Case 4:20-cv-03386-HSG Document 56 Filed 04/12/21 Page 1 of 171234UNITED STATES DISTRICT COURT5NORTHERN DISTRICT OF CALIFORNIA67RUBEN JUAREZ, et al.,8Plaintiffs,v.910SOCIAL FINANCE, INC., et al.,Defendants.United States District CourtNorthern District of California11Case No. 20-cv-03386-HSGORDER DENYING MOTION TOCOMPEL ARBITRATION ANDGRANTING IN PART AND DENYINGIN PART MOTION TO DISMISSRe: Dkt. No. 3812Pending before the Court is the motion to compel arbitration and motion to dismiss filed by1314the Defendants Social Finance Inc. and Social Finance Lending Corp (collectively, “SoFi”). Dkt.15No. 38. The Court held a hearing on December 3, 2020. For the reasons detailed below, the Court16DENIES the motion to compel and GRANTS IN PART and DENIES IN PART the motion to17dismiss.18I.BACKGROUNDPlaintiffs Ruben Juarez and Calin Constantin Segarceanu filed this putative class action1920against SoFi on May 19, 2020. See Dkt. No. 1. In July 2020, Plaintiffs filed an amended21complaint. See Dkt. No. 33 (“FAC”). In the amended complaint, Plaintiffs allege that SoFi22denied their attempts to apply for loans due to Mr. Juarez’s status as a Deferred Action for23Childhood Arrivals (“DACA”) recipient1 and Mr. Segarceanu’s status as a conditional permanent24resident (“CPR”). Plaintiffs allege that such policies and practices constitute unlawful25discrimination. See FAC at ¶¶ 7, 111, 115.26//27281DACA is a form of deferred action against removal, a discretionary grant of authorized stay bythe federal government. See FAC at ¶¶ 28–35.

United States District CourtNorthern District of CaliforniaCase 4:20-cv-03386-HSG Document 56 Filed 04/12/21 Page 2 of 171A.Plaintiff Juarez2Mr. Juarez became a DACA recipient on October 25, 2012. FAC at ¶ 59. To finance his3education in the United States, Mr. Juarez obtained private student loans. See id. at ¶¶ 63–64.4Plaintiffs allege that in 2016, Mr. Juarez received promotional material from SoFi offering student5loan refinancing services. Id. at ¶ 65. In approximately November 2016, Plaintiff first visited6SoFi’s website to begin the application process to refinance his student loans. Id. at ¶¶ 66–68.7After entering basic information such as his name and email, the website prompted Mr. Juarez to8indicate whether he was a U.S. citizen, lawful permanent resident (“LPR”), or visa-holder. Id. at9¶ 68. Plaintiffs allege that because Mr. Juarez is a DACA recipient—and not a U.S. citizen, LPR,10or visa-holder—SoFi’s online application process did not allow him to complete and submit his11online application. Id. at ¶ 68.12Plaintiffs further allege that Mr. Juarez made subsequent attempts to apply for student loan13refinancing on June 13, 2017 and December 8, 2018, and in late July 2019. Id. at ¶¶ 70–72, 74.14Plaintiffs explain that in 2017 and 2018, Mr. Juarez called SoFi’s customer service number to ask15whether SoFi had changed its eligibility policy for DACA recipients. Id. at ¶¶ 71–72. Plaintiffs16allege that in both instances, a SoFi customer service representative informed Mr. Juarez that the17policy had not changed. Id. In 2019, Mr. Juarez attempted to submit another application through18SoFi’s website, but as in 2016, he was unable to complete or submit the online application because19he was not a U.S. citizen, LPR, or visa-holder. Id. at ¶ 74. Plaintiffs allege that SoFi only20changed its policies in December 2019, allowing DACA recipients to apply for lending services if21they had “a creditworthy U.S. citizen or LPR co-signer.” Id. at ¶ 77.22B.23In October 2018, Mr. Segarceanu, a Romanian national, married his wife, a U.S. citizen,Plaintiff Segarceanu24and thereafter applied for permanent residency. FAC at ¶¶ 80, 84. On September 11, 2019, he25obtained a conditional green card with a two-year validity period. Id. at ¶ 84. On June 19, 2020,26Mr. Segarceanu completed SoFi’s online application for a personal loan. See id. at ¶¶ 86–88. As27part of this process, he was asked to upload a copy of his green card. See id. at ¶ 89. That same28day, SoFi conducted a “hard pull” of his credit report. See id. at ¶¶ 90–91. Plaintiffs allege that at2

Case 4:20-cv-03386-HSG Document 56 Filed 04/12/21 Page 3 of 171the time, SoFi had a policy that permanent residents were ineligible for loans if their green cards2had a validity period of two years or less. See id. at ¶ 6. On June 20, SoFi emailed Mr.3Segarceanu requesting that he provide a copy of his Form I-751 as proof that he had applied for, or4had been granted an extension of, his green card. Id. at ¶ 92. But Mr. Segarceanu could not5provide the form because his green card was not yet eligible for renewal. Id. at ¶ 93. On June 30,6SoFi notified Mr. Segarceanu that his application had been denied due to his status as a CPR. Id.7at ¶¶ 94–95.*8*Based on these facts, Plaintiffs assert causes of action for (1) alienage discrimination, in9United States District CourtNorthern District of California*10violation of 42 U.S.C. § 1981; (2) discrimination, in violation of the California Unruh Civil Rights11Act §§ 51, et seq.; and (3) obtaining consumer reports without a permissible purpose, in violation12of the Fair Credit and Reporting Act, 15 U.S.C. §§ 1681, et seq. (“FCRA”). Id. at ¶¶ 135–69.13Plaintiffs also indicate that they will seek to certify three classes: (1) a Section 1981 class214pursuant to Fed. R. Civ. P 23(b)(2); (2) an Unruh Act class3 pursuant to Fed. R. Civ. P. 23(b)(3);15and (3) a FCRA class4 pursuant to Fed. R. Civ. P. 23(b)(2) and (b)(3). Id. at ¶ 118.SoFi now moves to compel arbitration as to Mr. Juarez’s claims, and to dismiss all1617Plaintiffs’ claims under Federal Rule of Civil Procedure 12(b)(6). See Dkt. No. 38.18II.LEGAL STANDARD19A.20The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., sets forth a policy favoring21Motion to Compel Arbitrationarbitration agreements and establishes that a written arbitration agreement is “valid, irrevocable,22232425262728The Section 1981 Class is defined as “all non-United States citizens who resided in the UnitedSates and had DACA or were CPRs at the time they applied and were denied or unsuccessfullysought to apply for any SoFi Loan from May 19, 2017 through the date of the final judgement inthis action.” FAC at ¶ 119.3The Unruh Act Class is defined as “all non-United States citizens who resided in the UnitedStates and had DACA or were CPRs at the time they applied and were denied or unsuccessfullysought to apply for any SoFi Loan from May 19, 2018 through the date of final judgement in thisaction.” Id. at ¶ 120.4The FCRA Class is defined as “all non-United States citizens who resided in the United Statesand were CPRs at the time they applied and were denied or unsuccessfully sought to apply for anySoFi Loan, and whose consumer reports were obtained by SoFi form July 30, 2018 through thedate of final judgement in this action.” Id. at ¶ 121.32

United States District CourtNorthern District of CaliforniaCase 4:20-cv-03386-HSG Document 56 Filed 04/12/21 Page 4 of 171and enforceable.” 9 U.S.C. § 2; Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018) (noting2federal policy favoring arbitration); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 4603U.S. 1, 24 (1983) (same). The FAA allows that a party “aggrieved by the alleged failure, neglect,4or refusal of another to arbitrate under a written agreement for arbitration may petition any United5States district court . . . for an order directing that . . . arbitration proceed in the manner provided6for in such agreement.” 9 U.S.C. § 4. This federal policy is “simply to ensure the enforceability,7according to their terms, of private agreements to arbitrate.” Volt Info. Sciences, Inc. v. Bd. of8Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 476 (1989). Courts must resolve any9“ambiguities as to the scope of the arbitration clause itself . . . in favor of arbitration.” Id.10When a party moves to compel arbitration, the court must determine (1) “whether a valid11arbitration agreement exists” and (2) “whether the agreement encompasses the dispute at issue.”12Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). The13agreement may also delegate gateway issues to an arbitrator, in which case the court’s role is14limited to determining whether there is clear and unmistakable evidence that the parties agreed to15arbitrate arbitrability. See Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). In either16instance, “before referring a dispute to an arbitrator, the court determines whether a valid17arbitration agreement exists.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524,18530 (2019) (citing 9 U.S.C. § 2).19B.20Under Federal Rule of Civil Procedure 12(b)(6), the Court must dismiss a complaint if itMotion to Dismiss21fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to22dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its23face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard24requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant25has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court accepts as true a26plaintiff’s well-pleaded factual allegations and construes all factual inferences in the light most27favorable to the plaintiff. Id. However, a plaintiff must provide “more than labels and28conclusions.” Twombly, 550 U.S. at 555. The Court does not credit allegations that are4

Case 4:20-cv-03386-HSG Document 56 Filed 04/12/21 Page 5 of 171conclusory, unwarranted deductions of fact, or unreasonable inferences. Kwan v. SanMedica Int’l,2854 F.3d 1088, 1096 (9th Cir. 2017).3III.DISCUSSION4A.5In support of its motion to compel, SoFi contends its records indicate that Mr. JuarezMotion to Compel Arbitration56expressly consented to arbitration in 2016 when he first registered as a new user on SoFi’s7website. See Dkt. No. 38 at 7; see also Dkt. No. 38-1 (“Donohoe Decl.”) at ¶ 7, & Exs. C–D.8SoFi explains that to register as a new user, Mr. Juarez had to acknowledge and agree to be bound9by several agreements, including an arbitration agreement. See id. at ¶¶ 5–6, & Ex. A–B. This is10reflected on the sign-in page as reproduced below:United States District CourtNorthern District of California11121314151617181920212223See id. at Ex. A. SoFi explains that without affirmatively checking the box manifesting his24consent, Mr. Juarez could not have signed in or proceeded with any loan application on the25website. See id. at ¶ 6. SoFi therefore argues that Mr. Juarez must have affirmatively checked the262728SoFi’s motion to compel only applies to Mr. Juarez, as Plaintiffs allege—and SoFi appears toconcede—that Mr. Segarceanu opted out of SoFi’s alternative dispute resolution agreement. SeeFAC at ¶ 99.55

Case 4:20-cv-03386-HSG Document 56 Filed 04/12/21 Page 6 of 1712box stating, “I agree.” See Dkt. No. 38 at 10; see also Donohoe Decl., Ex. A.The arbitration agreement itself states:3[A]ny claim, dispute or controversy arising out of or related to (i) myregistration on SoFi’s website, (ii) my submission of information toSoFi in connection with any non-mortgage loan offered by SoFi, (iii)my application for any non-mortgage loan offered by SoFi, (iv) myparticipation in SoFi’s career services or entrepreneur program, or (v)the disclosures provided to me by SoFi in connection with any nonmortgage loan that SoFi offers (collectively, “Claim”) shall be, at myor your election, submitted to and resolved on an individual basis bybinding arbitration under the Federal Arbitration Act, 9 U.S.C. §§ 1et seq. (the “FAA”) before the American Arbitration Association(“AAA”) under its Consumer Arbitration Rules (“AAA Rules”) ineffect at the time the arbitration is brought . . . .45678910United States District CourtNorthern District of California11See Donohue Decl., Ex. B.SoFi contends that all Mr. Juarez’s claims “plainly fall within the Arbitration Agreement,”12even those that relate to his 2017, 2018, and 2019 applications. See Dkt. No. 38 at 12. Plaintiffs13do not appear to contest SoFi’s representation about the design and content of the website or the14language of the arbitration agreement. Instead, Plaintiffs respond that (1) the arbitration15agreement lacked adequate consideration because Mr. Juarez was ineligible for a loan under16SoFi’s polices from the outset; and (2) even if there were a valid agreement, it only applies to Mr.17Juarez’s 2016 application, not his subsequent efforts to refinance his student loans. See Dkt. No.1841 at 5–9.19i.Consideration20Plaintiffs first argue that the arbitration agreement Defendant says was entered in 201621“lacks consideration to be binding.” See Dkt. No. 41 at 5. Plaintiffs explain that because there22was no possibility that Mr. Juarez could have contracted with SoFi for any of its services—due to23his DACA status—any consideration was illusory. See id. The Court is not persuaded.24Plaintiffs’ own authorities recognize that a “promise to be bound by the arbitration process25itself serves as adequate consideration.” See id. (citing Circuit City Stores, Inc. v. Najd, 294 F.3d261104, 1108 (9th Cir. 2002)). Courts have repeatedly found under California law that “[w]here an27agreement to arbitrate exists, the parties’ mutual promises to forego a judicial determination and to28arbitrate their disputes provide consideration for each other” as “[b]oth parties gave up the same6

United States District CourtNorthern District of CaliforniaCase 4:20-cv-03386-HSG Document 56 Filed 04/12/21 Page 7 of 171rights and thus neither gains an advantage over the other.” Strotz v. Dean Witter Reynolds, 2232Cal. App. 3d 208, 216 (Cal Ct. App. 1990), overruled on other grounds by Rosenthal v. Great3Western Fin. Secs. Corp., 14 Cal. 4th 394 (Cal. 1996).6 The Ninth Circuit has made clear that the4inquiry into the adequacy of consideration is very limited, noting that “the first lesson in contracts5[is] the peppercorn theory—that courts will not inquire into the adequacy of consideration, so long6as it was true and valuable.” See Pope v. Sav. Bank of Puget Sound, 850 F.2d 1345, 1356 (9th Cir.71988).8In the face of this well-established and binding case law, Plaintiffs rely on a single Texas9state law case they claim carves out an exception to the general rule. See Dkt. No. 41 at 6 (citing10In re Rio Grande Reg’l Hosp., No. 13 Civ. 352, 2009 WL 481886, at *3, *7–8 (Tex. App. Feb. 25,112009)). In In re Rio Grande, the court applied Texas law in holding that a temporary hospital12employee who was injured on the job was not compelled to arbitrate her claim based on an13arbitration provision contained in the hospital’s employee health plan. Id. at *7. Although the14plaintiff signed plan documents in which she elected to receive benefits, as a temporary employee15she was ineligible. See id. The court reasoned that because under the terms of the health plan the16plaintiff only “agreed to arbitrate her disputes in exchange for being allowed to participate in the17benefit plan established by Rio Grande,” the agreement lacked consideration. Id. Even if the18Court found this reasoning persuasive and applicable to the question of California law presented19here, there is no evidence before the Court that Plaintiff only agreed to arbitrate in exchange for20consideration or approval of his refinance application. The Court finds that the parties’ mutual21agreement to arbitrate is thus sufficient consideration.22ii.ScopeNext, Plaintiffs contend that even if the 2016 arbitration agreement is valid, it is limited in2324scope and does not apply to Mr. Juarez’s applications in 2017, 2018, and 2019. See Dkt. No. 41 at257. In their opposition brief, Plaintiffs explain that Mr. Juarez’s claims are not premised on the262016 application at all. See Dkt. No. 41 at 1, 8, & n.6. Plaintiffs even acknowledge that such27286Although the arbitration agreement does not appear to contain a choice-of-law provision, duringthe hearing the parties confirmed that California law should apply.7

Case 4:20-cv-03386-HSG Document 56 Filed 04/12/21 Page 8 of 171claims likely would fall outside the statute of limitations under both § 1981 and the Unruh Civil2Rights Act. Id. at 8, n.6. However, SoFi does not present any additional arbitration agreements3related to the subsequent applications. Nor does it suggest that when consumers attempt to submit4applications or make inquiries over the telephone they are required to agree to any specific terms.5SoFi’s motion, therefore, asks the Court to find that the 2016 arbitration agreement extends6beyond that single student loan refinance application.United States District CourtNorthern District of California7First, the Court considers the plain language of the 2016 arbitration agreement. When8deciding whether parties agreed to arbitrate a certain matter, “courts generally . . . should apply9ordinary state-law principles that govern the formation of contracts.” First Options of Chicago,10Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Under California law, “the mutual intention of the11parties at the time the contract is formed governs interpretation.” AIU Ins. Co., v. Super Ct., 5112Cal. 3d 807, 821 (Cal. 1990) (citing Cal. Civ. Code § 1636). “Such intent is to be inferred, if13possible, solely from the written provisions of the contract.” Id. (citing Cal. Civ. Code § 1639).14The Court interprets terms “in their ‘ordinary and popular sense.’” Id. Ambiguous language is15construed against the drafter. Id. (citing Cal. Civ. Code § 1654).16Here, the arbitration agreement is limited in scope. Although it states that it applies to17“any claim, dispute, or controversy arising out of or related to” Mr. Juarez’s registration on SoFi’s18website; submission of information to SoFi in connection with a non-mortgage loan; or application19for any non-mortgage loan, it is framed to reference a single “registration,” “submission” or20“application” to SoFi. See Donohue Decl., Ex. B. Despite SoFi’s urging, the arbitration21agreement does not state that it applies to all registrations, submissions, or applications ever made22to SoFi. Rather, it applies on a transaction-by-transaction basis. SoFi’s suggestion that this23arbitration agreement nevertheless extends in perpetuity to all future registrations, submissions, or24applications is simply not supported by the plain language of the agreement.25262728SoFi also points to a “survival” clause in the arbitration agreement. See Donohue Decl.,Ex. B. The clause states:This Dispute Resolution Agreement shall survive the conclusion ofany SoFi consumer product or service, full payment of any loan, yoursale or transfer of any loan, any bankruptcy or insolvency, any8

Case 4:20-cv-03386-HSG Document 56 Filed 04/12/21 Page 9 of 17123See id. Based on this language, SoFi argues that the agreement survives the “conclusion of any4SoFi consumer product or service,” and therefore extends beyond the 2016 application. Dkt. No.538 at 12. But Mr. Juarez was never approved for any SoFi product or service. And in any event,6that the arbitration agreement may “survive” after the conclusion of such a product or service only7alters its duration, not its scope.89United States District CourtNorthern District of Californiaforbearance or modification granted pursuant to this Agreement, anycancellation or request for cancellation of the Agreement or anydisbursements under the Agreement.Second, SoFi suggests that Mr. Juarez’s interactions with SoFi in 2017, 2018, and 2019were merely a continuation of his 2016 student loan refinance application. Dkt. No. 43 at 5. SoFi10thus argues that the 2016 arbitration agreement should still govern claims arising from these11communications. However, the allegations in the amended complaint do not support this12contention. As alleged, Mr. Juarez attempted to apply