . . . 6 7 See Thompson Decl., Ex. B. SoFi contends that Mr. Galicia’s claims related to his August 2019 8 application “fall squarely within [the] scope” of the arbitration agreement. See Mot. at 1, 10–11. 9 SoFi further urges that Mr. Galicia’s claims related to his April 2021 call to SoFi, and any other 10 communications with SoFi, should be compelled to arbitration based on the doctrine of equitable 11 estoppel. See id. at 12–14. 12 A. 2019 Application 13 In their opposition brief, 2 Plaintiffs do not appear to challenge that Mr. Galicia’s claims 14 arising from his 2019 application fall within the scope of the arbitration agreement. See generally 15 Dkt. No. 74 (“Opp.”). And unlike their opposition to the motion to compel Mr. Juarez’s claims, 16 Plaintiffs do not explicitly disclaim reliance on Mr. Galicia’s 2019 application. Compare Opp. at 17 5–12 with Dkt. No. 41 at 8, & n.6. Rather, Plaintiffs only challenge whether to compel arbitration 18 as to Mr. Galicia’s claims arising from subsequent interactions with SoFi. See Opp. at 6–7, 11. 19 Based on Plaintiffs’ opposition brief, however, the Court assumes they do not intend to rely on 20 Mr. Galicia’s 2019 loan application. It appears clear that any claims relying on the 2019 loan 21 application would be subject to the arbitration agreement given SoFi’s internal records and the 22 plain language of the arbitration agreement. The Court therefore GRANTS SoFi’s motion to 23 compel arbitration as to Mr. Galicia’s claims arising from his 2019 loan application. 24 // 25
26 2 The Court notes that in reviewing Plaintiffs’ opposition brief, it is apparent that counsel did not comply with Civil L.R. 3-4(c), which requires 12-point type for all text, including footnotes. The 27 Court expects counsel to scrupulously comply with the Local Rules and the Court’s standing 1 B. 2021 Inquiry 2 The Court has already found that SoFi’s arbitration agreement “is limited in scope” and 3 only “applies on a transaction-by-transaction basis.” See Dkt. No. 56 at 8. It therefore does not 4 extend to any future registrations, submissions, or applications. See id. To the extent that Mr. 5 Galicia’s claims are premised, at least in part, on an April 2021 inquiry that he made over the 6 telephone (a year and a half after Mr. Galicia’s August 2019 application), that is not covered by 7 the plain terms of the 2019 arbitration agreement. SoFi acknowledges the Court’s prior ruling, but 8 contends that Mr. Galicia’s claims should still be compelled to arbitration under the doctrine of 9 equitable estoppel. See Mot. at 12–14, & n.5. 10 In California, “[e]quitable estoppel precludes a party from claiming the benefits of a 11 contract while simultaneously attempting to avoid the burdens that contract imposes.” Kramer v. 12 Toyota Motor Corp., 705 F.3d 1122, 1129 (9th Cir. 2013) (quotation omitted). As relevant here, 13 “‘equitable estoppel applies only if the plaintiffs’ claims against the nonsignatory are dependent 14 upon, or inextricably bound up with, the obligations imposed by the contract plaintiff has signed 15 with the signatory defendant.’” Id. (quoting Goldman v. KPMG, LLP, 173 Cal. App. 4th 209, 16 229–30 (Cal. Ct. App. 2009). SoFi’s arguments appear to be twofold. 17 First, SoFi contends that it is unfair to allow Mr. Galicia’s claims to proceed in this Court 18 because Plaintiffs intentionally circumvented the arbitration provision by contacting SoFi over the 19 phone, rather than through an online application. See Mot. at 12. SoFi notes that the only way to 20 submit a loan application is online, and this process requires users to agree to an arbitration 21 provision to proceed. See id. SoFi thus suggests that Mr. Galicia’s telephone communications 22 were simply pretextual and intended to evade the arbitration provision. Id. Yet elsewhere in the 23 amended complaint, Plaintiffs allege that once a prospective applicant indicates that he is not a 24 U.S. citizen, legal permanent resident, or visa holder, he cannot complete and submit an online 25 loan application. See SAC at ¶¶ 75, 81. Plaintiffs further allege that as of December 2019, DACA 26 recipients could only apply for loans with SoFi by telephone—not online. See id. at ¶ 84. SoFi’s 27 own records show that Mr. Galicia started an online application in 2019. See Thompson Decl. at 1 Galicia to apply online for a personal loan. See SAC at ¶ 131. In any event, SoFi offers no case 2 law—and the Court is aware of no authority—supporting the application of the doctrine of 3 equitable estoppel under such circumstances.3 4 Second, SoFi contends that Mr. Galicia’s claims are premised on SoFi’s Terms of Use, 5 which reference the arbitration agreement, such that Mr. Galicia must be bound by the arbitration 6 agreement. See Mot. at 13–14. The Court is not persuaded. SoFi points to a single sentence in 7 the amended complaint, which states: 8 [A]lthough Plaintiffs and Class Members are located throughout the 9 United States, they bring this claim under the Unruh Act because SoFi’s Terms of Use require California law to “govern[] in all 10 respects . . . without regard to its provisions relating to conflict of laws.” 11 12 See id. (citing SAC at ¶ 201, & n.34). However, as the California Court of Appeal has explained, 13 “merely mak[ing] reference to an agreement with an arbitration clause is not enough.” Goldman, 14 173 Cal. App. 4th at 218 (quotation omitted). Rather, the plaintiffs “must rely on the terms of the 15 written agreement in asserting [their] claims.” Id. (quotation omitted). Here, Mr. Galicia is a 16 California resident, so he does not need to rely on any choice of law provision to support his 17 Unruh Civil Rights Act claim. See SAC at ¶¶ 17, 202. Moreover, Mr. Galicia’s claims are not 18 based on SoFi’s Terms of Use generally or the arbitration agreement more specifically. Rather, 19 Plaintiffs allege that SoFi’s policies and practices intentionally discriminate against Mr. Galicia 20 and other putative class members based on their DACA status. See SAC at ¶¶ 203–206. Plaintiffs 21 allege that prior to December 2019, DACA recipients were ineligible to contract for loans with 22 SoFi, and after December 2019, DACA recipients could only contract for loans over the telephone 23 and with a co-signer. See id. at ¶¶ 203–204. Plaintiffs do not contend that these policies or 24 practices were contained within SoFi’s Terms of Use. In short, Mr. Galicia does not seek to 25 enforce the terms of the Terms of Use or the arbitration agreement, and therefore he has not 26
27 3 To the extent SoFi believes that Plaintiffs cannot support a § 1981 or Unruh Civil Rights Act 1 triggered any estoppel based on his claims. 2 SoFi’s motion to compel arbitration is therefore DENIED on this basis. 3 || Iv. CONCLUSION 4 Accordingly, the Court GRANTS IN PART and DENIES IN PART the motion to 5 || compel arbitration. The Court GRANTS SoFi’s motion to compel arbitration as to Mr. Galicia’s 6 || claims arising from his 2019 loan application, to the extent Plaintiffs intend to pursue such claims, 7 but otherwise DENIES the motion in its entirety. The case schedule at Dkt. No. 66 remains in 8 || place. Plaintiffs are further DIRECTED to file a short statement of two pages or less by August 9 || 31, 2021, indicating whether they intend to pursue in arbitration Mr. Galicia’s claims based on his 10 || 2019 loan application. 11 IT IS SO ORDERED. 12 || Dated: August 24, 2021
4 HAYWOOD S. GILLIAM, JR. United States District Judge
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