JEFFREY REICHERT, ET AL V. RAPID INVESTMENTS, INC., ET AL, No. 21-35530 (9th Cir. 2022)
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Plaintiff, who represents both a Washington and a national class, was incarcerated three times in the Kitsap County Jail. In each instance, the jail confiscated his cash at booking and returned it to him in the form of a prepaid debit card issued and serviced, respectively, by defendants Cache Valley Bank and Rapid Investments, Inc. (collectively, “Rapid”). Plaintiff was not provided an option to receive his money in any other form. Plaintiff claimed that Rapid’s debit cards carried fees that violated the EFTA and Washington state law. Rapid sought arbitration pursuant to an arbitration provision in a cardholder agreement.
The Ninth Circuit affirmed the district court’s order denying Defendants’ motion to compel arbitration. The panel wrote that Plaintiff’s retention of the release card, prior to use, cannot constitute assent to the agreement. The panel next considered whether Plaintiff’s subsequent use of the card to withdraw funds, while remaining silent, constituted assent. The panel held that because the money Plaintiff withdrew was his own, because the card he was issued came pre-activated and there was no other way to obtain immediate use of his own funds, and because Rapid structured its fees to begin deducting after three days regardless of use, Plaintiff’s decision to withdraw his own money cannot reasonably be understood to manifest assent to the contract.
Court Description: Arbitration The panel affirmed the district court’s order denying defendants’ motion to compel arbitration, under the Federal Arbitration Act, of claims under the Electronic Funds Transfer Act and Washington state law. Plaintiff Gary Moyer, who represents both a Washington and a national class, was incarcerated three times in the Kitsap County Jail. In each instance, the jail confiscated his cash at booking and returned it to him in the form of a prepaid debit card issued and serviced, respectively, by defendants Cache Valley Bank and Rapid Investments, Inc. (collectively, “Rapid”). Moyer was not provided an option to receive his money in any other form. After his third release, he used the card the day it was issued to him to * The Honorable Frederic Block, United States District Judge for the Eastern District of New York, sitting by designation. REICHERT V. RAPID INVESTMENTS, INC. 3 withdraw the bulk of his balance from an ATM machine. Moyer claimed that Rapid’s debit cards carried fees that violated the EFTA and Washington state law. Rapid sought arbitration pursuant to an arbitration provision in a cardholder agreement. Rapid argued that the district court erred in determining that Moyer’s retention and use of the release cards did not demonstrate, as a matter of law, his intent to accept the terms of the agreement, including the arbitration clause. Applying Washington law, the panel disagreed. Explaining that Washington law is clear that inaction in response to an offer is not acceptance, the panel wrote that Moyer’s retention of the release card, prior to use, cannot constitute assent to the agreement. The panel next considered whether Moyer’s subsequent use of the card to withdraw funds, while remaining silent, constituted assent. The panel held that because the money Moyer withdrew was his own, because the card he was issued came pre-activated and there was no other way to obtain immediate use of his own funds, and because Rapid structured its fees to begin deducting after three days regardless of use, Moyer’s decision to withdraw his own money cannot reasonably be understood to manifest assent to the contract. Because Moyer did not assent to the agreement through either his receipt or use of the release card, no contract was formed. The panel therefore affirmed the district court’s order denying Rapid’s motion to compel arbitration and remanded for further proceedings. 4 REICHERT V. RAPID INVESTMENTS, INC.
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