Sutaniman v. Axos Bank

• Court: District Court, S.D. California
• Decided: September 13, 2024
• Docket: 3:23-cv-02266
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 IN RE AXOS BANK LITIGATION Case No.: 23-cv-2266-RSH-SBC

13 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S 14 MOTION TO COMPEL 15 ARBITRATION OR DISMISS

16 [ECF No. 27] 17 18 19 Before the Court is a motion to compel arbitration or to dismiss filed by defendant 20 Axos Bank d/b/a UFB Direct (“UFB”). ECF No. 27. Pursuant to Local Civil Rule 21 7.1(d)(1), the Court finds the motion presented appropriate for resolution without oral 22 argument. For the reasons below, the Court grants in part and denies in part UFB’s 23 motion. 24 I. BACKGROUND 25 The instant case is a consolidated putative class action brought by customers 26 holding savings accounts with UFB. It is one of several related cases pending in this 27 District. See Ash et al v. Axos Bank, 24-cv-01157-RSH-SBC; Pliszka v. Axos Bank, 3:24- 28 cv-00445-RSH-SBC. 1 The Consolidated Amended Complaint (“CAC”) alleges Plaintiffs and other UFB 2 customers were induced into opening savings accounts that UFB represented were the 3 “highest yielding savings accounts we offer[.]” CAC, ECF No. 20 ¶ 2. UFB then 4 executed a “bait and switch”—creating new accounts with slightly different names 5 offering higher interest rates to new customers, without informing its existing 6 accountholders. Id. ¶¶ 2, 46–66. Rather than increasing the interest rates earned on its 7 earlier accounts, UFB reclassified them as “legacy accounts” and froze or decreased their 8 Annual Percentage Yields (“APYs”). Id. ¶¶ 2, 53. 9 Named Plaintiffs Sutaniman, Kuperstein, and Blosser are residents of California, 10 New Jersey and Arizona, respectively, who were affected by UFB’s alleged misconduct. 11 Id. ¶¶ 6–28. Plaintiffs seek to represent a class comprising: (1) “all persons who have 12 been UFB high-yield savings accountholders since UFB first began offering high-yield 13 savings account offered by UFB who did not, in fact, receive the highest APY offered by 14 UFB”; and (2) subclasses comprising all persons in California, New York, and Arizona 15 who similarly have been “UFB high-yield savings accountholders since UFB began 16 offering the high-yield savings account product who did not, in fact, receive the highest 17 APY offered by UFB.” Id. ¶¶ 159–62. 18 The CAC brings claims for: (1) breach of contract; (2) breach of the implied 19 covenant of good faith and fair dealing; (3) fraud; (4) violation of California’s Unfair 20 Competition Law; (5) violation of California’s False Advertising Law; (6) violation of 21 California’s Consumer Legal Remedies Act; (7) violation of New Jersey’s Consumer 22 Fraud Act; and (8) violation of Arizona’s Consumer Fraud Act. Id. ¶¶ 176–269. 23 On April 16, 2024, the Court consolidated the Sutaniman v. Axos Bank, No. 3:23- 24 cv-2266-RSH-SBC and Blosser v. Axos Bank, Case 3:24-cv-259-RSH-SBC cases into the 25 present action for all purposes. ECF No. 21. On July 11, 2024, the Court denied UFB’s 26 first motion to compel arbitration without prejudice. ECF No. 26. On July 25, 2024, UFB 27 filed the instant renewed motion to compel arbitration. ECF No. 27. Plaintiffs filed a 28 response and UFB filed a reply. ECF Nos. 29, 30. 1 II. LEGAL STANDARD 2 The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., “governs arbitration 3 agreements in ‘contract[s] evidencing a transaction involving interstate commerce.’” 4 Fli-Lo Falcon, LLC v. Amazon.com, Inc., 97 F.4th 1190, 1193 (9th Cir. 2024) (quoting 5 9 U.S.C. § 2). Pursuant to Section 2 of the FAA, arbitration agreements “shall be valid, 6 irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the 7 revocation of any contract[.]” 9 U.S.C. § 2. This provision reflects “both a liberal federal 8 policy favoring arbitration, and the fundamental principle that arbitration is a matter of 9 contract.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (internal 10 quotation marks and citations omitted). 11 The FAA permits “[a] party aggrieved by the alleged failure, neglect, or refusal of 12 another to arbitrate under a written agreement for arbitration [to] petition any United 13 States district court . . . for an order directing that such arbitration proceed in the manner 14 provided for in such agreement.” 9 U.S.C. § 4. “In deciding whether to compel arbitration 15 under the FAA, a court’s inquiry is limited to two ‘gateway’ issues: ‘(1) whether a valid 16 agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the 17 dispute at issue.’” Lim v. TForce Logistics, LLC, 8 F.4th 992, 999 (9th Cir. 2021) 18 (quoting Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 19 2000)). “If both conditions are met, the [FAA] requires the court to enforce the arbitration 20 agreement in accordance with its terms.” Id. (internal quotation marks omitted); Dean 21 Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985) (“By its terms, the Act leaves no 22 place for the exercise of discretion by a district court, but instead mandates that district 23 courts shall direct the parties to proceed to arbitration on issues as to which an arbitration 24 agreement has been signed.”). 25 III. ANALYSIS 26 A. Valid Agreement to Arbitrate 27 The Court first considers whether a valid agreement to arbitrate to exists in this 28 case. “[A] court must resolve any challenge that an agreement to arbitrate was never 1 formed[.]” Caremark, LLC v. Chickasaw Nation, 43 F.4th 1021, 1030 (9th Cir. 2022). “In 2 determining the validity of an agreement to arbitrate, federal courts should apply ordinary 3 state law principles that govern the formation of contracts,” in this case, California law. 4 Ferguson v. Countrywide Credit Indus., 298 F.3d 778, 782 (9th Cir. 2002) (internal 5 quotation marks omitted); see ECF Nos. 27-2 at 64; 29-1 at 15.1 The party seeking to 6 compel arbitration “has the burden of proving the existence of an agreement to arbitrate 7 by a preponderance of the evidence.” Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 8 (9th Cir. 2014). 9 Two agreements are relevant to this dispute: (1) the Personal Deposit Account 10 Agreement and Schedule of Fees (“Account Agreement”); and (2) the Online Access 11 Agreement. ECF Nos. 27-1 at 19; 29 at 9. The Parties do not dispute that at the time the 12 lawsuit was filed, the Online Access Agreement contained an arbitration provision, while 13 the Account Agreement did not. ECF No. 27-1 at 19. However, Plaintiffs contend UFB 14 has failed to prove either that: (1) Plaintiffs executed the Online Access Agreement; or 15 (2) Plaintiffs meaningfully assented to the agreement’s arbitration provision. ECF No. 29 16 at 14–19. 17 1. Authenticity of Electronic Signatures 18 The Court first addresses whether UFB has sufficiently authenticated Plaintiffs’ 19 electronic signatures to the Online Access Agreement. California’s Uniform Electronic 20 Transactions Act provides that “an electronic signature has the same legal effect as a 21 handwritten signature.” Ruiz v. Moss Bros. Auto Grp., Inc., 232 Cal. App. 4th 836, 843 22 (Ct. App. 2014).2 “Still, any writing must be authenticated before the writing . . . may be 23 received in evidence.” Id. “[California] Civil Code section 1633.9 addresses how a 24

25 1 All citations to electronic case filing (“ECF”) entries refer to the ECF-generated 26 page numbers. 27 2 An “electronic signature” is defined as “an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a 28 1 proponent of an electronic signature may authenticate [a] signature—that is, show the 2 signature is, in fact, the signature of the person the proponent claims it is.” Id. Under 3 section 1633.9: “An electronic record or electronic signature is attributable to a person if 4 it was the act of the person. The act of the person may be shown in any manner, including 5 a showing of the efficacy of any security procedure applied to determine the person to 6 which the electronic record or electronic signature was attributable.” Cal. Civ. Code § 7 1633.9(a); see Fabian v. Renovate Am., Inc., 42 Cal. App. 5th 1062, 1068 (Ct. App. 8 2019) (“The party seeking authentication may carry its burden ‘in any manner,’ including 9 by presenting evidence of the contents of the contract in question and the circumstances 10 surrounding the contract’s execution.”). 11 In this case, Plaintiffs Sutaniman, Kuperstein, and Blosser submitted sworn 12 declarations attesting they do not recall accepting the Online Access Agreement prior to 13 opening their savings accounts. Declaration of Gianni Sutaniman (ECF No. 29-3) ¶ 5; 14 Declaration of Samuel Kuperstein (ECF No. 29-2) ¶ 14; Declaration of Mark Blosser 15 (ECF No. 29-4) ¶ 3. The burden, therefore, shifts to UFB “to prove by a preponderance of 16 the evidence that [Plaintiff’s electronic] signature is, indeed, authentic.” Bulnes v. Suez 17 WTS Servs. USA, Inc., No. 22-cv-1154-BAS-AHG, 2023 U.S. Dist. LEXIS 78472, at *21 18 (S.D. Cal. May 4, 2023). 19 To meet its burden, UFB submits the supplemental declaration of Derek Tam, its 20 “First Vice President, Software Development Manager.” Supplemental Declaration of 21 Derek Tam (“Suppl. Tam Decl.,” ECF No. 27-2 at 1–14) ¶ 1.3 Mr. Tam declares that 22

23 3 Plaintiffs’ evidentiary objections to Mr. Tam’s declaration [ECF No. 29-5] are 24 OVERRULED. Mr. Tam’s declaration properly lays a foundation and establishes his 25 personal knowledge of the facts stated in his declaration. The Court does not find Mr. Tam’s statements vague, argumentative, or irrelevant. The Court is also not persuaded the 26 contents of Mr. Tam’s declaration could not be presented in an admissible form at trial. 27 See Lomeli v. Midland Funding, LLC, No. 19-CV-01141-LHK, 2019 U.S. Dist. LEXIS 166151, at *20 (N.D. Cal. Sep. 26, 2019) (“[OI]n a motion to compel arbitration . . . the 28 1 since starting at UFB, he and his team have been responsible “for building, maintaining, 2 and improving the backend software and database systems” UFB uses for: (1) account 3 enrollment (the “Enrollment System”); (2) user verification (the “Identity System”); and 4 (3) online banking services (the “OLB System”). Suppl. Tam Decl. ¶ 3. The three 5 systems are used together to “gather and store information about UFB’s accountholders” 6 and “are also the systems applicants and accountholders must use to obtain and use their 7 UFB accounts.” Id. ¶ 4. 8 Mr. Tam’s supplemental declaration describes the steps a new customer must take 9 in order to: (1) open an account with UFB; and (2) sign up for online banking services. 10 Id. ¶¶ 8–21. First, to open an account, a prospective customer must complete the “account 11 opening process on UFB’s website” which requires the individual to provide a “first 12 name, last name, email, and mobile phone number” and create a “username and 13 password.” Id. ¶ 8. “Usernames are unique to each UFB applicant (and, once the account 14 is approved, accountholder).” Id. ¶ 11. When an applicant creates a unique username, 15 UFB’s Identity System assigns the applicant a unique “UDBId”—the “identifier used by 16 UFB in its backend systems.” Id. ¶ 12. During the enrollment process, the applicant is 17 also asked to provide other personal identifying information, including occupation, 18 address, birth date, social security number, and Driver’s License or State ID number. 19 Id. ¶ 13. This data is “paired” with the applicant’s unique username and UDBId. Id. 20 To access their account online, an accountholder must return to UFB’s website (or 21 mobile application) and login using their unique username and password. Id. ¶ 18. When 22 logging in for the first time, the accountholder is presented with a “Terms & Conditions” 23 screen: 24 25 26

27 are capable of presentation in an admissible form at trial.”) (internal quotation marks 28 | Feaet ts ge barcrd Fld to os ry Fey Tem OE er

3 4 oe] —| + 5 Please read and accept our Terms & Conditions. 6 7 Online Access Agreement Version Effective February 9, 2024 8 —— ko

10 ee ee ee oe 1 1 □ eee aias arian “ — 12 tae ce eee ee 13 ICGSUNIS, products, services and atures Pease read thie Agent caretully 14 Eee 15 16 || /d. | 18. The “Terms & Conditions” screen states at the top: “Please read and accept our 17 ||Terms & Conditions.” Jd. § 19. Directly below is “a copy of the Online Access 18 |] Agreement that individuals can scroll through to review.” /d. Below this is text stating the 19 || following: 20 By selecting ‘Agree & Continue’, you consent to adhere to the Terms 21 and Conditions as stated in the Axos Online Access Agreement. This Online Access Agreement governs your use of this site for your personal requests and transactions; and details the online policies 23 relative to Axos Bank, Nationwide, and UFB Direct Online and Axos 4 Invest accounts, products, services and features. Please read this Agreement carefully. 25 26 The text is followed by an orange button reading “Agree & Continue.” /d. □ 22. 27 || According to Mr. Tam, when an accountholder clicks the “Agree & Continue” button, 2g ||the OLB System “stores the date and time” the button was clicked. /d. “UFB knows to

1 associate that datapoint with the accountholder because the accountholder cannot 2 proceed to the above screen without having logged in with their unique username and 3 password.” Id. For these reasons, Mr. Tam declares he was able to query UFB’s OLB 4 System using Plaintiffs’ UBDIds to confirm the date and time each Plaintiff clicked the 5 ”Agree and Continue” button. Id. ¶¶ 22–25. 6 The Court determines UFB has submitted sufficient evidence authenticating 7 Plaintiffs’ electronic signatures. The California Court of Appeal’s decision in Espejo v. 8 Southern California Permanente Medical Group, 246 Cal. App. 4th 1047 (2016) is 9 instructive. In that case, defendant submitted a declaration by its systems consultant 10 detailing the company’s “security precautions regarding transmission and use of an 11 applicant’s unique username and password, as well as the steps an applicant would have 12 to take to place his or her name on the signature line of the employment agreement” and 13 dispute resolution procedure. 246 Cal. App. 4th at 1062. The consultant concluded the 14 electronic signature could only have been placed by someone using plaintiff’s “unique 15 user name and password.” Id. The Espejo Court determined these details were 16 satisfactory to “establish” the authenticity of the electronic signature. Id. Similarly, here, 17 Mr. Tam’s supplemental declaration describes the steps an accountholder must take to 18 open an account with UFB and sign up for UFB’s online banking services. Tam. Suppl. 19 Decl. ¶¶ 8–21. Mr. Tam further states Plaintiff could not have accessed UFB’s online 20 banking services without first agreeing to the Online Access Agreement and this process 21 could only have been completed by someone using Plaintiff’s unique username and 22 password. Id. ¶¶ 16–21.4 23

24 25 4 In contrast, the Northern District’s Hoang decision—cited by Plaintiffs—is inapposite. ECF No. 29 at 15–16. In Hoang, defendant moved to compel arbitration of 26 plaintiff’s claims based on the arbitration provision set forth in a Client Manual. Tuong 27 Hoang v. Citibank, N.A., No. 23-cv-03270-PCP, 2023 U.S. Dist. LEXIS 205803, at *2 (N.D. Cal. Nov. 16, 2023). The question in Hoang was not—as it is here—whether 28 1 “[T]he burden of authenticating an electronic signature is not great.” Ruiz, 232 Cal. 2 App. 4th at 844. UFB has met its burden here. See Guidry v. Vitas Healthcare Corp., No. 3 3:24-cv-00176-H-MMP, 2024 U.S. Dist. LEXIS 84799, at *8 (S.D. Cal. May 9, 2024) 4 (electronic signature authenticated where defendant provided evidence regarding 5 transmission and use of plaintiff’s username and password and steps plaintiff would have 6 taken to execute agreement electronically); Beltran v. Inter-Con Sec. Sys., No. 2:21-cv- 7 04927-VAP-(AFMx), 2021 U.S. Dist. LEXIS 174720, at *12 (C.D. Cal. Sep. 13, 2021) 8 (electronic signature authenticated where defendant described hiring process in detail and 9 clarified process “could be completed only with signer’s private password”); Tanis v. Sw. 10 Airlines, Co., No. 18-cv-2333-BAS-BGS, 2019 U.S. Dist. LEXIS 38876, at *14 (S.D. 11 Cal. Mar. 11, 2019) (electronic signature authenticated where evidence showed someone 12 using plaintiff’s username and password clicked an acknowledgement of terms box and 13 this action “could only have been done” by plaintiff”); Garcia v. NRI USA, LLC, No. 14 2:17-CV-08355-ODW-GJS, 2018 U.S. Dist. LEXIS 130055, at *6–7 (C.D. Cal. Aug. 1, 15 2018) (electronic signature authenticated where the “only way” for plaintiff to access and 16 sign arbitration agreement was using a confidential username and password). 17 2. Meaningful Assent 18 The Court turns next to whether there is sufficient evidence Plaintiffs meaningfully 19 assented to the Online Access Agreement’s arbitration provision. Plaintiffs argue the 20 “misleading context” in which the Online Access Agreement was presented precludes a 21 finding of mutual assent and that the California Court of Appeal’s decision in Herzog 22 “mandate[s] the conclusion that Plaintiffs did not agree to the purported arbitration clause 23 in the clickwrap Online Access Agreement.” ECF No. 29 at 17–18. The Court disagrees. 24

25 conceded plaintiff had not signed the Client Manual. Id. at *7. Lacking this signature, the 26 court found defendant had to establish plaintiff had been provided a copy of the manual, 27 and had not met its burden of proof by relying on its “customs and practices.” Id. at *12– 14. The Hoang case has no bearing on the question of when an electronic signature has 28 1 In Herzog v. Superior Court, 101 Cal. App. 5th 1280, 1285 (2024), defendant 2 Dexcom moved to compel arbitration on the basis of a “clickwrap agreement” presented 3 to the plaintiffs upon installing a mobile medical application on their personal smart 4 devices. Once plaintiffs had successfully created or logged into their Dexcom accounts, 5 they would advance to a screen titled “Legal” with the following interface: 6 [T]he following paragraph of text is displayed: “You understand and 7 agree that your use of this website or any DexCom Inc. mobile application or software platform for your DexCom continuous glucose 8 monitor is subject to the Terms of Use, Privacy Policy and any other 9 acknowledgements listed below. By ticking the boxes below you understand that your personal information, including your sensitive 10 health information, will be collected, used and shared consistently 11 with the Privacy Policy and Terms of Use. You further understand that personal information and sensitive personal information will be stored 12 and processed by DexCom, Inc., and/or its affiliate, SweetSpot 13 Diabetes Care, Inc. in the United States, which may have different data protection laws than the country in which you reside.” 14 Underneath this paragraph were two boxes: one next to the statement, 15 “I agree to Terms of Use” and another next to, “I agree to Privacy 16 Policy.” The phrases “Terms of Use” and “Privacy Policy,” which were written in green, were hyperlinks that, if clicked, would take the 17 user to separate webpages. The user has to click on the boxes in order 18 to place a check mark in them, which would then allow the user to click on the green “Submit” button that appeared below the boxes. 19 The user, however, is not required to actually view the hyperlinked 20 Terms of Use (or the Privacy Policy) in order to complete the setup wizard process to use the G6 App. 21 22 Id. at 1289–90 (emphasis in original). The Herzog Court held users “would have no 23 reason to believe, given the context of the transaction and the content of the text on the 24 ‘Legal’ screen, that by clicking the checkbox next to ‘I agree to Terms of Use’ they were 25 entering an agreement that concerned any matters other than the scope of the user’s 26 privacy waiver and management of the user’s personal information.” Id. at 1298. 27 The interface at issue in Herzog, however, differs from the one at issue here. In 28 Herzog, the Terms of Use containing the arbitration provision was in a separate, 1 hyperlinked page. Id. at 1290. In the context of such a “clickwrap” agreement, the Herzog 2 Court reasoned that “the content of the screen on which a clickwrap is presented can 3 undermine the inference the consumer had notice of the terms to which they were 4 assenting when they clicked the associated checkbox.” Id. at 1296–97. In contrast, UFB’s 5 Online Access Agreement is more similar to a “scrollwrap” agreement. “Scrollwrap 6 agreements go one step further [than clickwrap agreements] and place the contractual 7 terms directly in front of the user, requiring them to scroll through the terms before 8 checking a box or clicking a button to indicate their assent[.]” Sellers v. JustAnswer LLC, 9 73 Cal. App. 5th 444, 470 (Ct. App. 2021). According to Mr. Tam, Plaintiffs were 10 presented with a scrollable copy of the Online Access Agreement in its entirety and 11 cautioned that by clicking the “Agree & Continue” button, they consented “to adhere to 12 the Terms and Conditions as stated in the Axos Online Access Agreement.” Suppl. Tam. 13 Decl. ¶¶ 18–19. 14 The Court determines this agreement was sufficient to place Plaintiffs on notice of 15 the Online Access Agreement’s terms. Sellers, 73 Cal. App. 5th at 470 (“[T]here should 16 be little doubt scrollwrap agreements are enforceable under California law because the 17 consumer is given the contract, a sufficient circumstance to place the consumer on 18 inquiry notice of the contractual terms.”) (emphasis added); see Flores v. Coinbase, Inc., 19 No. CV 22-8274-MWF (KS), 2023 U.S. Dist. LEXIS 90926, at *8–9 (C.D. Cal. Apr. 6, 20 2023) (holding plaintiff “affirmatively manifested” assent where full text of agreement 21 was made available in a “scroll-box”); Veribi, Ltd. Liab. Co. v. Compass Mining, Inc., 22 No. 2:22-cv-04537-MEMF-JPR, 2023 U.S. Dist. LEXIS 12333, at *25 (C.D. Cal. Jan. 23 20, 2023) (holding scrollwrap agreement provided “sufficient notice” of arbitration 24 terms because the terms were presented “directly” to plaintiff); Perez v. Bath & Body 25 Works, LLC, No. 21-cv-05606-BLF, 2022 U.S. Dist. LEXIS 116039, at *10 (N.D. Cal. 26 June 30, 2022) (“[S]crollwrap agreements are enforceable, as they affirmatively show 27 the terms to the user before obtaining assent rather than linking to a separate page 28 containing the terms that does not need to be viewed prior to agreement (as clickwrap 1 agreements do.”). 2 B. Scope and Enforceability 3 The Court turns next to whether the Online Access Agreement’s delegation clause 4 sends threshold questions of arbitrability to the arbitrator. 5 The FAA “allows parties to agree by contract that an arbitrator, rather than a court, 6 will resolve threshold arbitrability questions[.]” Henry Schein, Inc. v. Archer & White 7 Sales, Inc., 586 U.S. 63, 65 (2019). However, “[c]ourts should not assume that the parties 8 agreed to arbitrate arbitrability unless there is ‘clea[r] and unmistakabl[e]’ evidence that 9 they did so[.]” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (quoting 10 AT&T Techs. v. Communs. Workers of Am., 475 U.S. 643, 649 (1986)). “Such ‘clear and 11 unmistakable evidence of [an] agreement to arbitrate arbitrability might include a course 12 of conduct demonstrating assent or an express agreement to do so’—i.e., a delegation 13 clause.” Lim, 8 F.4th at 1000 (quoting Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 14 2011)). 15 Here, the Online Access Agreement contains a delegation clause that states: 16 You and we agree that any Covered Disputes between or among you 17 and us, regardless of when it arose, will, upon demand by either you or us, be resolved by the arbitration process described in the Binding 18 Arbitration and Waiver of Class Action Rights section below. You 19 understand and agree that you and we are each waiving the right to a jury trial or a trial before a judge in a public court. 20 21 ECF No. 27-2 at 58. The provision also defines a “dispute” to include “[w]hether a 22 disagreement is a ‘dispute’ subject to binding arbitration as provided for in this 23 Arbitration Provision.” Id. Finally, the provision provides that the Parties agree “[t]he 24 Arbitrator will decide any dispute regarding the enforceability of this Arbitration 25 Provision.” Id. at 59. 26 Plaintiffs argue the Supreme Court’s recent decision in Coinbase “mandates” that 27 the Court—and not an arbitrator—decide threshold questions of arbitrability. ECF No. 29 28 at 14. The Court does not read Coinbase so broadly. In Coinbase, the parties executed 1 two contracts: the first containing an arbitration provision with a delegation clause, and 2 the second containing a forum selection clause providing that all disputes related to that 3 contract be decided in California courts. Coinbase, Inc. v. Suski, 144 S. Ct. 1186, 4 1190–91 (2024). Defendant argued the first contract’s delegation clause “established the 5 terms by which all subsequent disputes were to be resolved[.]” Id. at 1191. Plaintiffs 6 maintained—and the Ninth Circuit held—that “the second contract’s forum selection 7 clause superseded that prior agreement.” Id. The Supreme Court “granted certiorari to 8 answer the question of who—a judge or an arbitrator—should decide whether a 9 subsequent contract supersedes an earlier arbitration agreement that contains a delegation 10 clause.” Id. at 1192. In answering this question, the Coinbase Court held “a court, not an 11 arbitrator, must decide whether the parties’ first agreement was superseded by their 12 second.” Id. at 1195. 13 The Coinbase decision is a narrow one. It holds only that where “parties have 14 agreed to two contracts—one sending arbitrability disputes to arbitration, and the other 15 either explicitly or implicitly sending arbitrability disputes to the courts—a court must 16 decide which contract governs.” Id. at 1194. As UFB notes, the instant case is not one 17 where the Parties entered into two agreements with conflicting forum selection clauses. 18 Instead, it is undisputed the Account Agreement did not have a forum selection or 19 arbitration provision. The Court is, therefore, not being asked to choose between two 20 conflicting agreements. 21 Further, even if the Court were being asked to choose between the Account 22 Agreement’s lack of a delegation clause and the Online Access Agreement’s inclusion of 23 one, the Supreme Court’s Coinbase decision did not disturb the Ninth Circuit’s reasoning 24 below. Id. at 1194 (“We decline to consider auxiliary questions about whether the Ninth 25 Circuit properly applied state law.”). In its decision below, the Ninth Circuit applied the 26 “general rule” that “when parties enter into a second contract dealing with the same 27 subject matter as their first contract without stating whether the second contract operates 28 to discharge or substitute for the first contract, the two contracts must be interpreted 1 together and the latter contract prevails to the extent they are inconsistent.” Suski v. 2 Coinbase, Inc., 55 F.4th 1227, 1230 (9th Cir. 2022). Even if the Account Agreement and 3 Online Access Agreement conflicted, the Online Access Agreement is the latter contract 4 in this case. According to Mr. Tam, accountholders agree to the Account Agreement 5 during the enrollment process. Suppl. Tam Decl. ¶ 14. Accountholders then subsequently 6 agree to the Online Access Agreement when signing up for online banking. Id. ¶¶ 19–20. 7 Plaintiffs have not explained why the Ninth Circuit’s reasoning would not apply so that 8 the subsequent Online Access Agreement’s delegation provision would prevail. 9 For the above reasons, the Court determines the Online Access Agreement’s 10 delegation provision governs and threshold issues of arbitrability are properly reserved 11 for the arbitrator. See Henry Schein, 586 U.S. at 68 (“When the parties’ contract delegates 12 the arbitrability question to an arbitrator, a court may not override the contract. In those 13 circumstances, a court possesses no power to decide the arbitrability issue.”). 14 C. Post-Contractual Conduct 15 Finally, the Court briefly addresses Plaintiffs’ argument that UFB’s post- 16 contractual conduct “compels denial” of UFB’s motion to compel. ECF No. 29 at 22–23. 17 Plaintiffs argue UFB sent an e-mail on January 26, 2024 notifying its customers that it 18 was adding an arbitration provision to the Account Agreement. Id. Plaintiffs contend 19 UFB, therefore, “admitted to its customers” that there was “no arbitration provision 20 governing disputes arising under the Account Agreement.” Id. This argument is directed 21 to the threshold question of whether Plaintiffs’ dispute is covered by the Online Access 22 Agreement’s arbitration provision. As the Court already noted above, however, this 23 threshold question is properly reserved for the arbitrator. 24 IV. CONCLUSION 25 For the above reasons, the Court grants in part and denies in part UFB’s motion as 26 follows: 27 1. The Court GRANTS UFB’s motion to compel arbitration. The Court 28 ORDERS the Parties to proceed to arbitration for a determination of arbitrability and 1 possible arbitration of Plaintiffs individual claims, in the manner provided for in the 2 || Online Access Agreement. 3 2. The case is STAYED pending the completion of arbitration proceedings 4 || pursuant to 9 U.S.C. § 3. 5 3. The Parties are ORDERED to file a status update on their arbitration 6 || proceedings every ninety days and within seven days of completion. 7 4. The Court DENIES UFB’s motion to dismiss as moot. 8 IT IS SO ORDERED. 9 || Dated: September 13, 2024 Jorkut ¢ Lowe 10 1 Hon. Robert S. Huie United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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