United States District Court, D. Colorado
KAZMIERA FRAZIER, RHONDA LAUBLER, TERESA RIGGS, ANITA SEWARD, and KOALESHIA SIMON, individually and on behalf of all others similarly situated, Plaintiffs,
THE WESTERN UNION COMPANY, WESTERN UNION FINANCIAL SERVICES, INC., HIKMET ERSEK, and VARIOUS “DOE” DEFENDANTS, including Western Union Officers, Directors, and Agents, Defendants.
Kristen L. Mix United States Magistrate Judge.
matter is before the Court on Defendants' Motion
to Stay Proceeding Pending Arbitration Pursuant to Section 3
of the Federal Arbitration Act [#33] (the
“Motion”). Thereafter, Defendants filed a Factual
Supplement [#48], Plaintiffs filed a Response [#52] in
opposition to the Motion [#33], and Defendants filed a Reply
[#56]. The Court has reviewed the relevant briefs, the entire
case file, and the applicable law, and is sufficiently
advised in the premises. For the reasons set forth below, the
Motion [#33] is GRANTED.
Summary of the Case
Plaintiffs initiated this putative class action against The
Western Union Company (“Western Union”), Western
Union Financial Services, Inc. (“WUFSI”), Western
Union's Chief Executive Officer Hikmet Ersek
(“Ersek”), and various other unnamed Doe
Defendants (collectively, “Defendants”). Am.
Compl. [#27] at 4. Plaintiffs assert claims under the
Racketeer Influenced and Corrupt Organizations Act
(“RICO”), the Colorado Organized Crime Control
Act, and their respective state consumer protection
laws. Id. at 46-72. WUFSI, a subsidiary
of Western Union, operates a “Money Transfer
System” through which consumers send money to other
individuals in the United States and around the world.
Id. at 16. Each of the named Plaintiffs alleges that
she was defrauded by an unnamed third-party fraudster who
convinced her to send a fraudulent money transfer order.
Id. at 5-6.
transfer orders sent through WUFSI are subject to a set of
contractual terms and conditions (“Terms and
Conditions”) located on a pre-printed Send Money Form.
Motion [#33] at 10, 12-13. The Terms and Conditions
in place at the time of each of the named Plaintiffs'
alleged money transfers included arbitration clauses,
requiring the parties to arbitrate any disputes individually,
rather than on a class-wide basis (the “Arbitration
Clauses”). Id. at 10-11. Defendants maintain
that the Terms and Conditions are included in both the Send
Money Form customers fill out to send money and on the
receipts given to customers after sending money transfer
orders. Id. at 12-13. Defendants also assert that
before a customer can send money using a Send Money Form,
WUFSI's standard business practices require the customer
to sign the form, agreeing to the accompanying terms and
conditions. Id. at 13. Once the information on the
Send Money Form is verified by a Western Union clerk on
location, the clerk then prints a receipt for the customer.
Id. at 14. Like the Send Money Form, Defendants
assert that WUFSI's standard business practices require
the customer to sign the receipt. Id.
relevant times of Plaintiffs' alleged
fraudulently-induced money transfer orders, two separate
Arbitration Clauses appeared in Defendants' Terms and
Conditions. Id. at 11-12; Response [#52] at
10. One Arbitration Clause appeared in Send Money Form Terms
and Conditions in 2005, and the other Arbitration Clause
appeared in Send Money Form Terms and Conditions in 2016 and
2017. Motion [#33] at 11-12; Response [#52]
seek a stay of this case while arbitration proceedings are
held. Motion [#33] at 7. At issue in the instant
motion is: (1) whether Plaintiffs are bound by the
Arbitration Clauses in dispute, (2) whether Defendants Ersek,
Western Union, and WUFSI respectively are bound by the
Arbitration Clauses in dispute, (3) whether the two
individual Arbitration Clauses in question are enforceable,
and (4) whether Plaintiffs' RICO claims fall within the
scope of the Arbitration Clauses.
Standard of Review
of arbitrability are governed by the Federal Arbitration Act
(“FAA”). Belnap v. Iasis
Healthcare, 844 F.3d 1272, 1279 (10th Cir. 2017). The
FAA “manifests a liberal federal policy favoring
arbitration.” Comanche Indian Tribe v. 49,
L.L.C., 391 F.3d 1129, 1131 (10th Cir. 2004) (quoting
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.
20, 25 (1991)); see also Epic Sys. Corp. v. Lewis,
138 S.Ct. 1612, 1621 (2018). Consequently, the Court must
“resolve ‘any doubts concerning the scope of
arbitrable issues . . . in favor of arbitration.'”
P&P Indus., Inc. v. Sutter Corp., 179 F.3d 861,
866 (10th Cir. 1999) (quoting Moses H. Cone Mem'l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25
(1983)). In addition, “this liberal policy
‘covers more than simply the substantive scope of the
arbitration clause,' and ‘encompass[es] an
expectation that [arbitration] procedures will be
binding.'” Id. (citation omitted).
the FAA, when parties agree to settle a controversy by
arbitration, courts must enforce that agreement “save
upon grounds as exist at law or in equity for the revocation
of any contract.” 9 U.S.C. § 2 (2018). Such
grounds include “generally applicable contract
defenses, such as fraud, duress, or unconscionability.”
Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 68
(2010) (quoting Doctor's Assocs., Inc. v.
Casarotto, 517 U.S. 681, 687 (1996)). “Under the
FAA, unless the arbitration provision states otherwise, the
question of the enforceability of a contract as a whole is a
matter for the arbitrator. Only if an enforceability argument
applies specifically to the arbitration provision (such as a
claim that the provision is unconscionable or that a party
was defrauded into agreeing to the arbitration provision) is
enforceability to be decided by the court.” In re
Cox Enters., Inc. Set-top Cable Television Box Antitrust
Litig., 835 F.3d 1195, 1209 (10th Cir. 2016). While the
Supreme Court recently held that courts should decide whether
certain types of employment contracts meet FAA exceptions
prior to ordering arbitration, see e.g., New
Prime Inc. v. Oliveira, 139 S.Ct. 532, 538 (2019), this
holding does not impact whether courts or the arbitrator
should decide challenges to the overall contract.
parties can agree to arbitrate the merits of a dispute, they
can agree to arbitrate arbitrability, such as the validity
and scope of an arbitration provision. Rent-A-Center, W.,
Inc., 561 U.S. at 69. If the parties' contract
delegates the issues of arbitrability, the party opposing
arbitration must specifically dispute the validity of the
delegation clause. Id. at 72.
the presence of an arbitration clause generally creates a
presumption in favor of arbitration, this presumption
disappears when the parties dispute the existence of a valid
arbitration agreement.” Bellman v. i3Carbon,
LLC, 563 Fed.Appx. 608, 613 (10th Cir. 2014).
Determining whether a dispute is subject to arbitration is
“similar to summary judgment practice.”
Id. at 612 (quoting Hancock v. Am. Tel. &
Tel. Co., 701 F.3d 1248, 1261 (10th Cir. 2012)). The
party moving to compel arbitration must present
“evidence sufficient to demonstrate the existence of an
enforceable agreement.” Id. If sufficient
evidence of an enforceable agreement is presented, the burden
then shifts to the nonmoving party to “raise a genuine
dispute of material fact regarding the existence of an
agreement.” Id.; BigBen 1613, LLC, v.
Belcaro Grp., Inc., No. 17-cv-00272-PAB-STV, 2018 WL
4257321, at *2 (D. Colo. Sept. 6, 2018). When analyzing
whether the parties agreed to submit a specific dispute to
arbitration, “[a]ll ‘doubts are to be resolved in
favor of arbitrability.'” Coors Brewing Co. v.
Molson Breweries, 51 F.3d 1511, 1514 (10th Cir. 1995)
(quoting Oil, Chem., & Atomic Workers Int'l
Union, Local 2-124 v. Am. Oil Co., 528 F.2d 252, 254
(10th Cir. 1976)).
are generally disfavored in this District. See Wason
Ranch Corp. v. Hecla Mining Co., No.
07-cv-00267-EWN-MEH, 2007 WL 1655362, at *1 (D. Colo. June 6,
2007). However, a stay may be appropriate in arbitration
disputes given the strong federal policy in favor of
arbitration agreements under the FAA. McWilliams v.
Logicon Inc., 143 F.3d 573, 576 (10th Cir. 1998). Once
the Court determines that the claims are subject to an
arbitration agreement, the Court must stay “the action
until such arbitration has been had in accordance with the
terms of the agreement, providing the applicant for the stay
is not in default in proceeding with such arbitration.”
9 U.S.C. § 3. If “all of [the] plaintiff's
claims are subject to arbitration, under the FAA, [the Court]
must stay litigation of the entire case pending
arbitration.” GATX Mgmt. Servs., LLC v.
Weakland, 171 F.Supp.2d 1159, 1167 (D. Colo. 2001).
analysis begins by examining whether enforceable Arbitration
Clauses exist between the parties. The Court first determines
whether each Plaintiff is bound by an existing Arbitration
Clause. Next, the Court resolves whether Defendant WUFSI is
bound by an Arbitration Clause, and whether Defendants
Western Union and Ersek may enforce arbitration through
determining whether Arbitration Clauses exist, the Court then
examines whether the existing Arbitration Clauses are
enforceable and whether Plaintiffs' disputes fall within
their scope. Regarding enforceability, the Court examines the
enforceability of an Arbitration Clause which names an
arbitrator who is no longer available for consumer disputes.
Additionally, the Court determines whether a separate
Arbitration Clause is unconscionable. Finally, regarding the
scope of Plaintiffs' disputes, the Court examines whether
Plaintiffs' RICO claims fall within the scope of the
Arbitration Clauses under the FAA.
Whether the Parties are Bound by the Arbitration
Court starts by determining which parties are bound by the
Arbitration Clauses. Defendants argue that an enforceable
Arbitration Clause exists from each alleged fraudulent
transaction asserted by each named Plaintiff. Motion
[#33] at 18. In support of this argument, Defendants argue
that each named Plaintiff assented to the Terms and
Conditions in order to send her money transfers as required
by WUFSI's standard business practices. Id. at
18-19. Additionally, Defendants argue that WUFSI is bound by
the relevant Arbitration Clauses, and that both Arbitration
Clauses apply to non-signatory Defendants Western Union and
Ersek through the doctrine of equitable estoppel.
Id. at 28-34.
by contrast, deny that Plaintiffs Kazmiera Frazier
(“Frazier”) and Koaleshia Simon
(“Simon”) ever agreed to Defendants' Terms
and Conditions, which contain the Arbitration Clauses.
Response [#52] at 26-32. Plaintiffs argue that WUFSI
is not bound by the Term and Conditions, and therefore it
cannot compel arbitration pursuant to the Arbitration Clause
therein. Id. at 32-33. Further, Plaintiffs argue
that the nonsignatory Defendants Western Union and Ersek also
cannot enforce arbitration. Id. at 33-37.
outset, the Court notes Plaintiffs' position regarding
who among Defendants is bound by the Terms and Conditions,
and thus the Arbitration Clauses. It appears that Plaintiffs
assert that none of the named Defendants are parties or
signatories to the Terms and Conditions. Plaintiffs argue
that WUFSI cannot be bound by the Terms and Conditions and
Arbitration Clauses as a nonsignatory. Id. at 32.
Further, Plaintiffs argue that as nonsignatories to the Terms
and Conditions, Defendants Western Union and Ersek are also
not bound by the Arbitration Clauses. Id. at 33. It
appears Plaintiffs argue that there is no Defendant who is
bound by the Terms and Conditions giving rise to their
substantive claims. Id. at 32-37. If that is the
case, Plaintiffs' case seeks to hold Defendants
accountable for a scheme to defraud customers through money
order transactions, while they also argue that Defendants are
not bound by the very agreements used in those transactions.
See Am. Compl. [#27] at 22-36; Response
[#52] at 32-37. Plaintiffs' contradictory argument defies
logic, and the Court addresses this novel position in
examining which Defendants can enforce arbitration in the
are subject to arbitration when a valid and enforceable
arbitration agreement exists, and when the dispute falls
within the scope of those identified in the arbitration
agreement. See 9 U.S.C. § 2; Green Tree
Fin. Corp. Ala. v. Randolph, 531 U.S. 79, 89 (2000);
Newmont U.S.A. Ltd. v. Ins. Co. of N. Am., 615 F.3d
1286, 1274 (10th Cir. 2010). In determining whether a valid
arbitration agreement exists, the Tenth Circuit relies on
state law principles of contract formation to determine
whether parties have agreed to arbitrate an issue or claim.
Hardin v. First Cash Fin. Servs., Inc., 465 F.3d
470, 475 (10th Cir. 2006); Avedon Eng'g, Inc. v.
Seatex, 126 F.3d 1279, 1287 (10th Cir. 1987). Thus,
under Colorado law,  contract formation principles govern
whether parties have agreed to submit disputes to
arbitration. Allen v. Pacheco, 71 P.3d 375, 378
(Colo. 2003). An arbitration agreement governed by the FAA is
presumed to be valid and enforceable, and the party resisting
arbitration bears the burden of proving that Congress
intended to preclude arbitration of the claims at issue.
Randolph, 531 U.S. at 91-92.
ruling on a motion to stay pending arbitration, a federal
court may consider “only issues relating to the making
and performance of the agreement to arbitrate.”
Prima Paint Corp., 388 U.S. at 404. This includes
whether any agreement between the parties was ever concluded.
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.
440, 441 n.1 (2006). However, the arbitrator, not the Court,
should determine whether the contract overall is otherwise
enforceable. In re Cox, 835 F.3d at 1210. Thus, the
Court begins its analysis by determining whether any
arbitration agreements exists, and what parties are bound by
party seeking arbitration must present sufficient evidence
demonstrating the existence of an arbitration agreement.
Bellman, 563 Fed.Appx. at 612. If sufficient
evidence of an enforceable agreement is presented, the burden
then shifts to the nonmoving party to “raise a genuine
dispute of material fact regarding the existence of an
agreement.” Id.; BigBen 1613, LLC,
2018 WL 4257321, at *2. Facts are “material” if
they are essential to the proper disposition of the claim
under the relevant substantive law. Wright v. Abbott
Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). A
dispute is “genuine” if the evidence might lead a
reasonable juror to return a verdict for the nonmoving party.
Allen v. Muskogee, Okla., 119 F.3d 837, 839 (10th
order to meet their initial burden of demonstrating the
existence of enforceable arbitration agreements here,
Defendants rely on: (1) the signed Terms and Conditions
containing the Arbitration Clauses produced by certain
Plaintiffs, (2) deposition testimony of certain Plaintiffs
admitting that they signed the Terms and Conditions when
conducting their transactions, and (3) WUFSI's standard
business practices and procedures in sending money orders,
with respect to Plaintiffs who have not produced signed Terms
and Conditions and who testified that they do not recall
signing arbitration agreements during their respective
transactions. Reply [#56] at 8; Motion
[#33] at 18-19; see also Factual Suppl. [#48] at
3-6. To further establish the practices and procedure
associated with WUFSI money order transactions, Defendants
submitted the Declarations of Edgardo Torres
(“Torres”) and Lisa Sherman
(“Sherman”). Reply [#56] at 8;
Motion [#33] at 18-19; Torres Decl. [#33-1]
at 1-5; Sherman Decl. [#33-2] at 1-12.
the Court considers whether Defendants Western Union, Ersek,
and WUFSI are bound by the Arbitration Clauses, allowing them
to enforce arbitration. Defendants argue that despite being a
nonsignatory to the Terms and Conditions, WUFSI is still
bound by the Arbitration Clauses. Motion [#33] at
28; Reply [#56] at 25. Similarly, Defendants argue
that Defendants Western Union and Ersek can enforce
arbitration without being signatories to the Terms and
Conditions through the doctrine of equitable estoppel.
Motion [#33] at 32; Reply [#56] at 25. The
Court address these arguments in turn.
Whether Plaintiffs Laubler, Riggs and Seward are Bound by the
undisputed that Plaintiffs Rhonda Laubler
(“Laubler”), Teresa Riggs (“Riggs”),
and Anita Seward (“Seward”) either produced
signed Terms and Conditions from their alleged fraudulent
transactions or testified that they signed agreements prior
to sending their money orders. Factual Suppl. [#48]
at 3-4. Plaintiffs Laubler, Riggs, and Seward's relevant
transactions took place throughout 2016 and 2017.
Id. During this period, the Terms and Conditions
contained on the Send Money Forms and order receipts included
an arbitration clause stating that National Arbitration and
Mediation (“NAM”) (the “NAM Arbitration
Clause”) will administer any arbitration arising from a
dispute. Motion [#33] at 12.
assert that the copies of signed receipts and affirmative
testimony regarding signed receipts are sufficient to
establish the existence of an agreement to arbitrate.
Id. at 19; Factual Suppl. [#48] at 3-6. The
Court agrees. See Bellman, 563 Fed.Appx. at 613;
Hancock, 701 F.3d at 1264. Plaintiffs Seward and
Laubler each produced copies of receipts that they received
in connection with their transactions at issue. Factual
Suppl. [#48] at 3-4. Plaintiff Riggs did not produce any
documentation relating to her transactions but testified that
she completed and signed a Send Money Form in connection with
each of her money transfers. Id. at 4. Thus,
Defendants have produced evidence that the parties were
presented with the NAM Arbitration Clause in the course of
their disputed transactions, and that Plaintiffs Laubler,
Riggs, and Seward assented to the agreements with their
signatures. As a result, Defendants have met their initial
burden of demonstrating an enforceable arbitration agreement
with respect to the NAM Arbitration Clause. Bellman,
563 Fed.Appx. at 613.
do not dispute the existence of agreements for Plaintiffs
Laubler, Riggs, and Seward because these three Plaintiffs
have produced copies of signed Terms and Conditions from
their transactions or testified to signing receipts.
Response [#56] at 27; Factual Suppl. [#48]
at 3-5. Therefore, Plaintiffs do not raise a genuine issue of
material fact. Bellman, 563 Fed.Appx. at 613. Thus,
the Court finds that Plaintiffs Laubler, Riggs, and Seward
are bound by the Arbitration Clauses.
Whether Plaintiffs Frazier and Simon are Bound by the
Plaintiffs Laubler, Riggs, and Seward, Plaintiffs Frazier and
Simon did not produce any evidence or testimony of signed
Terms and Conditions. Factual Suppl. [#48] at 4-6.
Plaintiff Simon's disputed transaction occurred in 2016,
purportedly making her subject to the NAM Arbitration Clause
included in the Terms and Conditions from 2016 through 2017.
Response [#52] at 10. Plaintiff Frazier's
disputed transaction occurred in 2005, purportedly making her
subject to an older version of the Terms and Conditions which
listed the National Arbitration Foundation
(“NAF”) (the “NAF Arbitration
Clause”) as the arbitrator. Id. Plaintiffs
Frazier and Simon both testified that they do not
specifically recall whether they signed any documentation
with respect to their transactions in dispute. Id.
Plaintiff Frazier testified that she filled out a form
provided at the Western Union location where she completed
her transaction that looked like a Send Money Form, and she
received a receipt. Id. at 5-6. ...