Peskett v. Designer Brands CA2/6

Filed 7/19/23 Peskett v. Designer Brands CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
SHARON PESKETT, 2d Civ. No. B320708
(Super. Ct. No. 19STCV38324)
Plaintiff and Respondent, (Los Angeles County)
v.
DESIGNER BRANDS, INC.,
Defendant and Appellant.
Designer Brands, Inc. (DBI) appeals the trial court’s denial
of its motion to compel arbitration of a putative class action
complaint filed by plaintiff and respondent Sharon Peskett for
alleged violations of the Fair and Accurate Credit Transactions
Act (FACTA; 15 U.S.C.A. § 1681c(g)(1)). Because DBI has failed
to establish error and because Peskett’s claim is independent of
and unrelated to the arbitration agreement, we affirm.
FACTS AND PROCEDURAL HISTORY
The Complaint And Subsequent Litigation
DBI owns and operates Designer Shoe Warehouse (DSW)
stores throughout the United States. On October 25, 2019,
Peskett filed a putative class action complaint against DBI
alleging it had violated FACTA by printing too many credit card
or debit card numbers on the paper receipts it provided to DBI
customers who made in-store purchases.1 The claim is supported
by an electronically-generated paper receipt Peskett received for
a purchase she made at a DSW store in Pasadena on March 28,
2019. Peskett sought to represent a class of “all persons in the
United States who, from September 24, 2019, through the date of
the Court’s order granting class certification, engaged in one or
more transactions using a debit card or credit card at one or more
of [DBI]’s retail locations in the United States, at which time
Defendant’s point-of-sale system was programmed to generate a
printed customer receipt displaying more than the last 5 digits of
the credit or debit card account number or the expiration date of
the credit or debit card used in connection with such
transaction(s).”
In January 2020, DBI removed the action to federal court.
The matter was subsequently remanded back to the state court
on Peskett’s motion. In a July 2020 joint status report, the
parties stated they “are not currently aware of any arbitration or
class action waiver clause applicable to this action.” The
following month, the court overruled DBI’s demurrer to the
1 “Under FACTA, it is prohibited for a person accepting
credit or debit cards for the transaction of business to print ‘more
than the last 5 digits of the card number or the expiration date’
on an electronically printed receipt provided to the cardholder at
the point of the transaction. [Citation.] Any person who willfully
fails to comply with this requirement is liable to the consumer for
actual damages of not less than $100 and not more than $1,000,
as well as punitive damages and reasonable attorney fees.
[Citation.]” (Luckey v. Superior Court (2014) 228 Cal.App.4th 81,
88.)
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complaint. In December 2020, DBI filed an answer to the
complaint but did not make any mention of a potential
arbitration clause as a defense. In a joint status report filed the
following week, DBI agreed it was proper to proceed with the
court-ordered settlement conference and that DBI was prepared
to discuss settling the matter “on either a single-plaintiff or class
basis.” In July 2021, the parties filed another joint status report
in which DBI represented it was not aware of any potentially
applicable arbitration or class action waiver clauses and was
planning to move for summary judgment. In September 2021,
Peskett was allowed to amend her complaint, over DBI’s
objection, to expand the putative class period and she filed an
amended complaint.
DBI’s Motion To Compel Arbitration
On October 22, 2021, DBI filed a motion to stay the
proceedings and compel arbitration of Peskett’s FACTA claim.
DBI contended that Peskett had agreed to arbitrate the claim by
assenting to recent changes in the terms and conditions of DSW’s
VIP Rewards Program, of which Peskett had been a member
since at least 2018. DBI offered that on January 1, 2020, it had
sent an email to all its VIP Rewards Program members, including
Peskett, stating among other things that “[u]pdates to our VIP
Rewards Terms and Conditions include the addition of a binding
arbitration and class action waiver provision. This provision
requires that all disputes related to your participation in the VIP
Rewards Program be resolved in individual arbitration or small
claims court proceedings. By participating in the DSW VIP
Rewards Program you agree to the updated VIP Rewards Terms
and Conditions.” (Hyperlink omitted.) DBI asserted that on
April 10, 2021, Peskett had participated in the VIP Rewards
Program—and thereby agreed to its updated terms and
3
conditions—when she made a purchase at a DSW store and gave
the store employee the information necessary to access her VIP
Rewards Program identification number.
The updated VIP Rewards Program terms and conditions
(the VIP Rewards Program agreement) include provisions
regarding the earning of points and benefits; membership
eligibility; redemption of points; and arbitration (the arbitration
provision). The arbitration provision states in pertinent part that
“[a]ny [d]ispute between you and DSW that cannot be resolved
informally . . . shall be resolved through individual arbitration or
in small claims court.” The provision goes on to state among
other things that “[t]he term ‘Dispute’ shall be interpreted as
broadly as permitted under the law and shall cover any claim or
controversy, related to us or our relationship including but not
limited to, any and all: (1) claims for relief and theories of
liability, whether based in contract, tort, fraud,
misrepresentation, negligence, statute, regulation, ordinance, or
otherwise; (2) claims that arose before these or any prior Terms
and Conditions; (3) claims that arise after the termination of
these Terms and Conditions; and (4) claims that are the subject
of purported class action litigation.” The arbitration provision
also expressly provides that it “shall be governed by the Federal
Arbitration Act [FAA].”2
In opposing DBI’s motion to compel arbitration, Peskett
primarily argued that “a claim is only subject to arbitration if it
arises from the contract containing the [arbitration provision],
and Peskett’s FACTA claim has nothing to do with the [VIP
R]ewards [P]rogram [agreement] or website contract containing
The arbitration provision is also included in DSW’s
2
Website Terms of Use.
4
the [arbitration provision]. Instead, her claim stems from DBI’s
disclosure of two-thirds of her credit card account number on her
in-store receipt.” Peskett alternatively argued (1) that she had
not assented to the arbitration provision, and (2) that DBI had
waived any right to arbitrate her FACTA claim by, among other
things, repeatedly representing to the court for almost two years
that to its knowledge no such provision even potentially applied.
The trial court denied DBI’s motion after concluding DBI
had failed to meet its burden of proving that Peskett had
assented to the arbitration provision. In light of that conclusion,
the court deemed it unnecessary to address Peskett’s other
arguments.3
DISCUSSION
DBI contends the trial court’s order denying its motion to
compel arbitration must be reversed because the court
“committed an error of law” in finding that Peskett had not
assented to the arbitration provision. DBI alternatively contends
that in making this finding, the court “committed an error of law
by making determinations of disputed fact without holding a trial
as required under 9 U.S.C. § 4.” DBI asks that we reverse the
trial court’s ruling and “remand for further proceedings
consistent with this Court’s order, and grant all other and further
relief as this Court deems just.” We affirm because DBI has
3 DBI moved for reconsideration of the court’s ruling and
offered additional supporting evidence. After the court heard oral
argument on the motion and had taken the matter under
submission—but before the court had ruled on the motion—DBI
filed a notice of appeal from the order denying its motion to
compel arbitration. The trial court subsequently granted
Peskett’s motion to strike DBI’s motion for reconsideration as
moot.
5
failed to meet its burden of establishing reversible error and has
failed to provide this court with an adequate record for our
review.
It is well-settled that we must affirm the judgment if it is
correct on any theory. (Muller v. Fresno Community Hospital &
Medical Center (2009) 172 Cal.App.4th 887, 906-907.) Moreover,
Peskett has exercised her right “to urge affirmance of the
judgment on grounds other than those cited by the trial court.”
(Little v. Los Angeles County Assessment Appeals Bds. (2007) 155
Cal.App.4th 917, 925, fn. 6.) Specifically, she has reiterated her
primary assertion below that the arbitration provision—
regardless of whether she assented to it—does not encompass her
FACTA claim. “Interpreting a written document to determine
whether it is an enforceable arbitration agreement is a question
of law subject to de novo review” when, as here, “the parties do
not offer conflicting extrinsic evidence regarding the document’s
meaning.” (Avery v. Integrated Healthcare Holdings, Inc. (2013)
218 Cal.App.4th 50, 60.)
The parties agree that both the FAA and Ohio contract law
apply. (Pinnacle Museum Tower Assn. v. Pinnacle Market
Development (US), LLC (2012) 55 Cal.4th 223, 236 [“In
determining the rights of parties to enforce an arbitration
agreement within the FAA’s scope, courts apply state contract
law while giving due regard to the federal policy favoring
arbitration.”].)
Arbitration of a claim under the FAA is permissible “only
where the court is satisfied that the parties agreed to arbitrate
that dispute.” (Granite Rock Co. v. Teamsters (2010) 561 U.S.
287, 297 [177 L.Ed.2d 567].) “An arbitration agreement is tied to
the underlying contract containing it, and applies ‘only where a
dispute has its real source in the contract. The object of an
6
arbitration clause is to implement a contract, not to transcend it.’
[Citation.] No authority permits sending a matter to arbitration
simply because the same parties agreed to arbitrate a different
matter.” (Moritz v. Universal City Studios LLC (2020) 54
Cal.App.5th 238, 246, quoting Litton Financial Printing Div. v.
NLRB (1991) 501 U.S. 190, 205 [115 L.Ed.2d 177].)
DBI acknowledges the trial court could not compel
arbitration of Peskett’s FACTA claim unless it found both (1) that
Peskett had assented to the arbitration provision included in the
VIP Rewards Program agreement, and (2) that the arbitration
provision fell “within the scope of the . . . agreement.” (Chiron
Corp. v. Ortho Diagnostic Sys Inc. (9th Cir. 2000) 207 F.3d 1126,
1134.) The trial court denied the motion under the first prong
finding Peskett did not assent. The court did not address the
second prong.
In its opening brief, DBI asserts in a footnote that Peskett’s
FACTA claim falls within the scope of the arbitration provision
because that provision purports to cover “any dispute” between
Peskett and DBI, regardless of whether that dispute arises from
or is related to Peskett’s participation or membership in the VIP
Rewards Program or her use of DBI’s website. In a footnote in its
reply brief, DBI asserts that Peskett’s FACTA claim is related to
her VIP Rewards Program membership because “the very receipt
that forms the basis of [Peskett’s] FACTA claim shows that [she]
used her Rewards Account to make her purchase and redeemed a
$5 Rewards towards the purchase.” These assertions
misconstrue the law.
In deciding whether a claim is within the scope of an
agreement to arbitrate, Ohio courts apply “a federal standard
that inquires whether the action could be maintained without
reference to the contract or relationship at issue.” (Academy of
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Medicine of Cincinnati v. Aetna Health, Inc. (Ohio 2006) 108 Ohio
St.3d 185, 191.) If it can, “‘it is likely outside the scope of the
arbitration agreement.’” (Id. at 186 quoting Fazio v. Lehman
Bros., Inc. (2003) 340 F.3d 386, 395.) Accordingly, “claims may be
subject to contractual arbitration if the factual allegations that
give rise to the claims fall within the scope of the arbitration
clause, but . . . claims that may be asserted independently,
without reference to the contract, fall outside the scope of the
arbitration provision.” (Complete Personnel Logistics, Inc. v.
Patton, 8th Dist. Cuyahoga No. 86857, 2006-Ohio-3356, ¶ 15.)
This standard “prevents the absurdity of an arbitration clause
barring a party to the agreement from litigating any matter
against the other party, regardless of how unrelated to the
subject of the agreement.” (Academy of Medicine of Cincinnati, at
p. 191.) Moreover, “[i]t allows courts to make determinations of
arbitrability based upon the factual allegations in the complaint
instead of on the legal theories presented. It also establishes that
the existence of a contract between the parties does not mean
that every dispute between the parties is arbitrable.” (Ibid.)
Accordingly, the court must review “the factual allegations
in the complaint” to determine whether Peskett’s FACTA claim
can be maintained without reference to the agreements in which
the arbitration provision is included. (Academy of Medicine of
Cincinnati, supra, 108 Ohio St.3d at p. 191.) DBI, however, did
not designate the complaint for inclusion in the record on appeal.
The challenged ruling is presumed correct and DBI had an
“affirmative duty to show error by an adequate record.
[Citation.]” (Osgood v. Landon (2005) 127 Cal.App.4th 425, 435.)
“‘Failure to provide an adequate record on an issue requires that
the issue be resolved against [the appellant].’” (Jameson v. Desta
(2018) 5 Cal.5th 594, 609.) Because the judgment is presumed
8
correct and DBI has not presented an adequate record for us to
review the allegations of Peskett’s complaint, its claim that the
court erred in declining to compel arbitration necessarily fails.
In any event, it appears to be undisputed (1) that Peskett’s
complaint makes no mention of DBI’s VIP Rewards Program or
its website, and (2) that the allegations of her FACTA claim are
completely unrelated to the terms to which she agreed as a
condition of participating the VIP Rewards Program or using
DBI’s website. It is also undisputed that Peskett seeks to pursue
her FACTA claim on behalf of herself and all persons during the
specified period who, like Peskett, “engaged in one or more
transactions using a debit card or credit card at one or more of
[DBI]’s retail locations in the United States, at which time
Defendant’s point-of-sale system was programmed to generate a
printed customer receipt displaying more than the last 5 digits of
the credit or debit card account number or the expiration date of
the credit or debit card used in connection with such
transaction(s).” Thus, Peskett’s FACTA allegations are
independent of the VIP Rewards Program agreement and are
unrelated to Peskett’s relationship with DBI as a result of that
agreement. “‘In other words, with respect to the alleged wrong, it
is simply fortuitous that the parties happened to have a
contractual relationship.’” (Academy of Medicine of Cincinnati,
supra, 108 Ohio St.3d at p. 190.) Contrary to DBI’s assertion, we
can thus say “‘with positive assurance that the [subject]
arbitration [provision] is not susceptible of an interpretation that
covers the asserted dispute.’” (Id. at pp. 192-193.)4
4DBI’s failure to explain why its email to Peskett regarding
changes to the terms and conditions of the VIP Rewards Program
limited arbitration to “all disputes related to your participation in
9
In urging the court to find that the arbitration provision
encompasses Peskett’s FACTA claim, DBI essentially asks us to
interpret that provision in a manner that transcends the
contractual agreement of which it is a part. But the provision
cannot be so interpreted. (Litton Financial Printing Div. v.
NLRB, supra, 501 U.S. at p. 205.) Because Peskett’s FACTA
claim is not encompassed in the arbitration provision, DBI’s
motion to compel arbitration was properly denied regardless of
whether the court erred in finding that Peskett did not assent to
the arbitration provision.
DISPOSITION
The judgment is affirmed. Respondent shall recover costs
on appeal.
NOT TO BE PUBLISHED.
CODY, J.
We concur:
GILBERT, P.J.
BALTODANO, J.
the VIP Rewards Program” further supports this conclusion.
(Italics added.)
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William F. Highberger, Judge
Superior Court County of Los Angeles
______________________________
Baker & Hostetler, Teresa Carey Chow, Joel C. Griswold,
Bonnie Keane DelGobbo, for Defendant and Appellant.
Hekmat Law Group, Joseph M. Hekmat; Keogh Law, Keith
J. Keogh, Michael S. Hilicki; Scott D. Owens, Andree Quaresima,
Matthew Bobulsky, for Plaintiff and Respondent.