Opinion
3:20-cv-01220-YY
06-21-2021
BRIAN ROLLINS, individually, on behalf of himself and all others similarly situated, Plaintiff, v. WINK LABS, INC., a Delaware corporation; and i.am.plus ELECTRONICS, INC., a Delaware corporation, Defendants.
FINDINGS AND RECOMMENDATIONS
Youlee Yim You United States Magistrate Judge
FINDINGS
Pursuant to District Judge Michael Mosman's Opinion and Order (ECF 43) issued on May 20, 2021, these Findings and Recommendations address the question of whether a valid arbitration agreement exists. The undersigned asked the parties how they wished to proceed in resolving this question, and the parties agreed to submit the matter on the briefing, declarations, and exhibits already in the court file. Oral argument was held on June 17, 2021.
The parties have a proposal for resolving the issue presented by Judge Mosman in his Opinion and Order [ECF 43]. We understand the issue to be: Does a valid arbitration agreement exist? The parties propose: On June 4, 2021, plaintiff's counsel emailed the court with a proposal on behalf of the parties:
1. Judge You resolves the issue based on the briefing, declarations, and exhibits in the Court file. Plaintiff points the Court to the following documents in the record that address the issue: a) Plaintiff's Response in Opposition to Defendants' Motion to Dismiss [ECF 27] pp. 10-13; b) Declaration of Brian Rollins [ECF 29] pp. 2; and c) Plaintiff's Response to Defendants' Objections to Findings and Recommendations [ECF 38] pp. 2-7. Defendants point the Court to the following documents in the record that address the issue: a) Defendants' Motion to Dismiss [ECF 20] pp. 38; b) Declaration of Travis Lopez [ECF 21]; c) Reply ISO Motion to Dismiss [ECF 31] pp. 1-8; and d) Defendants' Objections to Findings and Recommendations [ECF 37] pp. 1-3.
2. The parties are available for additional oral argument if it would be helpful to the Court.
3. If the Court is unable to resolve the issue as a matter of law, Plaintiff renews his request for a jury trial pursuant to Section 4 of the Federal Arbitration Act (9 U.S.C. § 4) on the issue of whether there was an agreement to arbitrate. Defendants take no position on this part of the proposal..
On this record, defendants have failed to meet their burden of establishing the existence of a valid arbitration agreement. Accordingly, the question of whether a valid arbitration agreement exists must be decided by a jury.
I. Relevant Law
“The party seeking to compel arbitration has the burden under the FAA to show (1) the existence of a valid, written agreement to arbitrate; and, if it exists, (2) that the agreement to arbitrate encompasses the dispute at issue.” Ashbey v. Archstone Property Management, Inc., 785 F.3d 1320, 1323 (9th Cir. 2015). This burden must be satisfied by a preponderance of the evidence. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014)).
With respect to the second factor, Judge Mosman has decided that plaintiff's “challenge falls within the scope of the alleged arbitration agreement.” Opinion and Order, ECF 43.
The court, rather than the arbitrator, decides “the threshold issue of the existence of an agreement to arbitrate.” Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1140-41 (9th Cir. 1991). “In deciding whether an agreement to arbitrate existed, a court should apply a summary-judgment-style standard.” Campos v. Bluestem Brands, Inc., 3:15-CV-00629-SI, 2015 WL 5737601, at *2 (D. Or. Sept. 30, 2015). “The district court should give the party opposing a motion to compel arbitration ‘the benefit of all reasonable doubts and inferences that may arise.'” Id. (quoting Three Valleys, 925 F.2d at 1140-41). “Only when there is no genuine issue of fact concerning the formation of the agreement” should the court decide as a matter of law that an agreement to arbitrate existed. Id. (quoting Three Valleys, 925 F.2d at 1141); see also Alarcon v. Vital Recovery Servs., Inc., 706 Fed.Appx. 394 (9th Cir. 2017) (cited pursuant to Ninth Cir. Rule 36-3) (“A district court should not decide as a matter of law that the parties entered into an agreement to arbitrate when there is a genuine issue of fact concerning the formation of any agreement.”).
“If the making of the arbitration agreement . . . be in issue, the court shall proceed summarily to the trial thereof.” 9 U.S.C. § 4. “[T]he party alleged to be in default may . . . demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose.” Id. “If the jury find that an agreement for arbitration was made in writing and that there is a default in proceeding thereunder, the court shall make an order summarily directing the parties to proceed with the arbitration in accordance with the terms thereof.” Id.
II. Proffered Facts
1. Lopez Declarations
Travis Lopez is head of finance for defendant i.am+ and has been acting CFO of Wink Labs, Inc. (“Wink”), since the second quarter of 2017 when i.am+ acquired Wink. Lopez Decl. ¶ 1, ECF 21; Lopez Decl. Support Reply (“Lopez Supp. Decl.”) ¶ 5, ECF 32. Lopez began his career at i.am+ as director of finance in August 2016, and has been the head of finance at i.am+ since May 2017. Lopez Supp. Decl. ¶ 2. His experience includes over 15 years in finance, including working for other technology and startup enterprises. Id. ¶ 3.
I.am+ acquired defendant Wink in the second quarter of 2017, in an acquisition that received coverage in the business and tech press. Lopez Supp. Decl. ¶ 4, ECF 32.
Lopez attests:
1) Plaintiff signed up for a Wink account on October 11, 2015. Lopez Decl. ¶ 3, ECF 21.
2) Since at least November 2013, all persons who want to use a Wink Hub must sign up for an account and must agree affirmatively to the Terms of Use and Privacy Policy (the “Terms”). Id. ¶ 4.
3) The process for all users on all devices has always looked substantially similar to the images shown below:
(Image Omitted) Id. ¶ 5.
4) The sign-up process depicted above required plaintiff to create an account by entering his email address, first and last name, and a password. Upon creation of that account, plaintiff was notified that he had to accept the Terms in order to continue using the app. After clicking “OK, ” the Terms were displayed for plaintiff to review. Id. ¶ 6.
5) Plaintiff could not have used his Wink Hub without clicking the “Accept” button. It was only after clicking “Accept” and signifying his affirmative consent to the Terms that plaintiff could have accessed the app. Id.; see also Lopez Supp. Decl. ¶ 8, ECF 32 (“The Wink Hub does not work without signing up for an account and agreeing to the Terms of Use and Privacy Policy (the “Terms”).”); Id. ¶ 11 (“Users who do not agree to the Terms cannot use a Wink Hub.”).
6) The Terms contained the following cautionary language:
PLEASE READ THESE TERMS OF USE CAREFULLY AS THEY CONTAIN IMPORTANT INFORMATION REGARDING YOUR LEGAL RIGHTS, REMEDIES AND OBLIGATIONS. THESE INCLUDE VARIOUS LIMITATIONS AND EXCLUSIONS, AND A DISPUTE RESOLUTION CLAUSE THAT GOVERNS HOW DISPUTES WILL BE RESOLVED.Lopez Decl. ¶ 7, ECF 21.
7) Since November 2013, the Terms contained a mandatory arbitration clause that plaintiff could have accessed by simply scrolling down to read it. Id. ¶¶ 7, 9. These Terms are attached to Lopez's declaration as Exhibit A. Id., Ex. A. Exhibit A contains the terms that plaintiff agreed to because the terms were not updated again until after plaintiff signed up for the Wink account and accepted the terms on October 11, 2015. Lopez Supp. Reply ¶ 13, ECF 32.
8) Exhibit A provides in pertinent part as follows:
Dispute Resolution; Governing Law; Venue and Jurisdiction
By visiting or using the Services, you agree that the laws of the State of New York, without regard to principles of conflict of laws, will govern these Terms of Use and any dispute of any sort that might arise between you and the Company or any of our affiliates.
YOU AND THE COMPANY AGREE THAT THE SOLE AND EXCLUSIVE FORUM AND REMEDY FOR ANY AND ALL DISPUTES AND CLAIMS RELATING IN ANY WAY TO OR ARISING OUT OF THIS AGREEMENT, THE SERVICES (INCLUDING YOUR VISIT TO OR USE OF THE SERVICES) SHALL BE FINAL AND BINDING ARBITRATION, except that Wink may seek injunctive relief in state or federal court located in New York County, New York concerning violation by a User of any of the User conduct rules set forth above, and in such case, the parties acknowledge that arbitration is not an adequate remedy at law and that injunctive or other appropriate relief may be sought.
Arbitration under this Agreement shall be conducted by the American Arbitration Association (the “AAA”) under its Commercial Arbitration Rules and, in the case of consumer disputes, the AAA's Supplementary Procedures for Consumer Related Disputes (the “AAA Consumer Rules”) (collectively the “AAA Rules”). The location of the arbitration and the allocation of costs and fees for such arbitration shall be determined in accordance with such AAA Rules and shall be subject to the limitations provided for in the AAA Consumer Rules (for consumer disputes). The arbitrator's award shall be binding and may be entered as a judgment in any court of competent jurisdiction.
To the fullest extent permitted by applicable law, YOU AND WINK AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING, AND THAT NO ARBITRATION OR CLAIM UNDER THESE TERMS OF USE SHALL BE JOINED TO ANY OTHER ARBITRATION OR CLAIM, INCLUDING ANY ARBITRATION OR CLAIM INVOLVING ANY OTHER CURRENT OR FORMER USER OF THE SERVICES.Lopez Decl., Ex. A, ECF 21-1, at 11.
9) The Terms define the “Company” as Wink, Inc. Id. at 1. “At the time plaintiff accepted the Terms, Wink, Inc., a Delaware Corporation owned by Flextronics, owned the Wink Hub and its software.” Lopez Supp. Decl. ¶ 14, ECF 32. “That is why Wink, Inc. is the entity listed in the Terms that plaintiff accepted.” Id. “However, two years later, at the time i.am.+ acquired Wink, the Wink Hub and its software were owned by Wink Labs, Inc., which is also a Delaware Corporation owned by Flextronics.” Id. “Wink Labs, Inc. is the successor in interest to Wink, Inc.” Id.
Lopez also attests that “[e]very user of a Wink Hub creates a digital trail that Wink tracks in its system, ” and “[t]his digital trail shows when a customer has created an account and accepted the Terms.” Id. ¶ 9. He further declares that “[a]ccording to my review of the digital trail, Mr. Rollins signed up for a Wink account and accepted the Terms on October 11, 2015.” Id. ¶ 10.
B. Plaintiff's Declaration
In his declaration, plaintiff attests that he purchased a Wink Hub for $49.99 at Home Depot on October 11, 2015. Rollins Decl. ¶ 2, ECF 29. He declares, “At the time I purchased the Wink Hub, I was not presented with and did not sign or agree to any terms of us or any sort of an agreement to arbitrate or to waive my right to bring a class action, nor was I informed about the existence of any terms of use, arbitration requirement, or class action waiver.” Id. ¶ 5. He also has “no recollection of ever being presented with or agreeing to arbitrate or waive bringing or participating in a class action against the defendants in this case.” Id. ¶ 6.
III. Analysis
Defendants have failed to meet their burden of showing through competent, admissible evidence that a valid arbitration agreement exists.
A. Lack of Knowledge and Authentication
Lopez attests that “Wink's records show [plaintiff] signed up for a Wink account on October 11, 2015, ” and “[s]ince at least November 2013, all persons who want to use a Wink Hub must sign up for an account and must agree affirmatively to the Terms of Use and Privacy Policy (the “Terms”).” Lopez Decl. ¶¶ 3, 4, ECF 21. Lopez proffers what he claims are “[t]he Terms to which Mr. Rollins agreed when he first signed up” in Exhibit A. Id., Ex. A, ECF 21-1. Plaintiff argues that “Lopez has not established knowledge or competence to speak to the subject matter of his Declaration-Wink's records, its practices with regard to customer account set up, the terms of its user agreement, or any specific purported agreement by Plaintiff.” Resp. 6, ECF 27.
Under Federal Rule of Evidence 901, “[t]o satisfy the requirement of authenticating or identifying an item of evidence, the proponent must produce evidence sufficient to support a finding that the item is what the proponent claims it is.” FED.R.EVID. 901(a). “A document can be authenticated [under Rule 901(b)(1)] by a witness who wrote it, signed it, used it, or saw others do so.” Orr v. Bank of Am., NT & SA, 285 F.3d 764, 774 (9th Cir. 2002) (quoting 31 Charles Alan Wright & Victor James Gold, Federal Practice & Procedure: Evidence § 7106, 43 (2000)).
Lopez, who is the head of finance at i.am+ and the acting chief financial officer of Wink, attests that in his “finance roles at i.am+, ” he “participated in the negotiations that led to the acquisition and became intimately familiar with Wink's product, finances, agreements and other records during this process.” Lopez Supp. Decl. ¶¶ 2, 5, 6, ECF 32. Lopez broadly claims to have “personal knowledge of the matters stated” in his declaration. Id. ¶ 1. However, there is nothing in Lopez's declaration describing how he has personal knowledge of plaintiff's records or how he would have become “intimately familiar” with the records of a single Wink Hub user during negotiations for the acquisition of Wink. See Becerra v. Newpark Mall Dental Group, C 12-01325 LB, 2012 WL 3010973, at *3 (N.D. Cal. July 23, 2012) (recognizing “it is not enough for [a witness] to state that he has personal knowledge of the facts stated”; “testimony must contain facts showing the witness's connection to the matters stated”).
Lopez further claims “[t]he process for all users on all devices has always looked substantially similar to the images shown” in his declaration. Lopez Decl. ¶ 5, ECF 21. But, as plaintiff observes, the images that Lopez has produced contain different language from the Terms in Exhibit A that defendants claim plaintiff agreed to.
Among the differences, Exhibit A is a singlespaced, unformatted 13 pages of continuous text. (Ex. A [ECF 21-1].) In contrast, the version relied on in Defendants' Motion and Mr. Lopez's Declaration shows as a first page an option to “Create an Account, ” uses paragraphs and formatting, has different colors, and includes buttons to select “Ok, ” “LOG OUT, ” and “ACCEPT.” (See Mot. to Dismiss [ECF 20] at 3; Lopez Decl. [ECF 21] ¶ 5.) This version also appears to be designed for viewing on a phone. Id.Pl. Resp. Mot. 7, ECF 27.
Further, the “TERMS AND CONDITIONS” state, “Effective Date of Last Revision: July 24, 2020.” Objections at 2, 3 (screenshots of TERMS AND CONDITIONS). Defendants argue, “Wink's records show that Plaintiff signed up for a Wink account on October 11, 2015, ” nearly five years before the effective date of the “TERMS AND CONDITIONS.” Objections at 1-2. Plaintiff could not have agreed to the TERMS AND CONDITIONS that did not exist in 2015, when Defendants say Plaintiff “signed up.”Pl. Resp. Obj. 4, ECF 38.
Moreover, Lopez provides no explanation for how he, as someone who works in finance and did not begin working for Wink until 2017, has knowledge of the process that plaintiff went through in 2015 and what plaintiff would have seen. “It is not even clear that [Lopez] reviewed any . . . business records to reach this conclusion.” Alarcon, 706 F. App'x. at 395.
Accordingly, the Terms proffered by Lopez are not authenticated and defendants have failed to establish that Lopez's testimony on these determinative issues is based on personal knowledge. See Alarcon, 706 F. App'x. at 394 (reversing district court's decision granting motion to compel arbitration where moving party had submitted “insufficient and inadmissible” evidence).
B. Business Records
Plaintiff argues that, in addition to failing to authenticate the Terms, defendants “make no attempt to establish that . . . [they] otherwise qualify as admissible business records.” Resp. 6, ECF 27. Federal Rule of Evidence 803(6) contains an exception to the rule against hearsay for records of a regularly conducted activity, i.e.:
A record of an act, event, condition, opinion, or diagnosis 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 Rule 902(11) 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.
Plaintiff asserts that Lopez is not a records custodian and there is no evidence regarding how the records are maintained and in what form. Indeed, defendants have offered no such evidence or even any response to this argument. Accordingly, defendants have failed to satisfy the business records exception.
Defendants, for example, do not argue that the documents are not offered for the truth of the matter asserted or are not otherwise hearsay.
C. Best Evidence Rule
Plaintiff also objects to Lopez's testimony regarding the digital trail under the best evidence rule. “The best evidence rule provides that the original of a ‘writing, recording, or photograph' is required to prove the contents thereof.” U.S. v. Bennett, 363 F.3d 947, 953 (9th Cir. 2004) (citing FED.R.EVID. 1002).
A writing or recording includes a “mechanical or electronic recording” or “other form of data compilation.” Fed.R.Evid. 1001(1). Photographs include “still photographs, X-ray films, video tapes, and motion pictures.” Fed.R.Evid. 1001(2). An original is the writing or recording itself, a negative or print of a photograph or, “[i]f data are stored in a computer or similar device, any printout or other output readable by sight, shown to reflect the data accurately.” Fed.R.Evid. 1001(3).Id.
“Where the rule applies, the proponent must produce the original (or a duplicate, see FED.R.EVID. 1003) or explain its absence.” Id. (citing FED.R.EVID. 1002, 1004).
The rule's application turns on “whether contents are sought to be proved.” Fed.R.Evid. 1002 Advisory Committee's note. “[A]n event may be proved by nondocumentary evidence, even though a written record of it was made.” Id. Accordingly, the rule is inapplicable when a witness merely identifies a photograph or videotape “as a correct representation of events which he saw or of a scene with which he is familiar.” Id.; see also United States v. Workinger, 90 F.3d 1409, 1415 (9th Cir.1996) (“[A] tape recording cannot be said to be the best evidence of a conversation when a party seeks to call a participant in or observer of the conversation to testify to it. In that instance, the best evidence rule has no application at all.”). However, the rule does apply when a witness seeks to testify about the contents of a writing, recording or photograph without producing the physical item itself-particularly when the witness was not privy to the events those contents describe. See Fed.R.Evid. 1002 Advisory Committee's note.Bennett, 363 F.3d at 953 (emphasis added).
In Bennett, the government sought to admit a border patrol officer's testimony that while he was searching the defendant's boat, he saw on a global positioning system (“GPS”) that the defendant's boat had traveled from Mexican waters to San Diego Bay. Id. at 952. The Ninth Circuit found the GPS display was a writing or recording because the officer “saw a graphical representation of data that the GPS had compiled about the path of [the defendant's] boat.” Id. at 953. The court also noted the officer “never actually observed [the defendant] boat travel the path depicted by the GPS. Id. The court held that “[p]roffering testimony about [the defendant's] border-crossing instead of introducing the GPS data . . . was analogous to proffering testimony describing security camera footage of an event to prove the facts of the event instead of introducing the footage itself, ” and excluded the testimony under the best evidence rule. Id.
Here, defendants offer Lopez's testimony regarding plaintiff's digital trail, which “shows when a customer has created an account and accepted the Terms.” Lopez Supp. Decl. ¶ 9, ECF 32. This digital trail is clearly an “electronic recording” or “other form of data compilation” and therefore a writing or recording under the best evidence rule. See Bennett, 363 F.3d at 953. Lopez was not privy to the events that the digital trail describes-he “never actually observed” plaintiff create the account and accept the terms in 2015. See id. He did not even begin working at Wink until 2017. Accordingly, Lopez cannot testify about the digital trail under the best evidence rule. See id. at 953-54 (citing 14 Am. Jur. 2d Proof of Facts 173 (1977) (“The reported cases show that proponents of computer-produced evidence occasionally founder on the best evidence rule by presenting oral testimony based on the witness' review of computer printouts without actually introducing the printouts themselves into evidence.”); Seiler v. Lucasfilm, Ltd., 808 F.2d 1316, 1319 (9th Cir. 1986) (“Since the contents are material and must be proved, Seiler must either produce the original or show that it is unavailable through no fault of his own. Rule 1004(1). This he could not do.”).
IV. Plaintiff's Arguments
Plaintiff makes additional arguments that the arbitration agreement is invalid. However, on this record, these arguments are not dispositive. Accordingly, the matter must proceed to a jury trial, as plaintiff requests.
A. Plaintiff's Declaration
Plaintiff argues that his declaration contains proof there was no valid agreement to arbitrate. Pl. Resp. Objections 4, ECF 38. In his declaration, plaintiff attests that “[a]t the time I purchased the Wink Hub, I was not presented with and did not sign or agree to any terms of use or any sort of agreement to arbitrate or to waive my right to bring a class action, nor was I informed about the existence of any terms of use, arbitration requirement, or class action waiver.” Rollins Decl. ¶ 5, ECF 29 (emphasis added). It is unclear whether plaintiff is referring to when he purchased the Wink Hub at Home Depot or more generally to the time period surrounding his purchase of the Wink Hub, including when he signed up for services. Due to this ambiguity, plaintiff's declaration is insufficient to prove that an arbitration agreement did not exist.
Plaintiff also attests that he does not otherwise remember agreeing to any arbitration terms. However, “nothing in the law requires a party to remember having contracted for the agreement to be valid.” Pinto v. Squaw Valley Resort, LLC., No. 2:17-cv-02281-MCE-CKD, 2018 WL 5630702, at *2 (E.D. Cal. 2018). “Thus, the fact that an individual ‘does not remember signing [an] Arbitration Agreement . . . is not sufficient.'” Solorio v. ABC Phones of N. Carolina, Inc., 120CV01051NONEJLT, 2021 WL 363680, at *9 (E.D. Cal. Feb. 3, 2021), report and recommendation adopted, 2021 WL 2390420 (E.D. Cal. June 11, 2021) (alteration in original, citation omitted); see also Chalian v. CVS Pharm., Inc., CV1608979ABAGRX, 2017 WL 6940520, at *2 (C.D. Cal. Oct. 17, 2017) (“While Aleksandryan states she does not remember signing the Agreement, this is not equivalent to a denial.”); Simpson v. Inter-Con Sec. Sys., Inc., C12-1955RAJ, 2013 WL 1966145, at *5 (W.D. Wash. May 10, 2013) (“His mere assertion that he does not remember signing the agreement is insufficient to create a genuine issue of material fact.”).
B. Unsigned Agreement
Plaintiff also contends that “[t]he Terms do not even have a place to sign or otherwise accept them.” Pl. Resp. Obj. 4, ECF 38. “However, the FAA requires only that arbitration agreements be ‘written'; there is no ‘signature' requirement.” Bell-Sparrow v. SFG*Proschoicebeauty, 18-CV-06707-YGR, 2019 WL 1201835, at *5 (N.D. Cal. Mar. 14, 2019) (citing 9 U.S.C. § 2; Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1369 (11th Cir. 2005) (noting that “the overwhelming weight of authority supports the view that no signature is required to meet the FAA's ‘written' requirement.”)).
As noted, “[i]f the making of the arbitration agreement . . . be in issue, the court shall proceed summarily to the trial thereof.” 9 U.S.C. § 4. Plaintiff has requested a jury trial. Thus, the matter should proceed to jury trial on the question of whether there is a valid arbitration agreement.
RECOMMENDATIONS
Defendants have failed to establish that a valid arbitration agreement exists; therefore, the case should proceed to a jury trial on this issue.
SCHEDULING ORDER
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Tuesday, July 06, 2021. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
NOTICE
These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.