BERNSLEY v. BARCLAYS BANK DELAWARE (2023)

Proceedings: ORDER GRANTING MOTION TO COMPEL ARBITRATION [15]

I. Introduction

Before the Court is a motion to compel arbitration filed by Defendant Barclays Bank Delaware (“Defendant”). For the reasons stated below, the motion is GRANTED.

II. Factual and Procedural Background

Plaintiff Mark Bernsley (“Plaintiff”) is a former customer of Defendant. On April 4, 2013, Plaintiff applied for a credit card account with Defendant. Declaration of Stephenie Beauchamp (“Beauchamp Decl.”) at ¶ 6. On April 24, 2013, Plaintiff's application was approved and on April 29, 2013, Defendant mailed several documents to Plaintiff. Id. at ¶¶ 7-9. The documents sent to Plaintiff included, the credit card for the account, the Cardmember Agreement, a privacy statement, terms and conditions for a rewards program, and card activation instructions. Id. at ¶ 9. The Cardmember Agreement included an arbitration clause, which purports to apply to claims or disputes arising out of the Cardmember Agreement. Id. at ¶ 12. Sometime around the beginning of May 2013, Plaintiff activated the credit card sent to him and made charges on the account. Id. at ¶ 10.

The events that give rise to the present lawsuit arise from an apparent mischarge on Plaintiff's credit card. Sometime between February 16 and March 1, 2020, Plaintiff was charged $14.22 by Amazon for an Amazon Prime membership. First Amended Complaint at ¶ 12. Plaintiff claims to not have intentionally requested this membership and in late February/ early March 2020, Plaintiff spoke with a representative of Amazon to remove the charge and correct the billing. Id. at ¶¶ 12-13. The Amazon representative agreed to reverse the charge and the charge was revered on March 1, 2020. Id. at ¶¶ 15-16.

Much to Plaintiff's chagrin, he was charged against by Amazon on March 16, 2020. Id. at ¶ 17. This time Plaintiff was unable to reach an Amazon representative and instead Plaintiff contacted Defendant. Id. at ¶¶ 18-19. Plaintiff advised Defendant that Amazon had cancelled his membership and that he wanted the March charge reversed and any further charges blocked. Id. at ¶ 19. Defendant refused to do as Plaintiff requested, resulting in Plaintiff closing his credit card account to prevent further charges. Id. at ¶ 20.

In a statement for the credit card for a billing period ending on April 15, 2020, Defendant claimed that Plaintiff had a remaining balance of $14.22. Id. at ¶ 21. Plaintiff formally disputed this charge via a formal letter dated April 30, 2020. Id. at ¶ 22. Plaintiff then faxed this letter on June 30, 2020, after hearing no response. Id. at ¶ 23. On July 26, 2020, Defendant responded to Plaintiff allegedly substantiating his claims. Id. at ¶ 24. But Defendant processed two more charges from Amazon on Plaintiff's card. Id. at ¶ 25.

As a result of this charge dispute, Plaintiff accrued charges and penalties that amounted to $155.44. Id. at ¶¶ 26. Plaintiff further contends that Defendant reported Plaintiff's account as delinquent to one or more credit reporting agencies without including a notice that the delinquent payment was disputed. Id. at ¶ 29. On September 23, 2020, Plaintiff paid the charges and penalties. Id. at ¶ 32.

Then on January 4, 2021, Defendant advised Plaintiff that the credit card dispute was resolved in his favor. Id. at ¶ 33. Defendant refused to refund the late fees and charges that arose from the dispute, and Plaintiff alleges that Defendant failed to advise credit reporting agencies that Plaintiff never owed the disputed charges. Id. at ¶¶ 34-35.

In the summer of 2022, Plaintiff applied for a credit card with Home Depot and was denied. Id. at ¶ 36. Plaintiff alleges this denial was due to Defendant's “wrongful and uncorrected credit report.” Id.

From the aforementioned events Plaintiff brings the following claims: 1) unspecified “Violations of Federal and State Laws”; 2) Unfair Business Practice under California Business and Professions Code section 17200; 3) “Mandatory Injunction”; 4) Money had and received; 5) Intentional Infliction of Emotional Distress; and 6) Negligence. Id. at ¶¶ 11-54.

Plaintiff filed the present action on October 18, 2022. ECF No. 1. Defendant filed this instant motion to compel arbitration on December 9, 2022. ECF No. 15. On January 20, 2023, the Court ordered supplemental briefing, and the parties submitted these briefs on February 3 and February 10, 2023. ECF Nos. 24, 26, 27.

III. Legal Standard

Congress enacted the Federal Arbitration Act (“FAA”) “to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The FAA reflects a “national policy favoring arbitration,” Preston v. Ferrer, 552 U.S. 346, 349, 128 S.Ct. 978, 169 L.Ed.2d 917 (2008) (citation omitted), and the principal purpose of the FAA is “to ensur[e] that private arbitration agreements are enforced according to their terms,” AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 344, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (citation omitted)).

The FAA provides that contractual arbitration agreements “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. “Because the FAA mandates that ‘district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed[,]’ the FAA limits courts’ involvement to ‘determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.’ ” Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008) (citation omitted)) (emphasis in original). If these two requirements are met, courts generally must compel arbitration. See Farrow v. Fujitsu Am., Inc., 37 F. Supp. 3d 1115, 1119 (N.D. Cal. 2014). However, arbitration clauses “may be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability.” Rent-A-Ctr., West, Inc. v. Jackson, 561 U.S. 63, 68, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) (citation omitted). “While the Court may not review the merits of the underlying case in deciding a motion to compel arbitration, it may consider the pleadings, documents of uncontested validity, and affidavits submitted by either party.” Weber v. Amazon.com, Inc., No. CV 17-8868-GW(EX), 2018 WL 6016975, at *5 (C.D. Cal. June 4, 2018) (cleaned up and citations omitted).

“The party seeking to enforce an arbitration agreement bears the burden of showing that the agreement exists and that its terms bind the other party.” Gelow v. Cent. Pac. Mortg. Corp., 560 F.Supp.2d 972, 978 (E.D. Cal. 2008); see also Sanford v. MemberWorks, Inc., 483 F.3d 956, 963 n. 9 (9th Cir. 2007) (“The district court, when considering a motion to compel arbitration which is opposed on the ground that no agreement to arbitrate had been made between the parties, should give to the opposing party the benefit of all reasonable doubts and inferences that may arise.”) (internal quotation marks omitted). Once the moving party has met this initial burden, the party opposing arbitration bears the burden of establishing that the arbitration agreement does not apply. Westinghouse Hanford Co. v. Hanford Atomic Metal Trades Council, 940 F.2d 513, 518 (9th Cir. 1991). “[A]ny 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.” Moses H. Cone Mem'l Hosp., 460 U.S. at 24–25, 103 S.Ct. at 941.

IV. Evidentiary Objections

As an initial matter Plaintiff makes several evidentiary objections to the declaration and exhibits submitted by Defendant. These objections are OVERRULED.

First, Plaintiff contends that Ms. Beauchamp's statements in her declaration are irrelevant under Fed. R. Evid. 401, because her views are based on Defendant's current business practices as opposed to Defendant's business practices at the time that Plaintiff's card was issued. This objection is misguided. First, Ms. Beauchamp's declaration states generally that she is “familiar with the policies and procedures employed by Barclays” and does not limit her knowledge to Defendant's “current” business practices. Beauchamp Decl. at ¶ 3. Second, even if her declaration could be read to contain that limitation, Defendant's current business practices are certainly relevant to their past practices.

Second, Plaintiff contends that Exhibits 1 and 2 of the Beauchamp Declaration are not properly authenticated. But Defendant has provided sufficient evidence that the exhibits are what they purport to be through the Beauchamp Declaration. Fed. R. Evid. 901(b)(1); Beauchamp Decl. at ¶¶ 7, 9.

Third, Plaintiff contends that Exhibits 1 and 2 are impermissible hearsay. But these exhibits fall under Federal Rule of Evidence 803(6) as a business record. A business record may be admissible if:

(A) the record was made at or near the time by—or from information transmitted by—someone with knowledge;

(B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;

(C) making the record was a regular practice of that activity;

(D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with [Federal Rule of Evidence] 902(1) or (12) or with a statute permitting certification; and

(E) the opponent does not show that the source of information or the method or circumstances of preparation indicate a lack of trustworthiness.

Fed. R. Evid. 803(6). The Beauchamp Declaration establishes all of the aforementioned elements and Ms. Beauchamp is a qualified witness. See Beauchamp Decl. at ¶¶ 1-8; Lomeli v. Midland Funding, LLC, No. 19-CV-01141-LHK, 2019 WL 4695279, at *5 (N.D. Cal. Sept. 26, 2019) (“Rule 803(6)’s foundation requirement ‘may be satisfied by the testimony of anyone who is familiar with the manner in which the document was prepared, even if he lacks firsthand knowledge of the matter reported, and even if he did not himself either prepare the record or even observe its preparation.’ ”) (citations omitted).

Fourth, Plaintiff contends that these exhibits violate the Best Evidence Rule. But “[a] duplicate is admissible to the same extent as the original unless a genuine question is raised about the original's authenticity or the circumstances make it unfair to admit the duplicate.” Fed. R. Evid. 1003. Plaintiff neither raises a genuine question as to the authenticity of exhibits nor has he demonstrated why it would be unfair to admit the duplicate.

Finally, Plaintiff contends that the Court should not consider Exhibits 1 and 2 because they were not disclosed to him, under the initial disclosure required under Fed. R. Civ. P 26. (“Rule 26”). Plaintiff is incorrect. Defendant provided this information by providing a description by category and location of all documents. Reply at 18. Such a disclosure is acceptable under Rule 26. Fed. R. Civ. P. 26(a)(1)(A)(ii) (noting that a party may provide an initial disclosure via “a copy—or a description by category and location”) (emphasis added). Accordingly, Plaintiff's objections are OVERRULED and the Court will consider Ms. Beauchamp's declaration and the exhibits attached.

V. Discussion

1) A Valid Agreement to Arbitrate Exists

First, Plaintiff contends that the arbitrations clause in the Cardmember Agreement is not part of the contract. “In determining whether a valid arbitration agreement exists, federal courts ‘apply ordinary state-law principles that govern the formation of contracts.’ ” Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175 (9th Cir. 2014) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995).) In California “[a]n essential element of any contract is the consent of the parties, or mutual assent.” Donovan v. RRL Corp., 26 Cal. 4th 261, 270, 109 Cal.Rptr.2d 807, 27 P.3d 702 (2001), as modified (Sept. 12, 2001).

Here, the Cardmember Agreement provided that: “By signing, keeping, using or otherwise accepting your Card or Account, you agree to the terms and conditions of this Agreement.” Beauchamp Decl. ¶ 11. Plaintiff does not dispute that he used the credit card, thereby accepting its terms. See Opp. at 10. (Bernsley does not dispute that terms applied to his use of the Card [and] [h]e understood that he was obligated to pay any charges he made and that his failure to do so would be subject to interest.”); Haas v. J.A. Cambece L. Off., P.C., No. 05CV2039 DMS (RBB), 2006 WL 8455381, at *4 (S.D. Cal. Apr. 5, 2006) (“It is also undisputed that Haas used the subject credit card, thus assenting to the terms of the agreement.”).

Instead, Plaintiff's primary argument is that the arbitration clause was not part of the Cardmember Ageement because “no additional terms had yet been presented and disclosed” to Plaintiff. Opp. at 9; Bernsley Decl. at ¶ 14 (“I am confident that I never saw any such document, nor did I see or become aware of any such purported written materials until after being provided a copy in this case”). But a plaintiff's assertion that they never saw an arbitration clause “does not negate [their] implied acceptance of its terms ․ Under California law, an offeree, knowing that an offer has been made to him but not knowing all of its terms, may be held to have accepted, by his conduct, whatever terms the offer contains.” Romero v. GE Betz, Inc., 2016 WL 9138054, at *3 (C.D. Cal. June 28, 2016) (citations and quotations omitted); Pinnacle Museum Tower Assn. v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223, 236, 145 Cal.Rptr.3d 514, 282 P.3d 1217 (2012) (“An arbitration clause within a contract may be binding on a party even if the party never actually read the clause.”); Marin Storage & Trucking, Inc. v. Benco Contracting & Eng'r, 89 Cal.App.4th 1042, 1049, 107 Cal.Rptr.2d 645 (2001); Newton v. Am. Debt Servs., Inc., 854 F. Supp. 2d 712, 722 (N.D. Cal. 2012), aff'd, 549 F. App'x 692 (9th Cir. 2013) (“In California, ‘[a]n party cannot avoid the terms of a contract on the grounds that he or she failed to read it before signing.’ ”) (citations omitted).¹

To avoid this result, Plaintiff relies on Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 566 (9th Cir. 2014). Specifically, Plaintiff relied on Knutson for the proposition that “where ‘the writing does not appear to be a contract and the terms are not called to the attention of the recipient’ ” there is an exception to upholding such terms. Opp. at 12 (citing Knutson, 771 F.3d at 567) (emphasis in original). But Plaintiff's reliance on Knutson is misplaced, In Knutson, the plaintiff received a complimentary subscription to defendant Sirius's satellite radio service as part of a purchase of a new Toyota. Knutson, 771 F.3d at 562. Sirius then sent Knutson a welcome packet containing a customer agreement with an arbitration provision. Id. In holding that the plaintiff did not have a contractual relationship with Sirius, the court stated:

As far as Knutson was concerned, then, he had not entered into an agreement for service with Sirius XM when he purchased the vehicle. He was, as far as he knew, only in a contractual relationship with Toyota. A reasonable person in Knutson's position could not be expected to understand that purchasing a vehicle from Toyota would simultaneously bind him or her to any contract with Sirius XM, let alone one that contained an arbitration provision without any notice of such terms.

Id. at 566. By contrast, Plaintiff admits that he was aware that he was entering into an agreement with Barclays and was bound by some terms of the agreement. See, e.g., Declaration of Mark Bernsley (“Bernsley Decl.”) at ¶ 15 (“I knew that when I used a Card I was required to pay for the charges made; and that if I failed to pay those charges, a high rate of interest would apply.”). Accordingly, a valid contract containing an arbitration clause was formed.

2) The FAA Applies

Next, Plaintiff contends that he should not be compelled to arbitrate, because the FAA does not apply to the credit card agreement between Plaintiff and Defendant. Section 2 of the FAA provides that:

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract or as otherwise provided in chapter 4.

9 U.S.C.A. § 2. “The FAA applies to any contract affecting interstate commerce.” Yahoo! Inc. v. Iversen, 836 F.Supp.2d 1007, 1009 (N.D. Cal. 2011); see Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). “The ‘interstate commerce’ provision has been interpreted broadly, embracing any agreement that in its operation directly or indirectly affects commerce between states in any fashion.” Krause v. Barclays Bank Delaware, No. 2:13-CV-01734-MCE-AC, 2013 WL 6145261, at *2 (E.D. Cal. Nov. 21, 2013).

Plaintiff first contends that the FAA does not apply because the phrase “contract evidencing a transaction involving commerce” only refers to “distinct commercial dealings with an identifiable completion, and not to any and every ongoing contractual relationship.” Opp. at 13. According to Plaintiff, cases before the adoption of the FAA “appear to comport to the definition of ‘transact’ found in the Meriam-Webster online dictionary” which defines “transact” to mean “carry to completion. Id. Thus, if the FAA was intended to apply to any commercial dealing, the term “transaction” would be superfluous, and to give effect to every word of the statute the Court must adopt the position that the FAA only applied to dealings with an identifiable completion.

The Court declines to adopt Plaintiff's reading of the statute. First, Plaintiff provides no support for his assertion that cases before the adoption of the FAA utilized the Meriam-Webster online dictionary's definition of transact. Second, Plaintiff's interpretation runs contrary to the numerous instances where courts have held that the FAA applied to ongoing commercial transactions, including credit card agreements. See Krause, No. 2:13-CV-01734-MCE-AC, 2013 WL 6145261, at *2 (concluding that the credit card agreement between Barclays and a consumer that contained an arbitration clause “involve[ed] interstate commerce” because the contract was “for a consumer credit card between citizens of two different states-California and Delaware”); Ackerberg v. Citicorp USA, Inc., 898 F.Supp.2d 1172, 1175, 1177 (N.D. Cal. 2012) (compelling arbitration under the FAA based on arbitration clause contained in credit card agreement between citizens of different states); Snyder v. Cach, LLC, No. 16-00174 HG-KSC, 2016 WL 6804871, at *4 (D. Haw. Nov. 16, 2016) (“The Federal Arbitration Act applies to arbitration provisions in consumer credit card account agreements.”); Lipuma v. Am. Express Co., 406 F. Supp. 2d 1298, 1322 (S.D. Fla. 2005) (noting that “a number of federal courts have enforced arbitration provisions in credit card agreements under the FAA” and collecting cases).²

Second, Plaintiff contends that the FAA does not apply, because the Cardmember Agreement did not involve interstate commerce. Plaintiff is incorrect. Plaintiff is a resident of California and Barclays is a company organized under the law of Delaware with its principle place of business in Delaware. Beauchamp Decl. at ¶ 2. A contract between citizens of two different states for a consumer credit card is clearly a transaction involving interstate commerce. Krause, No. 2:13-CV-01734-MCE-AC, 2013 WL 6145261, at *2 (finding that a contract for a consumer credit card between citizens of two different states, California and Delaware, was a transaction involving interstate commerce); see also Betancourt v. Experian Info. Sols., Inc., No. SACV15301JVSDFMX, 2015 WL 12806461, at *2 (C.D. Cal. May 29, 2015) (“Credit Corp. asserts that ‘the FAA is properly applied in this case because the Contract involved interstate parties and financing from out-of-state sources, and, thus ‘involved’ interstate commerce. [․] The Court agrees and notes that the language “involving interstate commerce” applies to this transaction.). Accordingly, the FAA applies.

3) The Arbitration Clause Applies to the Instant Dispute

Although the question of whether a dispute is arbitrable is generally decided by the courts, “where the parties clearly and unmistakably provide otherwise, the courts will be divested of their authority and an arbitrator will decide in the first instance whether a dispute is arbitrable.” United Broth. of Carpenters v. Desert Palace, Inc., 94 F.3d 1308, 1310 (9th Cir. 1996); Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 2011) (“parties clearly and unmistakably agreed to arbitrate the question of arbitrability” in contract that stated “the breach of this Agreement or the validity or application of any of the provisions of this Section 4, and, if the dispute cannot be settled through negotiation, the dispute shall be resolved exclusively by binding arbitration.”).

Here, the arbitration clause provides that “[a]ny claim, dispute or controversy ․ arising from or relating in any way to [the] Agreement or Account” is subject to binding arbitration. See Beauchamp Decl. ¶ 11, Ex. 2. Moreover, “[c]laims regarding the applicability of this arbitration provision or the validity of the entire Agreement, shall be resolved exclusively by arbitration.” Id. Plaintiff's claims seem to arise out of and relate to the account. Moreover, the determination of whether his claims fall under the arbitration agreement are also delegated to the arbitrator in the first instance. Plaintiff does not dispute this. Accordingly, the arbitration clause applies to the instant dispute.

4) The Arbitration Clause is not Unconscionable

Next, Plaintiff contends that the arbitration clause should not be enforced, because it is unconscionable. Unconscionability has both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, and the latter on overly harsh or one-sided results. Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83, 114, 99 Cal.Rptr.2d 745, 6 P.3d 669 (2000). “[P]rocedural unconscionability focuses on the manner in which the contract was negotiated and the circumstances of the parties” while “[s]ubstantive unconscionability focuses on the actual terms of the agreement.” American Software, Inc. v. Ali, 46 Cal. App. 4th 1386, 1390, 54 Cal.Rptr.2d 477 (1996). “California courts generally require a showing of both procedural and substantive unconscionability at the time the contract was made.” Id.

a. Procedural Unconscionability

Procedural unconscionability focuses on whether there is (1) “oppression” arising from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice, and (2) “surprise” which involves the extent the supposedly agreed-upon terms are hidden in a prolix printed form drafted by the party seeking to enforce them. The Casiano-Bel Air Homeowners Ass'n v. Philadelphia Indem. Ins., No. 2:16-CV-08549-SVW-SK, 2017 WL 3273654, at *4 (C.D. Cal. Feb. 22, 2017).

Here, the Court recognizes some indicia of procedural unconscionability. The Agreement is a contract of adhesion provided on a take it or leave it basis, which would support a minimal degree of procedural unconscionability. Cobarruviaz v. Maplebear, Inc., 143 F. Supp. 3d 930, 941 (N.D. Cal. 2015) (“An adhesion contract is a “standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates the subscribing party only the opportunity to adhere to the contract or reject it.”); West v. Reliant Fin. Corp., No. 20CV678-JAH-JLB, 2021 WL 1749905, at *5 (S.D. Cal. May 4, 2021) (“Absent a showing that a contract involved surprise, oppression, or otherwise falls outside of the reasonable expectations of the weaker party, an adhesion contract establishes only a minimal degree of procedural unconscionability.”); Gatton v. T-Mobile USA, Inc., 152 Cal. App. 4th 571, 585, 61 Cal. Rptr. 3d 344, 355–56 (2007) (“use of a contract of adhesion establishes a minimal degree of procedural unconscionability notwithstanding the availability of market alternatives. If the challenged provision does not have a high degree of substantive unconscionability, it should be enforced.”).

In terms of surprise, the Court also finds a minimal level of unconscionability, if any. Although the arbitration agreement was contained in a prolix, printed form, the arbitration clause was denoted by a bold heading designating the arbitration clause and the end of the arbitration clause contained a fully capitalized, bolded disclaimer further calling attention to the arbitration clause. See Beauchamp Decl. at Ex. 2.

b. Substantive Unconscionability

“An arbitration provision is substantively unconscionable if it is overly harsh or generates one-sided results. The paramount consideration in assessing conscionability is mutuality. California law requires an arbitration agreement to have a modicum of bilaterality, and arbitration provisions that are unfairly one-sided are substantively unconscionable.” Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1280-81 (9th Cir. 2006) (citations and alterations omitted). In addition, arbitration provisions are substantively unconscionable if they impede one of the parties from vindicating their legal rights. See id. at 1285. Substantive unconscionability is indicated by contract terms so one-sided as to “shock the conscience.” Am. Software, Inc. v. Ali, 46 Cal. App. 4th 1386, 1391, 54 Cal.Rptr.2d 477 (1996).

First, Plaintiff attempts to challenge the arbitration clause as unconscionable because arbitrators with the American Arbitration Association (“AAA”) “are economically dependent on the businesses like Barclays that employ them” and thus lack independence. Opp. at 20. But Plaintiff provides no evidence that this alleged “economic dependence” skews the results of arbitrations by the AAA in favor of large financial institutions or otherwise undermines the independence of AAA arbitrators. At most Plaintiff presents conjecture that arbitrators would be eager to rule in favor of Defendants, which certainly cannot be enough for the Court determine that the arbitration clause is unconscionable.

Second, from what the Court can understand, Plaintiff contends that the Arbitration Agreement unconscionably limits his remedies. Specifically, Plaintiff points to language in the arbitration clause which limits the authority of the arbitrator to entertain a claim, or to award any relief on behalf of or against anyone other than the parties in the arbitration proceeding. Beauchamp Decl. at Ex. 2. In other words, the arbitration clause precludes the ability of the arbitrator to hear claims that are part of a class action or other representative action and therefore, limits the ability of the arbitrator to enter a public injunction. Thus, the arbitration clause “acts as a prospective waiver of the right to pursue statutory remedies.” Opp. at 24.

But as noted by Defendant though. Plaintiff's argument was “refuted by the Ninth Circuit's decision in DiCarlo v. MoneyLion, Inc., 988 F.3d 1148 (9th Cir. 2021).” Crosby v. Amazon.com Inc., No. 220CV08003SVWJPR, 2021 WL 3185091, at *2 (C.D. Cal. Apr. 19, 2021). In DiCarlo, the Ninth Circuit considered whether an agreement providing for individual arbitration precluded public injunctive relief in arbitration. 988 F.3d at 1153. The agreement explicitly authorized the arbitrator to award injunctive relief. Id. But it limited relief to what was “available in an individual lawsuit.” Id. Nonetheless, the Ninth Circuit held that public injunctive relief remained available, because the agreement still permitted the arbitrator to enter injunctive relief, which “could theoretically result in an injunction that broadly affects others.” Id.

Similarly, here, the arbitration clause does not preclude Plaintiff from seeking a public injunction. Although the arbitrator may not entertain claims on a representative basis or award relief for or against entities not a party to the arbitration, the arbitrator could still enter injunctive relief against Defendant which “could theoretically result in an injunction that broadly affects others.” Id.; Reply at 22 (“the Arbitration Agreement does not prevent Plaintiff from seeking an injunction.”). Accordingly, the arbitration clause does not unconscionably limit Plaintiff's remedies.

5) Plaintiff Has Not Demonstrated That the AAA would Not Accept Arbitration

Next, Plaintiff asserts that the arbitrations agreement is unenforceable because it does not comply with the AAA's Due process protocol. But Plaintiff has not provided sufficient evidence that the AAA would not accept arbitration brought under the Agreement. Moreover, “[t]his is a determination that should be left to the arbitrator in the first instance.” Missaghi v. Coca-Cola Co., No. CV 12-07472 SJO, 2013 WL 12114765, at *5 (C.D. Cal. Jan. 2, 2013) (citations omitted and alterations in original).

6) Section 2105 Does Not Preclude Enforcement of the Arbitration Clause

Finally, Plaintiff contends that Defendant is precluded from engaging in arbitration, because Defendants have failed to comply with Cal. Corp. Code § 2105 (“Section 2105”).

Section 2105 requires a foreign corporation conducting intrastate business in California to register with the California secretary of state. Cal. Corp. Code § 2105. If a business fails to comply with section 2105, then that business “shall not maintain any action or proceeding upon any intrastate business so transacted in any court of this state, commenced prior to compliance with Section 2105, until it has complied with the provisions thereof.” Cal. Corp. Code § 2203. Thus, according to Plaintiff, Section 2105 precludes Defendant from enforcing the arbitration clause, until Defendant has complied with Section 2105.

But reviewing the relevant California law, the Court finds that section 2105 does not apply. Intrastate commerce is defined as “repeated and successive transactions of its business in this state, other than interstate or foreign commerce.” Cal. Corp. Code § 191. Moreover, Section 191(d)(4), states that “the modification, renewal, extension, transfer, or sale of loans [․], if the activities are carried on from outside this state by the lending institution” by any foreign lending institution shall not be considered intrastate commerce. Cal. Corp. Code § 191(d)(4).

Applying these definitions to the present case, it is clear that Defendant's activities in California, or at least those implicated by this lawsuit are not “intrastate” commerce. Defendant is a citizen of Delaware and is engaged in the business of extending credit across state lines into California. Beauchamp Decl. at ¶ 4. Defendant issues and services its credit card accounts from Delaware.³ Id. at ¶¶ 5-9. These activities are clearly interstate commerce or, at least, fall within the ambit of Section 191(d)(4). See Thorner v. Selective Cam Transmission Co., 180 Cal.App.2d 89, 4 Cal.Rptr. 409 (1960) (“a foreign corporation is not doing, transacting, carrying on, or engaging in business in a state, by making loans outside the state to residents thereof, on applications obtained by agents of the corporation acting within the state, where the application is transmitted to the foreign corporation at a point outside the state for acceptance or rejection, and the loan is made payable outside the domestic state.”) (citation omitted).

VI. Conclusion

For the foregoing reasons, Defendant's motion to compel arbitration is GRANTED. The case is hereby STAYED pending the outcome of the arbitration. The parties should not notify the Court when the arbitration is completed but should file a notice of dismissal within 30 days of its completion.

IT IS SO ORDERED.

FOOTNOTES

1.   To the extent that Plaintiff is contending that he never received the document containing the arbitration clause, Plaintiff has failed to rebut the mailbox rule. Defendant has provided unrebutted evidence that: 1) it is their business practice to include the terms of conditions of using the credit card and a copy of the Cardmember Agreement for Plaintiff's account, and 2) that such materials were mailed to Plaintiff. Beauchamp Decl. at ¶¶ 8-10; Schikore v. BankAmerica Supplemental Ret. Plan, 269 F.3d 956, 961 (9th Cir. 2001) (“The mailbox rule provides that the proper and timely mailing of a document raises a rebuttable presumption that the document has been received by the addressee in the usual time.”). Plaintiff does not “unequivocally deny receiving the mail” and instead contends he did not see or was not aware of the Cardmember Agreement. This failure to recall is insufficient to defeat the mailbox rule. See Chavez v. Bank of Am., No. C 10-653 JCS, 2011 WL 4712204 at *8 (N.D. Cal. Oct. 7, 2011) (a party's statement that she did not recall receiving the arbitration agreement in the mail is “not the sort of reliable evidence necessary to defeat the presumption of receipt by mail”); Mangahas v. Barclay's Bank Delaware, No. SACV1600093JVSJCGX, 2016 WL 11002179 at *3 (C.D. Cal. May 9, 2016)

2.   Under Plaintiff's logic the FAA would also not apply to at-will employment contracts since such agreements would not have an identifiable point of completion.

3.   It seems that the parties dispute whether Defendant maintains a physical presence in California. Specifically, Defendant contends that they only maintain a P.O. Box in California, while Plaintiff points to three offices in California maintained by Barclay's Investment Bank. But even if Defendant maintained a physical office in California, Plaintiff has not refuted Defendant's evidence that Defendant services credit card accounts, like Plaintiff's from Delaware. And such activity clearly does not fall under Section 191’s definition of intrastate commerce. Moreover, the Court harbors serious doubts as to whether the physical locations that Plaintiff is referring to can be attributed to Defendant, since it seems that Barclay's Investment Bank may be a separate corporate entity from Defendant.

STEPHEN V. WILSON, UNITED STATES DISTRICT JUDGE