# Pliszka v. Axos Bank

> District Court, S.D. California · September 13, 2024

URL: https://www.frixlaw.com/law-library/cases/10640547

## Case

- **Court:** District Court, S.D. California
- **Decided:** September 13, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

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8 UNITED STATES DISTRICT COURT
9 SOUTHERN DISTRICT OF CALIFORNIA
10
11 JOSEPH PLISZKA, individually and on Case No.: 24-cv-445-RSH-SBC
behalf of all others similarly situated,
12

Plaintiffs,
13 ORDER GRANTING IN PART AND
v. DENYING IN PART DEFENDANT’S
14
MOTION TO COMPEL
AXOS BANK, d/b/a UFB DIRECT,
15 ARBITRATION OR DISMISS
Defendant.
16
[ECF No. 10]
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. 10. 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 putative class action brought by customers holding money
26 market accounts with UFB. It is one of several related cases pending in this District. See
27
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1 In re Axos Bank Litigation, 3:23-cv-2266-RSH-SBC, Kyle Ash et al v. Axos Bank, 24-cv-
2 01157-RSH-SBC.
3 The Complaint alleges Plaintiff and other UFB customers were induced into
4 opening money market accounts advertised as earning “high yield,” “exceptional” or
5 “leading” annual percentage yields (“APYs”)). ECF No. 1 ¶ 4. UFB then executed a
6 “shell game”—creating new money market accounts offering higher interest rates to new
7 customers, without informing its existing accountholders. Id. ¶¶ 6–10. Rather than
8 increasing the APYs earned on its earlier accounts, UFB reclassified them as “legacy
9 accounts” and, in some cases, even decreased their APYs. Id.
10 Named Plaintiff is a New York resident affected by UFB’s alleged misconduct. Id.
11 ¶¶ 14, 79–92. Plaintiff seeks to represent: (1) “a class of all persons who have been UFB
12 high-yield money market accountholders since UFB began converting its money market
13 accounts to ‘legacy’ accounts”; and (2) “a subclass of all persons in New York who have
14 been UFB money market accountholders sinc[e] UFB began converting its money market
15 accounts to ‘legacy’ accounts.” Id. ¶ 97.
16 The Complaint brings claims for: (1) breach of the implied covenant of good faith
17 and fair dealing; (2) violation of California’s Unfair Competition Law; (3) violation of
18 California’s False Advertising Law; (4) violation of California’s Consumer Legal
19 Remedies Act; and (5) deceptive practices under New York General Business Law
20 section 349(a). Id. ¶¶ 107–156.
21 II. LEGAL STANDARD
22 The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., “governs arbitration
23 agreements in ‘contract[s] evidencing a transaction involving interstate commerce.’”
24 Fli-Lo Falcon, LLC v. Amazon.com, Inc., 97 F.4th 1190, 1193 (9th Cir. 2024) (quoting
25 9 U.S.C. § 2). Pursuant to Section 2 of the FAA, arbitration agreements “shall be valid,
26

27
1 The In re Axos case is a consolidation of the Sutaniman v. Axos Bank, No. 3:23-cv-
28
1 irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
2 revocation of any contract.” 9 U.S.C. § 2. This provision reflects “both a liberal federal
3 policy favoring arbitration, and the fundamental principle that arbitration is a matter of
4 contract.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (internal
5 quotation marks and citations omitted).
6 The FAA permits “[a] party aggrieved by the alleged failure, neglect, or refusal of
7 another to arbitrate under a written agreement for arbitration [to] petition any United
8 States district court . . . for an order directing that such arbitration proceed in the manner
9 provided for in such agreement.” 9 U.S.C. § 4. “In deciding whether to compel arbitration
10 under the FAA, a court’s inquiry is limited to two ‘gateway’ issues: ‘(1) whether a valid
11 agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the
12 dispute at issue.’” Lim v. TForce Logistics, LLC, 8 F.4th 992, 999 (9th Cir. 2021)
13 (quoting Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir.
14 2000)). “If both conditions are met, ‘the [FAA] requires the court to enforce the
15 arbitration agreement in accordance with its terms.’” Id.; Dean Witter Reynolds Inc. v.
16 Byrd, 470 U.S. 213, 218 (1985) (“By its terms, the Act leaves no place for the exercise of
17 discretion by a district court, but instead mandates that district courts shall direct the
18 parties to proceed to arbitration on issues as to which an arbitration agreement has been
19 signed.”).
20 III. ANALYSIS
21 A. Valid Agreement to Arbitrate
22 The Court first considers whether a valid agreement to arbitrate to exists. See Lim,
23 8 F.4th at 999; see Caremark, LLC v. Chickasaw Nation, 43 F.4th 1021, 1030 (9th Cir.
24 2022) (“[A] court must resolve any challenge that an agreement to arbitrate was never
25 formed[.]”).
26 “Parties are not required to arbitrate their disagreements unless they have agreed
27 to do so.” Davis v. Nordstrom, Inc., 755 F.3d 1089, 1092 (9th Cir. 2014). “In
28 determining the validity of an agreement to arbitrate, federal courts should apply ordinary
1 state law principles that govern the formation of contracts,” in this case, California law.
2 Ferguson v. Countrywide Credit Indus., 298 F.3d 778, 782 (9th Cir. 2002) (internal
3 quotation marks omitted); see ECF No. 10-2 at 55, 89.2 The party seeking to compel
4 arbitration “has the burden of proving the existence of an agreement to arbitrate by a
5 preponderance of the evidence.” Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th
6 Cir. 2014).
7 Two agreements are relevant to this dispute: (1) the Personal Deposit Account
8 Agreement and Schedule of Fees (“Personal Deposit Agreement”); and (2) the Online
9 Access Agreement. ECF No. 10-1 at 21–25. The Parties do not dispute that the Online
10 Access Agreement Plaintiff originally entered into contains an arbitration provision,
11 while the Personal Deposit Agreement does not. Id. at 16–17. Nevertheless, UFB
12 contends both agreements were later updated to include arbitration provisions with class
13 action waivers effective February 9, 2024. Id. at 19–20. In response, Plaintiff argues: (1)
14 UFB failed to prove Plaintiff “executed or agreed” to the original Online Access
15 Agreement; and (2) Plaintiff did not agree to the February 9, 2024 updates to the Personal
16 Deposit and Online Access Agreements. ECF No. 12 at 20–25.
17 1. Assent to Online Access Agreement
18 Plaintiff argues UFB has not met its burden to show Plaintiff executed and
19 assented to the Online Access Agreement. Id. at 20–21.
20 “[U]nder California law, mutual assent is a required element of contract
21 formation.” Knutson, 771 F.3d at 565. “Mutual assent is determined under an objective
22 standard applied to the outward manifestations or expressions of the parties, i.e., the
23 reasonable meaning of their words and acts, and not their unexpressed intentions or
24 understandings.” Caballero v. Premier Care Simi Valley LLC, 69 Cal. App. 5th 512, 518
25 (Ct. App. 2021) (internal quotation marks omitted). “A party’s acceptance of an
26

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2 All citations to electronic case filing (“ECF”) entries refer to the ECF-generated
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1 agreement to arbitrate may be express, as where a party signs the agreement.” Id.
2 (internal quotation marks omitted).
3 Under California’s Uniform Electronic Transactions Act, “an electronic signature
4 has the same legal effect as a handwritten signature.” Ruiz v. Moss Bros. Auto Grp., Inc.,
5 232 Cal. App. 4th 836, 843 (Ct. App. 2014).3 “Still, any writing must be authenticated
6 before the writing . . . may be received in evidence.” Id. California “Civil Code
7 section 1633.9 addresses how a proponent of an electronic signature may authenticate the
8 signature—that is, show the signature is, in fact, the signature of the person the proponent
9 claims it is.” Id. Under section 1633.9: “An electronic record or electronic signature is
10 attributable to a person if it was the act of the person. The act of the person may be shown
11 in any manner, including a showing of the efficacy of any security procedure applied to
12 determine the person to which the electronic record or electronic signature was
13 attributable.” Cal Civ Code § 1633.9(a); see Fabian v. Renovate Am., Inc., 42 Cal. App.
14 5th 1062, 1068 (Ct. App. 2019) (“The party seeking authentication may carry its burden
15 ‘in any manner,’ including by presenting evidence of the contents of the contract in
16 question and the circumstances surrounding the contract’s execution.”).
17 In this case, Plaintiff submitted a sworn declaration attesting he does not recall
18 accepting the Online Access Agreement prior to opening his money market account.
19 Declaration of Joseph Pliszka (“Pliszka Decl.,” ECF No. 12-1) ¶ 4. The burden, therefore,
20 shifts to UFB “to prove by a preponderance of the evidence that [Plaintiff’s electronic]
21 signature is, indeed, authentic.” Bulnes v. Suez WTS Servs. USA, Inc., No. 22-cv-1154-
22 BAS-AHG, 2023 U.S. Dist. LEXIS 78472, at *21 (S.D. Cal. May 4, 2023).
23 UFB submits two declarations from Derek Tam, its “First Vice President, Software
24 Development Manager.” Declaration of Derek Tam (“Tam Decl.,” ECF No. 10-2 at 1–5)
25

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27 3 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
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1 ¶ 1; Supplemental Declaration of Derek Tam (“Suppl. Tam Decl.,” ECF No. 15-1 at
2 1–17) ¶ 1.4 Mr. Tam declares that since starting at UFB, he and his team have been
3 responsible “for building, maintaining, and improving the backend software and database
4 systems” UFB uses for: (1) account enrollment (the “Enrollment System”); (2) user
5 verification (the “Identity System”); and (3) online banking services (the “OLB System”).
6 Suppl. Tam Decl. ¶ 3. The three systems are used to “gather and store information about
7 UFB’s accountholders” and “are also the systems applicants and accountholders must use
8 to obtain and use their UFB accounts.” Id. ¶ 4.
9 Mr. Tam’s supplemental declaration then describes the steps a new customer must
10 take in order to: (1) open an account with UFB; and (2) sign up for online banking
11 services. Id. ¶¶ 8–23. First, to open an account, a prospective customer must complete the
12 “account opening process on UFB’s website” which requires the individual to provide a
13 “first name, last name, email, and mobile phone number” and create a “username and
14 password.” Id. ¶ 8. “Usernames are unique to each UFB applicant[.]” Id. ¶ 11. When an
15 applicant creates a unique username, UFB’s Identity System assigns the applicant a
16 unique “UDBId”—the “identifier used by UFB in its backend systems.” Id. ¶ 12. During
17 the enrollment process, the applicant is also asked to provide other personal identifying
18 information, including occupation, address, birth date, social security number, and
19 Driver’s License or State ID number. Id. ¶ 13. This data is “paired” with the applicant’s
20 unique username and UDBId. Id.
21 ///
22 ///
23 ///
24

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4 Plaintiff submits a number of evidentiary objections to Mr. Tam’s declaration. ECF
26
No. 12-2. These objections are OVERRULED. Mr. Tam’s declaration properly lays a
27 foundation and establishes his personal knowledge of the facts stated in his declaration
and the authenticity of the exhibits attached. The court does not find Mr. Tam’s
28
To access their account online, an accountholder must return to UFB’s website (or
2 ||mobile application) and login using their unique username and password. Jd. § 20. When
3 || logging in for the first time, the accountholder is presented with a “Terms & Conditions”
4 screen:
5 Feats go board fd tos ery | CeCe re
°
7
oo —
9 Please read and accept our Terms & Conditions.
10
11 Online Access Agreement
Version Effective February 9, 2024
12 a deena

14
15 a anemone = ane ard Bro — a
16 Sree te Me ance RT
17 ACCOUNIS, products, aecices and Watues Pease read □□ Agreement carefully
18 eel
19 || Td. 20. The “Terms and Conditions” screen states at the top: “Please read and accept our
20 |Terms and Conditions.” Jd. § 21. Directly below is “a copy of the Online Access
21 || Agreement that individuals can scroll through to review.” Jd. Below this is text stating the
22 || following:
23 By selecting ‘Agree & Continue’, you consent to adhere to the Terms
and Conditions as stated in the Axos Online Access Agreement. This
Online Access Agreement governs your use of this site for your
25 personal requests and transactions; and details the online policies
6 relative to Axos Bank, Nationwide, and UFB Direct Online and Axos
Invest accounts, products, services and features. Please read this
27 Agreement carefully.
28 || Id. 4. The text 1s followed by an orange button reading “Agree & Continue.” /d. □□ 22.

1 According to Mr. Tam, when an accountholder clicks the “Agree & Continue”
2 button, the OLB System “stores the date and time” the button was clicked. Id. “UFB
3 knows to associate that datapoint with the accountholder because the accountholder
4 cannot proceed to the above screen without having logged in with their unique username
5 and password.” Id. For these reasons, Mr. Tam declares he was able to query UFB’s
6 OLB System using Plaintiff’s UBDId to confirm Plaintiff had clicked the “Agree and
7 Continue” button on April 11, 2023 at 8:42 a.m. Id. ¶ 25.
8 The Court determines that UFB has submitted sufficient evidence authenticating
9 Plaintiff’s electronic signature. The California Court of Appeal’s decision in Espejo v.
10 Southern California Permanente Medical Group, 246 Cal. App. 4th 1047 (2016) is
11 instructive. In that case, defendant submitted a declaration by its systems consultant
12 detailing the company’s “security precautions regarding transmission and use of an
13 applicant’s unique username and password, as well as the steps an applicant would have
14 to take to place his or her name on the signature line of the employment agreement” and
15 dispute resolution procedure. Id. at 1062. The consultant concluded the electronic
16 signature could only have been placed by someone using plaintiff’s “unique user name
17 and password.” Id. The Espejo Court found these details were satisfactory to “establish”
18 the authenticity of the electronic signature. Id. Similarly, here, Mr. Tam’s supplemental
19 declaration describes the steps an accountholder must take to open an account with UFB
20 and sign up for UFB’s online banking services. Tam. Suppl. Decl. ¶¶ 8–23. Mr. Tam
21 further states Plaintiff could not have accessed UFB’s online banking services without
22 first agreeing to the Online Access Agreement and this process could only have been
23 completed by someone using Plaintiff’s unique username and password. Id. ¶¶ 20–25.
24 “[T]he burden of authenticating an electronic signature is not great.” Ruiz, 232 Cal.
25 App. 4th at 844. UFB has met its burden here. See Guidry v. Vitas Healthcare Corp., No.
26 3:24-cv-00176-H-MMP, 2024 U.S. Dist. LEXIS 84799, at *8 (S.D. Cal. May 9, 2024)
27 (electronic signature authenticated where defendant provided evidence regarding
28 transmission and use of plaintiff’s username and password and steps plaintiff would have
1 taken to execute agreement electronically); Beltran v. Inter-Con Sec. Sys., No. 2:21-cv-
2 04927-VAP-(AFMx), 2021 U.S. Dist. LEXIS 174720, at *12 (C.D. Cal. Sep. 13, 2021)
3 (electronic signature authenticated where defendant described hiring process in detail and
4 clarified process “could be completed only with signer’s private password”); Tanis v. Sw.
5 Airlines, Co., No. 18-cv-2333-BAS-BGS, 2019 U.S. Dist. LEXIS 38876, at *14 (S.D.
6 Cal. Mar. 11, 2019) (electronic signature authenticated where evidence showed someone
7 using plaintiff’s username and password clicked an acknowledgement of terms box and
8 this action “could only have been done” by plaintiff”); Garcia v. NRI USA, LLC, No.
9 2:17-CV-08355-ODW-GJS, 2018 U.S. Dist. LEXIS 130055, at *6–7 (C.D. Cal. Aug. 1,
10 2018) (electronic signature authenticated where the “only way” for plaintiff to access and
11 sign arbitration agreement was using a confidential username and password).5
12 2. Assent to Updates
13 The Court next considers whether Plaintiff assented to UFB’s February 9, 2024
14 updates to the Personal Deposit and Online Access Agreements.
15 Here, both the Personal Deposit and Online Access Agreements contain provisions
16 stating UFB could add, delete, or change the terms of these agreement “at any time.” ECF
17 Nos. 10-1 at 18–19; 10-2 at 55, 63. Nevertheless, “a party with the unilateral right to
18 modify a contract” does not have “carte blanche to make any kind of change whatsoever
19 as long as a specified procedure is followed.” Badie v. Bank of Am., 67 Cal. App. 4th 779,
20 791 (Ct. App. 1998). Nor do Parties to a contract have an “obligation to check the terms
21 on a periodic basis to learn whether they have been changed by the other side.” Douglas
22 v. United States Dist. Court, 495 F.3d 1062, 1066 (9th Cir. 2007). Instead, “[i]n order for
23 changes in terms to be binding pursuant to a change-of-terms provision in the original
24 contract, both parties to the contract—not just the drafting party—must have notice of the
25 change in contract terms.” Stover v. Experian Holdings, Inc., 978 F.3d 1082, 1086 (9th
26

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5 Notably, in his Sur-Reply, Plaintiff does not dispute the supplemental Tam
28
1 Cir. 2020); see also Am. Licorice Co. v. Total Sweeteners, Inc., No. C-13-1929 EMC,
2 2013 U.S. Dist. LEXIS 114401, at *33 (N.D. Cal. Aug. 13, 2013) (“[A] modification
3 requires the mutual assent of the parties.”). The party “alleging the existence” of the
4 contract bears the burden of proving each element of a valid contract—including mutual
5 assent. Stover, 978 F.3d at 1086.
6 The question before the Court, then, is whether UFB has met its burden of
7 demonstrating Plaintiff had notice of the February 9, 2024 updates to the Personal
8 Deposit and Online Access Agreements. Stover, 978 F.3d at 1086 (“[N]otice—actual,
9 inquiry, or constructive—is the touchstone for assent to a contract, and the resulting
10 enforceability of changed terms in an agreement.”).6 Here, UFB submits evidence that it
11 sent an e-mail with the subject line: “‘Change in Terms for Online Access Agreement and
12 Deposit Account Agreement & Schedule of Fees’… to all UFB accountholders [who]
13 elected to have communications sent by e-mail.” Suppl. Tam. Decl. ¶ 29. The e-mail
14 informed accountholders UFB’s Personal Deposit and Online Access Agreements would
15 be updated effective February 9, 2024. ECF No. 15-1 at 107; 109. The e-mail further
16 informed customers: (1) an arbitration provision was being inserted into the Personal
17 Deposit Agreement; (2) the arbitration provision in the Online Access Agreement was
18 being revised; and (3) accountholders had thirty days after the February 9, 2024 effective
19 date to opt out of these provisions. Id. at 108–109. Finally, the e-mail provided a
20 hyperlink where users could download an electronic copy of the updated agreements. Id.
21 at 109–110. According to UFB’s records: (1) this change-in-terms e-mail was sent to
22

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6 The Court rejects UFB’s argument that case law directed to the initial formation of
24
a contract is inapplicable here, because UFB was updating the terms of an existing
25 contract rather than creating a new one. ECF No. 15 at 4. “[A] revised contract is merely
an offer and does not bind the parties until it is accepted.” Douglas v. U.S. Dist. Ct. for
26
Cent. Dist. of California, 495 F.3d 1062, 1066 (9th Cir. 2007). For these reasons, “[a]
27 valid modification still requires proof of the other elements essential to the validity of a
contract, including mutual assent.” Pmc, Inc. v. Porthole Yachts, 65 Cal. App. 4th 882,
28
1 Plaintiff on January 26, 2024 at 11:47 p.m. CST; (2) Plaintiff opened the e-mail on
2 January 27, 2024 at 10:05 a.m. CST; and (3) Plaintiff did not close his money market
3 account until May 7, 2024—after the thirty day opt-out deadline had already passed.
4 Suppl. Tam Decl. ¶¶ 34, 36.
5 Plaintiff contends the fact that he may have received UFB’s e-mail, opened it, and
6 then continued using his money market account without opting out is not sufficient to
7 show his agreement to these updated arbitration terms. ECF Nos. 12 at 22–25; 16-1 at
8 6–7. The Court agrees.
9 “As a general rule, ‘silence or inaction does not constitute acceptance of an offer.’”
10 Norcia v. Samsung Telcoms. Am., LLC, 845 F.3d 1279, 1284 (9th Cir. 2017) (quoting
11 Golden Eagle Ins. Co. v. Foremost Ins. Co., 20 Cal. App. 4th 1372, 1385 (Ct. App.
12 1993)). Under California law, “[a]n offer made to another, either orally or in writing,
13 cannot be turned into an agreement because the person to whom it is made or sent makes
14 no reply, even though the offer states that silence will be taken as consent, for the
15 [offeror] cannot prescribe conditions of rejection so as to turn silence on the part of the
16 offeree into acceptance.” Leslie v. Brown Bros., Inc., 208 Cal. 606, 621 (1929). “There
17 are several well-recognized exceptions to this rule.” Golden Eagle, 20 Cal. App. 4th at
18 1386. “An offeree’s silence may be deemed to be consent to a contract when the offeree
19 has a duty to respond to an offer and fails to act in the face of this duty.” Norcia, 845
20 F.3d at 1284–85. “An offeree’s silence may also be treated as consent to a contract when
21 the party retains the benefit offered.” Id. at 1285.
22 Here, UFB has not adequately demonstrated that any of these exceptions apply.
23 First, there is no evidence Plaintiff “manifested his intent to use his silence, or failure to
24 opt out, as a means of accepting the arbitration agreement.” Gentry v. Superior Court, 42
25 Cal. 4th 443, 468 (2007). For example, in Njad, the Ninth Circuit held an employee was
26 bound by a dispute resolution agreement when plaintiff signed an acknowledgement form
27 clearly setting out “the significance of his failure to opt out and describ[ing] in detail the
28 mechanism by which he could express his disagreement.” Circuit City Stores, Inc. v.
1 || Najd, 294 F.3d 1104, 1109 (9th Cir. 2002). Given this signed form, the Njad Court found
2 could “infer” plaintiff's assent through his silence. /d. Similarly, in Gentry, the
3 California Supreme Court found that the plaintiff had “manifested his intent to use his
4 ||silence” as “a means of accepting the arbitration agreement,” where the plaintiff had
5 signed an “easily readable, one-page form” acknowledging receipt of the agreement. 42
6 ||Cal. 4th at 468. This District’s decision in Gaines v. AT&T Mobility Servs., Ltd. Liab.
7 || Co., 424 F. Supp. 3d 1004 (S.D. Cal. 2019), is also persuasive. In Gaines, the parties
8 || disputed whether plaintiffs’ failure to opt-out of an arbitration agreement sent by e-mail
9 || was sufficient to establish their consent to be bound by the agreement’s terms. /d. at
10 }}1011. As the defendant had “failed to require and obtain” the plaintiffs’
11 |}acknowledgement they had received the arbitration agreements, the court concluded
12 || “silence alone [was] insufficient to constitute consent.” /d. at 1012. "
13 Similarly, in this case, absent evidence that Plaintiff acknowledged receiving the
14 || change-of-terms e-mail, the Court declines to conclude that Plaintiff manifested his intent
15 use silence as a means of acceptance. See also Sifuentes v. Dropbox, Inc., No. 20-cv-
16 ||07908-HSG, 2022 U.S. Dist. LEXIS 125273, at *11 (N.D. Cal. June 29, 2022) (“Even if
17 ||the email alone could be considered ‘reasonably conspicuous notice,’ Plaintiff took no
18 || action to unambiguously manifest his assent.’’).
19 This is also not a case where Plaintiff's silence may be treated as consent because
20 || he “retained” the benefits of his money market account. Here, the change-in-terms e-mail
21 ||clearly indicated opting out of the arbitration provision would not affect an
22 |}accountholder’s “other rights or responsibilities” under the agreement. ECF No. 15-1 at
23 || 108-09. Plaintiff did not, therefore, “retain” any benefit by failing to act. Instead,
24 || Plaintiff would still have been entitled to the benefit of his money market account
25 ||regardless of whether he opted out of the February 9, 2024 updates or not. See Norcia,
26 || 845 F.3d at 1286 (plaintiff did not “retain” benefit from failing to act, where plaintiff was
27 |/entitled to the benefits of a limited warranty regardless of whether he opted out of an
28 || arbitration agreement or not).

1 “In the absence of an applicable exception, California’s general rule for contract
2 formation applies.” Id. at 1286. The Court concludes that Plaintiff is not bound by the
3 updated February 9, 2024 arbitration provisions.7
4 B. Scope and Enforceability
5 Having determined that the Online Access Agreement’s original arbitration
6 provision is at issue, the Court turns to whether this provision covers Plaintiff’s claims,
7 and if so, whether it is enforceable.
8 Plaintiff argues the Online Access Agreement’s arbitration provision “plainly
9 governs” claims arising from use of the UFB website only, and regardless, is
10 unenforceable because it includes a waiver of public injunctive relief and “poison pill”
11 clause. ECF No. 12 at 15, 21–22. UFB responds, in part, that the original Online Access
12 Agreement’s arbitration provision contains a clause delegating these questions for the
13 arbitrator. ECF No. 15 at 5–6.
14
15
16
7 UFB cites three cases in support of its position that where an agreement contains a
17 change-of-terms provision, an e-mail providing notice of updated terms constitutes
sufficient notice to be binding. ECF Nos. 10-1 at 22; 15 at 4. These cases are not on point
18
and unpersuasive.
19 In Stover, the Ninth Circuit addressed the question “whether a single website visit
four years after assent to a contract containing a change-of-terms provision is enough to
20
bind the parties to terms in the then-current version of the contract of which the visitor is
21 unaware[.]” 978 F.3d at 1085–86. The Ninth Circuit did not address whether an e-mail
would constitute sufficient notice of updated terms.
22
Silverman v. Move Inc., No. 18-cv-05919-BLF, 2019 U.S. Dist. LEXIS 105365
23 (N.D. Cal. June 24, 2019), supports this Court’s holding that more than an e-mail is
required. In Silverman, the e-mail that the plaintiff received was “not the only
24
interaction” the plaintiff had with the defendant. Id. at *34. The plaintiff also spoke with
25 an account executive who informed her she would be receiving “all of the details and
important information” about her agreement through e-mail. Id. at *35. The Silverman
26
Court found this admonition adequately put the plaintiff on notice. Id.
27 Finally, Corsale v. Sperian Energy Corp., 374 F. Supp. 3d 445 (W.D. Pa. 2019),
analyzes contract formation and modification under Pennsylvania common law and is not
28
1 “A delegation clause is a clause within an arbitration provision that delegates to the
2 arbitrator gateway questions of arbitrability, such as whether the agreement covers a
3 particular controversy or whether the arbitration provision is enforceable at all.”
4 Caremark, 43 F.4th at 1029. The FAA “allows parties to agree by contract that an
5 arbitrator, rather than a court, will resolve threshold arbitrability questions as well as
6 underlying merits disputes.” Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S.
7 63, 65 (2019). However, “[c]ourts should not assume that the parties agreed to arbitrate
8 arbitrability unless there is ‘clea[r] and unmistakabl[e]’ evidence that they did so[.]” First
9 Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (quoting AT&T Techs. v.
10 Communs. Workers of Am., 475 U.S. 643, 649 (1986)). “Such ‘clear and unmistakable
11 evidence of [an] agreement to arbitrate arbitrability might include a course of
12 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 arbitration provision in question 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. 15-1 at 61. The provision 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 62. Plaintiff has not offered any argument or legal authority as to why
26 the delegation clause would not apply. Nor does Plaintiff offer any challenge as to the
27
28
1 ||clause’s validity or enforceability.’ Given the express language of the provision, and the
2 ||lack of any argument or legal authority to the contrary, the Court holds Plaintiff must
3 arbitrate these gateway issues before the arbitrator. See Henry Schein, 586 U.S. at 68
4 ||(‘‘When the parties’ contract delegates the arbitrability question to an arbitrator, a court
5 ||may not override the contract. In those circumstances, a court possesses no power to
6 || decide the arbitrability issue.’’).
7 IV. CONCLUSION
8 For the above reasons, the Court grants in part and denies in part UFB’s motion as
9 || follows:
10 1. The Court GRANTS UFB’s motion to compel arbitration. The Court
11 |} ORDERS the Parties to proceed to arbitration for a determination of arbitrability and
12 ||possible arbitration of Plaintiff's individual claims, in the manner provided for in the
13 || original Online Access Agreement.
14 2. The case is STAYED pending the completion of arbitration proceedings
15 || pursuant to 9 U.S.C. § 3.
16 3. The Parties are ORDERED to file a status update on their arbitration
17 || proceedings every ninety days and within seven days of completion.
18 4. The Court DENIES UFB’s motion to dismiss as moot.
19 IT IS SO ORDERED.
20 || Dated: September 13, 2024 ebut C Phone
21
7 Hon. Robert S. Huie
United States District Judge
23
24
25
8 Plaintiff has forfeited such challenges by not timely raising them. See Rent-A-
Center, W., Inc. v. Jackson, 561 U.S. 63, 75-76 (2010); Holley-Gallegly v. TA Operating,
27 || LLC, 74 F.4th 997, 1003 n.3 (9th Cir. 2023); Steward v. Kemper Corp., No. 5:23-cv-
02312-SSS-SPx, 2024 U.S. Dist. LEXIS 130522, at *4 (C.D. Cal. June 4, 2024).

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10640547. Public record. Not legal advice.