NerdWallet, Inc. v. Fidelity Information Services, LLC

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 NERDWALLET, INC., Case No. 25-cv-08184-WHO

8 Plaintiff, ORDER ON DEFENDANT'S MOTION 9 v. TO STAY AND COMPEL ARBITRATION AND ATTORNEYS' 10 FIDELITY INFORMATION SERVICES, FEES LLC, 11 Re: Dkt. Nos. 19, 20, 30, 31, 33 Defendant.

12 13 In this breach of contract dispute, defendant Fidelity Information Services, LLC, d/b/a 14 Atelio (“Atelio”) moves to stay this proceeding and compel plaintiff NerdWallet, Inc. 15 (“NerdWallet”) into arbitration, as the parties’ original contract contains an arbitration clause. 16 NerdWallet disagrees. In its view, the language of this clause suggests that arbitration is 17 permissive, not mandatory. NerdWallet is mistaken. While the arbitration provision includes 18 language that can be interpreted as permissive, the overall structure and context of the contract 19 confirms that the purpose of the clause was to mandate arbitration upon a party’s request. Atelio’s 20 motion to stay and compel arbitration is GRANTED. Its request for attorneys’ fees to cover the 21 costs of litigating this dispute is DENIED because NerdWallet did not advocate for its 22 interpretation of the contract in bad faith. 23 BACKGROUND 24 I. Nerdwallet’s Allegations 25 NerdWallet is a “leading personal finance company incorporated in the state of Delaware 26 and with its principal place of business in San Mateo, California.” Complaint (“Compl.”) [Dkt. 27 No. 1] ¶ 10. Atelio is a financial technology company and is a “wholly owned subsidiary of 1 global provider of financial technology solutions.” Id. ¶¶ 11–12. 2 In June 2023, NerdWallet began engaging with Atelio to “provide certain services in 3 connection with the NerdUp card,” a tool that would “allow[] users to build credit with minimal 4 risk by depositing funds in an account and using those funds to cover their future NerdUp Card 5 purchases.” Id. ¶¶ 13–14. The parties executed a Terms of Use agreement, which gave Atelio 6 “primary responsibility for most aspects of the NerdUp Card’s operations,” including “issuing 7 cards,” “creating and maintaining an online application for customers,” and “handling collection 8 activities on past due-accounts,” amongst other things. Id. ¶¶ 15–16. Atelio also agreed to “use 9 commercially reasonable efforts to address customer issues and assist NerdWallet during [its] 10 wind-down process.” Id. ¶ 17. 11 In late 2024, NerdWallet decided to discontinue its NerdUp Card. Id. ¶ 19. As a result, the 12 parties executed an Addendum to the Terms of Use on November 22, 2024, “reiterating their 13 commitment to cooperate on the closure of the program and agreeing to effectuate a ‘Wind-Down 14 Plan.’” Id. According to NerdWallet, the wind-down of the NerdUp Card was “not a complex 15 undertaking,” and Atelio only had a few responsibilities, including to “[d]isable NerdUp Cards, 16 and prevent further deposits or withdrawals, on the ‘freeze date’ of February 17, 2025”; “[i]ssue 17 refund checks to customers who did not withdraw their funds before the freeze date”; “[r]equest 18 NerdWallet’s cooperation ‘in a timely manner’ if such cooperation was needed to effectuate 19 refunds”; “[d]eliver final statements to users”; and “[c]omplete its wind-down obligations by an 20 agreed April2 1, 2025 Closure Date.” Id. ¶ 20. 21 “Put mildly,” NerdWallet alleges, “Atelio’s performance [of the Wind-Down Plan] has 22 been a disaster.” Id. ¶ 23. NerdWallet maintains that Atelio has failed to “timely issue refunds” to 23 over 1,600 NerdUp customers on the freeze date. Id. ¶¶ 24–25. While it indicated to NerdWallet 24 that the “entire refund process would be completed by the end of March 2025,” Atelio “did not 25 send out a single check until April 14, 2025.” Id. ¶ 26. This meant that numerous NerdUp 26 customers never received refunds until after the refund process was scheduled to be completed. 27 See id. “Nearly five months after the freeze date, the refund process still ha[d] not been 1 Moreover, NerdWallet asserts that many customers who did receive checks from Atelio 2 were “unable to access their funds because the checks they received were rejected by their banks.” 3 Id. ¶ 29. Atelio “never notified NerdWallet that it had issued invalid checks.” Id. ¶ 30. Instead, it 4 “discovered the issue after customers began complaining in April 2025.” Id. Similarly, Atelio 5 allegedly failed to calculate the statement balances for “at least five customers,” yet failed to 6 communicate with these customers for “more than a month because Atelio initially provided 7 NerdWallet with incorrect user IDs.” Id. ¶ 40. Put together, NerdWallet asserts that Atelio failed 8 to live up to the requirements in the Terms of Use and Addendum, as Atelio did not “reasonably 9 assist NerdWallet” with the Wind-Down process. Id. ¶ 33. Nor did Atelio “timely notify 10 NerdWallet of issues with the refund process,” instead choosing to “ke[ep] NerdWallet in the dark 11 about numerous key issues.” Id. ¶ 34. 12 II. Procedural History 13 On September 25, 2025, NerdWallet filed this action, raising claims for breach of contract 14 and indemnification. See id. ¶¶ 51–60. Atelio then moved to compel arbitration and for costs 15 associated with filing its motion on December 19, 2025. See Defendant Fidelity Information 16 Services, LLC’s Notice of Motion (“Mot.”) [Dkt. No. 20]. NerdWallet filed its opposition on 17 January 1, 2026. See NerdWallet, Inc.’s Opposition to Defendant Fidelity Information Services, 18 LLC’s Motion to Stay and Compel Arbitration (“Oppo.”) [Dkt. No. 30]. Atelio replied on January 19 23, 2025. See Defendant Fidelity Information Services, LLC’s Reply in Support of Motion to 20 Stay and Compel Arbitration and for Costs (“Repl.”) [Dkt. No. 33]. I heard oral argument on 21 March 4, 2026. 22 LEGAL STANDARD 23 The Federal Arbitration Act (“FAA”) governs the motion to compel arbitration. 9 U.S.C. 24 §§ 1 et seq. Under the FAA, a district court determines: (i) whether a valid agreement to arbitrate 25 exists and, if it does, (ii) whether the agreement encompasses the dispute at issue. Lifescan, Inc. v. 26 Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). “To evaluate the validity of 27 an arbitration agreement, federal courts should apply ordinary state-law principles that govern the 1 (internal quotation marks and citation omitted). 2 If the court is satisfied “that the making of the arbitration agreement or the failure to 3 comply with the agreement is not in issue, the court shall make an order directing the parties to 4 proceed to arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4. “Any doubts 5 concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Simula, Inc. 6 v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999). 7 DISCUSSION 8 I. Motion to Stay and Compel Arbitration 9 Neither party disputes that the first prong of the arbitration analysis—whether a valid 10 agreement to arbitrate exists—is met. Both parties acknowledge the Terms of Use as controlling 11 authority. It is also clear that the arbitration agreement covers this dispute if applied. See 12 Lifescan, Inc., 363 F.3d at 1012. What remains in dispute, therefore, is whether the arbitration 13 clause is mandatory or permissive. I first address the parties’ concerns regarding whether public 14 policy requires me to favor arbitration over reading the agreement using principles of contract 15 interpretation (it does not). I then address the merits of the parties’ motions, ultimately finding 16 that the arbitration provision is mandatory. 17 a. Whether Public Policy Supports Enforcement of the Arbitration Provision 18 Atelio first asserts that the FAA compels me to enforce the parties’ arbitration agreement. 19 See Mot. at 11–15. Under 9 U.S.C. § 2, arbitration agreements generally “shall be valid, 20 irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation 21 of any contract.” Similarly, under 9 U.S.C. § 3, courts are required to stay litigation of arbitral 22 claims “in accordance with the terms of the agreement.” “The principal purpose of the FAA is to 23 ensur[e] that private arbitration agreements are enforced according to their terms.” AT&T Mobility 24 LLC v. Concepcion, 563 U.S. 333, 344 (2011) (internal quotation marks omitted). 25 Atelio maintains that the United States Supreme Court has “recognized . . . strong public 26 policy in favor of arbitration.” See Mot. at 12–13 (collecting cases). NerdWallet points out that 27 two recent appellate decisions show that this policy no longer exists. Oppo. at 4. First, in Morgan 1 invoke an arbitration clause after the parties litigated the cases for an extended period of time, 2 including “filing motions to dismiss, answering complaints, and discussing settlement.” 596 U.S. 3 411, 413 (2022). Prior to Morgan, many circuits applied a rule of waiver specific to arbitration, 4 finding that a party could “waive its arbitration right by litigating only when its conduct has 5 prejudiced the other side.” Id. at 413–14 (emphasis added). Most justified this rule based on the 6 FAA’s “policy favoring arbitration.” See id. The Court disagreed. While it acknowledged the 7 existence of a “policy favoring arbitration,” it emphasized that courts may not use the FAA to 8 “invent special, arbitration-preferring procedural rules.” See id. at 418 (quoting Mohes H. Cone 9 Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). Rather, courts should 10 understand “arbitration agreements as enforceable as other contracts, but not more so.” Morgan, 11 596 U.S. at 418 (quoting Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n.12 12 (1967)). In other words, the FAA requires courts to “treat[] arbitration contracts like all others, 13 not . . . foster[] arbitration.” Id. (emphasis added). 14 Later, in Armstrong v. Michaels Stores, Inc., a Ninth Circuit panel applied Morgan and 15 considered the circuit’s own treatment of arbitration agreements. 59 F.4th 1011, 1013 (9th Cir. 16 2023). While the plaintiff in Armstrong originally agreed to arbitrate “any disputes regarding the 17 terms and conditions of her employment,” a dispute arose that resulted in plaintiff filing the 18 lawsuit. Id. The district court ordered the plaintiff to take her claim to arbitration. Id. She then 19 appealed, arguing the defendant “waited too long to move for arbitration and therefore waived its 20 right to the arbitral forum.” Id. The Ninth Circuit panel affirmed the district court, noting that the 21 defendant “repeatedly reserved its right to arbitration, did not ask the district court to weigh in on 22 the merits, and did not engage in any meaningful discovery.” Id. “Indeed,” the court found, “the 23 only significant motion filed was [defendant’s] motion to compel arbitration.” Id. And while 24 defendant did not immediately move to compel arbitration, the court found that “its actions d[id] 25 not amount to a relinquishment of the right to arbitrate.” Id. 26 Taken together, Morgan and Armstrong show that courts cannot favor arbitration 27 agreements as compared to other contractual arrangements. See, e.g., Jackson v. Amazon.com, 1 (clarifying the Court’s statement in Morgan that the FAA’s “longstanding policy favoring 2 arbitration is meant simply to place arbitration agreements on equal footing with other contracts”). 3 But that does not mean the existence of an agreement should be downplayed. As I explain in 4 Section I.B, supra, principles of contract interpretation still govern an arbitration clause. And if 5 the terms of the contract show that enforcement of the clause is required, then the parties are 6 bound by such agreement.1 7 b. Whether the Complaint is Subject to the Arbitration Provision 8 Having now clarified how the FAA applies to this matter, I turn to the parties’ agreement. 9 The Terms of Use provides in relevant part: “These terms limit our liability to you and generally 10 require that disputes related to the Services be resolved by a dispute resolution process which may 11 lead to binding arbitration.” Mot. at 9 (citing Grayson Decl., Ex. 1 (“Terms of Use”)). The 12 agreement then goes on to state in pertinent part:

13 22. Dispute Resolution. In the event of a dispute, claim, or controversy arising out of or in connection with these Terms or the 14 breach, termination, enforcement, interpretation, or validity thereof (other than for disputes, claims, or controversies related to the 15 intellectual property of a party) (collectively, “Disputes”), each party’s senior representatives will engage in good faith negotiations 16 with the other party’s senior representatives to amicably resolve the Dispute. If the parties are unable to resolve the Dispute within thirty 17 (30) days after the first request to engage in good faith negotiations or within such other time period as the parties may agree to in writing, 18 then either party may commence binding arbitration under JAMS’ Comprehensive Arbitration Rules and Procedures…..Judgment on 19 the award rendered by the arbitrator may be entered in any court of competent jurisdiction. 20 Id. The Arbitration Provision also contains a choice of forum clause, requiring all “arbitration 21 proceedings [to] take place in San Francisco, California.” Id.; Mot. at 10. 22

23 1It is worth noting that there is no issue of relinquishment in this case. Atelio has made it clear from the beginning that it sought arbitration. During the parties’ October 24, 2025 meet and 24 confer, shortly after this suit was filed, Atelio brought the arbitration clause to NerdWallet’s 25 attention, indicating it “intended to elicit consent to proceed by the way of arbitration” to avoid “unnecessary motion[s].” Mot. at 11; Declaration of Nicholas O. Kennedy (“Kennedy Decl.”) 26 [Dkt. No. 20-1] ¶ 2. After their call, counsel for Atelio “followed up via e-mail four times, on November 10, November 25, and twice on December 10, to seek Plaintiff’s consent to proceed by 27 way of arbitration.” Id.; Kennedy Decl. ¶¶ 4, 6, Ex. 1. Atelio’s efforts to compel arbitration were 1 While NerdWallet does not dispute this provision exists, it argues that the agreement is 2 “permissive, meaning that there was no binding arbitration agreement.” Oppo. at 3. It focuses on 3 the use of the word “may” in the agreement as evidence that arbitration is permissive. Grayson 4 Decl., Ex. 1 ¶ 22 (emphasis added). To support this reading, it highlights various Ninth Circuit 5 and California Supreme Court cases finding that the plain meaning of “may” connotes “discretion 6 or permissiveness,” unlike words such as “shall.” See Ceausu v. Progressive Cas. Ins. Co., No. 7 CV 12-6254 PSG (VBKx), 2013 WL 12131280, at *7 (C.D. Cal. Oct. 10, 2013) (“The Ninth 8 Circuit routinely holds that the plain meaning of the term ‘may’ connotes discretion or 9 permissiveness, in contrast to ‘shall,’ the contraposition of the term, which connotes a requirement 10 or duty.”); Tarrant Bell Property, LLC v. Superior Court, 51 Cal.4th 538, 542 (2011) (“[W]e 11 ‘ordinarily’ construe the word ‘may’ as permissive and the word ‘shall’ as mandatory.”). 12 Considering this language and caselaw together, NerdWallet urges me to conclude that the plain 13 meaning of the arbitration agreement is permissive, not mandatory. Oppo. at 5. 14 Although NerdWallet touts the “plain meaning rule” as evidence of arbitration being 15 permissive, it fails to consider the crucial rule of contract interpretation—reading the terms in 16 context. While “the plain meaning of the term ‘may’ . . . is ordinarily understood in a permissive 17 or discretionary manner,” it is “not a per se indicator of permissiveness [and] must be read in 18 context.” Ceausu, 2013 WL 12131280 at *7; Kropke v. Dunbar, No. CV-16-08753-MWF 19 (FFMx), 2017 U.S. Dist. LEXIS 236414, at *14 (C.D. Cal. Mar. 2, 2017). The Terms of Use and 20 the Dispute Resolution provision, read in context, require arbitration once good faith negotiations 21 fail. 22 Critical to the context of the Terms of Use is that the Dispute Resolution clause is the only 23 provision that discusses how a dispute can be litigated under the agreement. Only arbitration is 24 mentioned as a way to resolve a dispute after good faith negotiations. There is no choice of law, 25 venue or jurisdiction clause. “May” in the context of the Dispute Resolution provision gives 26 permission to either party to take a formal litigation step after negotiating in good faith for thirty 27 days. Parties are not required to arbitrate after that time expires—they can continue to negotiate. 1 contemplated by the Terms of Use—arbitration. 2 Mentor Capital, Inc. v. Bhang Chocolate Co., No. 3:14-cv-3630-LB, 2014 WL 6485666 3 (N.D. Cal. Nov. 19, 2014) (Beeler, M.J.), is instructive. There, the parties disputed whether a 4 similar arbitration clause was binding. That arbitration agreement read:

5 This Agreement shall be governed and construed in accordance with the laws of the State of California.... In the event that any dispute is 6 unresolved after good faith attempts by the Parties, any Party may demand arbitration. In that case, the matter will be submitted to final 7 and binding arbitration before an arbitrator of the American Arbitration Association.... In the event [that] a Party brings any legal 8 action or submits any claim or controversy to arbitration with respect to this Agreement, the prevailing Party, in addition to any other 9 remedies available to it, shall be entitled to recover reasonable attorneys' fees and costs from the non-prevailing Party, regardless of 10 whether such action, claim or controversy is prosecuted or arbitrated to completion. 11 Id. at *1 (emphasis added). The plaintiff argued that the use of the word “may” meant the 12 arbitration agreement in its entirety was permissive. Id. at *3. The Hon. Laurel Beeler disagreed, 13 finding the language “instead expresse[d] the grant of a contractual right to demand arbitration.” 14 Id. Judge Beeler explained in detail that “may” must be read in context: 15

16 It would be artificial, and partial, to focus only on “may” when the term is “may demand.” What can “demand” mean here if not 17 something compulsory? What would the right to “demand arbitration” amount to if the demand were merely suggestive? (The 18 shared etymology of “demand” and “mandatory”—both words derive from the Latin mandare, meaning “to order” or “to command”— 19 suggests something here.) Read in its still broader context, along with the phrase “will be submitted,” the arbitration clause seems 20 inescapably mandatory. If a party demands arbitration, then, under the arbitration clause's plain terms, “the matter will be submitted to final 21 and binding arbitration.” 22 See id. 23 Like the arbitration agreement in Mentor Capital, the language of Atelio and NerdWallet’s 24 agreement states that either party “may commence” arbitration. See id.; Grayson Decl., Ex. 1 ¶ 25 22. I agree with Judge Beeler’s reasoning that it would not make sense for an agreement to 26 “demand arbitration” if such a demand were “merely suggestive.” Mentor Capital, 2014 WL 27 6485666, at *3. Those interpretation principles apply equally here too. The Terms of Use 1 negotiations.” See Grayson Decl. Ex. 1 ¶ 22. Atelio attempted to negotiate numerous times with 2 NerdWallet about how to resolve their concerns. Kennedy Decl. ¶¶ 2, 4, 6. As a result, the right 3 to “commence binding arbitration” was vested in Atelio, which it now seeks to enforce. That the 4 word “may” is used in the agreement does not allow NerdWallet to avoid arbitration. To construe 5 the agreement otherwise would be a “disfavored result under the canon that contracts should be 6 construed so as to make them operative.” Id. at *4; see Health Integrated, Inc. v. Community 7 Health Plan of Wash., No. C18-1522 RSM, 2019 U.S. Dist. LEXIS 15750, at *8–*9 (W.D. Wash. 8 2019); Plintron Techs. USA, LLC v. Phillips, No. C24-93, 2024 U.S. Dist. LEXIS 65771, at *8 9 (W.D. Wash. Apr. 10, 2024) (finding arbitration clauses that stated that “either Party may request 10 binding arbitration” to be compulsory). 11 NerdWallet points to the parties’ Technology Licensing and Onboarding Agreement 12 (“TLO”) as evidence that the Terms of Use’s arbitration clause is permissive. The TLO was 13 executed around the same time as the Terms of Use and also contained an arbitration clause. That 14 provision reads: Any Dispute which cannot otherwise be resolved as provided above 15 after the parties have negotiated the resolution of the Dispute for at least fifteen (15) business days shall be resolved by arbitration 16 conducted in accordance with the commercial arbitration rules of the American Arbitration Association, and judgment upon the award 17 rendered by the arbitral tribunal may be entered in any court having jurisdiction thereon. 18 Id.; TLO ¶ 15 (emphasis added). NerdWallet argues that because Atelio “chose to use mandatory 19 ‘shall’ language” in the TLO, Atelio’s use of “may” in the Terms of Use was an “intentional 20 choice to render arbitration permissive, not mandatory.” Oppo. at 6. 21 NerdWallet is mistaken. First, it has not shown why this extrinsic document should be 22 considered. The goal of contract interpretation is to “give effect to the mutual intention of the 23 parties as it existed at the time of contracting.” Mot. at 6; Int’l Bhd. of Teamsters v. NASA Servs., 24 Inc., 957 F.3d 1038, 1042 (9th Cir. 2020); Cal. Civ. Code § 1636. “When a contract is reduced to 25 writing, the intention of the parties is to be ascertained from the writing alone, if possible.” Int’l 26 Bhd. of Teamsters, 957 F.3d at 1042; Cal. Civ. Code § 1639. Only when a contractual provision is 27 unclear should a court consider extrinsic evidence. Id. As indicated above, the language of the 1 Terms of Use is sufficiently clear in showing the arbitration clause was mandatory; it is neither 2 necessary nor helpful to consider the TLO. 3 The attempt to parse between a potential “may” versus “shall” distinction is unsupported 4 by the caselaw cited by NerdWallet. In both its briefs and at oral argument, NerdWallet cited to 5 Plintron Technologies USA, LLC v. Phillips. No. C24-93 MJP, 2024 WL 1557661 (W.D. Wash. 6 Apr. 10, 2024). But Plintron shows why arbitration is mandatory here. There, the Hon. Marsha 7 Pechman considered whether an arbitration clause stating that the parties “may . . . submit to 8 binding arbitration” was permissive or mandatory. Id. at *1. She concluded in the context of that 9 agreement that arbitration was permissive. But that agreement was different than the one at issue 10 here for a number of reasons. Fundamentally, it contained a choice of law, jurisdiction, and venue 11 clause, which suggested to Judge Pechman that “the parties preserved other options to resolve 12 disputes, including litigation.” Id. at *2. The Terms of Use here contain no such provisions. And 13 in emphasizing the importance of context in interpreting a contract, Judge Pechman distinguished 14 a case in her District, Health Integrated, Inc. v. Cmty. Health Plan of Wash., No. C18-1522 RSM, 15 2019 WL 399027 (W.D. Wash. Jan. 31, 2019), that is squarely on point. The Health Integrated 16 court found that “may” was mandatory in its arbitration agreement. Judge Pechman quoted the 17 language from the Health Integrated agreement that she said was different from the language in 18 Plintron: “if the dispute is not resolved through mediation, either Party may request binding 19 arbitration.” The Health Integrated language is virtually identical to the language in our case: “If 20 the parties are unable to resolve the dispute…then either party may commence binding 21 arbitration…” 22 Atelio’s motion to stay and compel arbitration is GRANTED. NerdWallet cannot avoid 23 arbitration on the word “may” alone. Nor can it rely on other cases that parse distinctions between 24 numerous contracts. Those cases are factually different. What is clear here is that both parties 25 entered into an agreement that mandates arbitration for any dispute, so long as the parties (1) 26 engage in good faith, (2) fail to reach an agreement, and (3) one party requests arbitration. Atelio 27 has met those requirements. Accordingly, under both the FAA and canons of contract 1 interpretation, I must uphold the provision and compel arbitration.2 2 II. Motion for Attorneys’ Fees 3 Atelio also moves to recover attorneys’ fees for litigating this case in federal court. See 4 Mot. at 21–23. It maintains that NerdWallet engaged in “bad faith [by] pursuing this frivolous 5 action, in light of clear evidence that this dispute is subject to arbitration and despite FIS’ attempts 6 at settling this dispute without a motion.” Id. at 21. 7 District courts may award attorneys’ fees when a party has “acted in bad faith, vexatiously, 8 wantonly, or for oppressive reasons.” Int’l Union of Petroleum & Indus. Workers v. W. Indus. 9 Maint., Inc., 707 F.2d 425, 428 (9th Cir. 1983). Bad faith exists when “the legal and factual basis 10 for the action [is] totally frivolous” or when a claim is brought with an improper purpose. B.K.B. 11 v. Maui Police Dept., 276 F.3d 1091, 1108 (9th Cir. 2002), abrogated on other grounds by Fort 12 Bend County, Texas v. Davis, 587 U.S. 541 (2019); see Safeco Ins. Co. of Illinois v. LSP Prods. 13 Grp., Inc., 659 F. Supp. 3d 1131, 1139 (D. Idaho 2023). “Courts should exercise their discretion 14 to award attorney fees ‘only in exceptional cases and for dominating reasons of justice.’” Safeco, 15 659 F. Supp. 3d at 1139 (quoting Beaudry Motor Co. v. Abko Props., Inc., 780 F.2d 751, 756 (9th 16 Cir. 1986)). 17 This is not an “exceptional case[]” where attorneys’ fees are warranted. Beaudry, 780 F.2d 18 at 756. To be sure, NerdWallet incorrectly interpreted the Terms of Use. But that does not mean 19 its belief was “totally frivolous.” See B.K.B., 276 F.3d at 1108. As early as July 2025, prior to 20 filing suit, NerdWallet indicated to Atelio that it was “prepared to explore all available remedies, 21 including the initiation of arbitration under Section 15 of [their] Technology Licensing and 22 Onboarding Agreement.” Declaration of Ekumene Lysonge in Support of NerdWallet, Inc.’s 23 Opposition (“Lysonge Decl.”) [Dkt. No. 30-1] Ex. 2 (July 9, 2025 correspondence between 24 Ekumene Lysonge, the Chief Legal Officer at NerdWallet, and Caroline Tsai, Atelio’s Chief Legal 25 and Corporate Affairs Officer)). The parties then repeatedly discussed whether the arbitration 26 2 Atelio also makes an additional argument that the arbitration provision is both procedurally and 27 substantively conscionable. See Mot. at 18–21. NerdWallet does not address these arguments. 1 provision should be understood as mandatory or permissive. Kennedy Decl. ¶¶ 4, 6. While 2 NerdWallet should have been at least aware of the possibility of the arbitration clause being 3 mandatory, given the language and Atelio’s interpretation of it, nothing in the record explicitly 4 shows NerdWallet acted in bad faith by filing this lawsuit. I DECLINE to grant attorneys’ fees to 5 Atelio. 6 III. Motions to Seal 7 Atelio finally moves to seal various documents filed in support of its motions, including 8 (1) a declaration from Jonathan Grayson, counsel for Atelio; (2) the Terms of Use agreement; (3) 9 the TLO; and (4) the parties’ Wind-Down Plan executed on December 12, 2024. See Defendant 10 Fidelity Information Services, LLC’s Administrative Motion to File Under Seal (“Sealing Mot.”) 11 [Dkt. No. 19]. The justification for sealing the four documents is the same: Atelio believes each 12 contains the “operative agreements governing the relationship between the parties,” which may 13 include “commercially sensitive information with respect to the terms of the parties’ relationship 14 and its termination.” Id. at 2–3. 15 The problem with this request is that Atelio attempts to seal these documents in their 16 entirety. Much of the information contained in them, including the arbitration clause at issue and 17 the TLO, have already been filed in public record or have been discussed by Atelio in its briefing. 18 To request these documents be sealed in their entirety would defeat the “strong presumption in 19 favor of access” and disclosure. See Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 20 (9th Cir. 2006) (quoting Foltz v. State Farm Mutual Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 21 2003)). Nor would it make sense at this juncture, as Atelio has failed to “articulate[] compelling 22 reasons supported by specific factual findings” that disclosure place them in a “competitive 23 disadvantage” or would harm their “competitive and market standing” should these documents be 24 public. See id. (citing San Jose Mercury News, Inc. v. U.S. Dist. Ct., 187 F.3d 1096, 1102–03 (9th 25 Cir. 1999)) (emphasis added); Sealing Mot. at 4–5. Atelio’s request is therefore DENIED. Should 26 Atelio seek to propose specific information that would cause competitive harm if disclosed, it may 27 submit a chart that identifies its requests within ten (10) days of this Order. I will issue a final ] NerdWallet has also moved to seal various portions of its exhibits in opposition to the 2 |} motion. Its request is GRANTED IN PART and DENIED IN PART. The request to seal the 3 || names of specific customers who made complaints to Atelio in Meredith Carlo’s July 25, 2025 4 email is GRANTED. Any other request, however, is DENIED for the reasons indicated above; it 5 is unlikely that the parties’ agreements need to be sealed in their entirety. I will reconsider 6 || NerdWallet’s denied requests should the parties submit a narrower proposal for redactions. 7 CONCLUSION 8 For the reasons expressed above, Atelio’s motion to stay and compel arbitration is 9 || GRANTED; its motion for attorneys’ fees, however, is DENIED. The parties shall file a joint 10 || status report on or before September 11, 2026, and every six months thereafter, advising the court 11 of the status of the arbitration. They shall also file a Request for Case Management Conference or 12 || a Notice of Resolution within two weeks of the completion of the arbitration or settlement. 13 IT IS SO ORDERED. |) Dated: March 11, 2026

16 YVU.de illiam H. Orrick 17 United States District Judge 18 19 20 21 22 23 24 25 26 27 28