Bluestem Brands, Inc. d/b/a Fingerhut v. Darlene Shade
239 W. Va. 694
| W. Va. | 2017Background
- Bluestem Brands (d/b/a Fingerhut) partners with banks to provide customer credit; Shade opened a Fingerhut account in 2006 and received various written credit agreements and notices over time.
- Shade received and accepted credit agreements in 2007 and 2010 that contained arbitration clauses with an opt-out; she made numerous purchases after receiving them and did not opt out.
- Bluestem changed credit partners in 2012 and 2013 and sent a notice of partner change but did not provide the full amended credit agreements; Shade denies receiving those full agreements.
- A debt collector sued Shade for delinquent account charges; Shade filed a third-party complaint against Bluestem alleging unlawful finance charges and a "rent‑a‑bank" scheme, asserting Bluestem (not the banks) extended the credit.
- Bluestem moved to compel arbitration under the credit agreement; the circuit court denied the motion, finding Shade had not assented to the 2012/2013 amendments and Bluestem was not a signatory.
- The West Virginia Supreme Court reversed: the 2012 and 2013 amendments were ineffective for lack of notice, the 2010 agreement remained binding, and Bluestem (a nonsignatory) could compel arbitration under equitable estoppel.
Issues
| Issue | Plaintiff's Argument (Shade) | Defendant's Argument (Bluestem) | Held |
|---|---|---|---|
| Was there a valid arbitration agreement binding Shade? | Shade: she never received 2012/2013 amendments, so no assent to arbitration under those versions; Bluestem isn’t party to earlier agreements. | Bluestem: earlier agreements (and later amendments via notice) bound Shade; notice of partner change satisfied amendment statute. | The 2007 and 2010 agreements containing arbitration were validly formed and binding; the 2012/2013 amendments were ineffective for lack of adequate notice. |
| Could unilateral notice under WV Code §46A‑3‑116(2) effect the 2012/2013 amendments without delivering the amended agreements? | Shade: lack of receipt of the amended agreements means no meeting of minds; statute’s notice element does not eliminate assent requirement. | Bluestem: statutory notice of change of creditor sufficed to amend terms and bind customers. | Court: statute does not excuse mutual assent; mere notice of partner change that did not disclose amendment substance or provide the agreement was insufficient. |
| Can a nonsignatory (Bluestem) enforce the arbitration clause? | Shade: agreements were with banks, not Bluestem; Bluestem cannot compel arbitration as nonsignatory. | Bluestem: may enforce via principles like estoppel because Shade’s claims arise from the credit relationship governed by the agreement. | Court: Bluestem may invoke equitable estoppel—Shade’s claims reference and depend on the credit agreement, so arbitration is required. |
| Do Shade’s claims fall within the substantive scope of the arbitration clause? | Shade: her "rent‑a‑bank" and pricing/scheme allegations are against Bluestem and not purely about credit terms, so not arbitrable. | Bluestem: claims about interest, finance charges and the relationship giving rise to them fall squarely within the arbitration clause. | Court: Claims about interest, finance charges, late fees and the alleged rent‑a‑bank scheme arise out of the credit relationship and are arbitrable under the 2010 agreement. |
Key Cases Cited
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (arbitration is a matter of contract; only disputes the parties agreed to submit are arbitrable)
- W. Va. CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 238 W.Va. 465 (W. Va. 2017) (de novo review for appeals of orders denying motions to compel arbitration)
- State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W.Va. 250 (W. Va. 2010) (trial court’s limited role under the FAA: determine existence and scope of arbitration agreement)
- Chesapeake Appalachia, L.L.C. v. Hickman, 236 W.Va. 421 (W. Va. 2015) (non‑signatory enforcement theories of arbitration, including estoppel)
- Am. Bankers Ins. Grp., Inc. v. Long, 453 F.3d 623 (4th Cir. 2006) (estoppel applies when signatory’s claims rely on the written agreement; arbitration appropriate)
- Int’l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411 (4th Cir. 2000) (non‑signatories can be bound by arbitration provisions under common‑law principles)
- Martin v. Ewing, 112 W.Va. 332 (W. Va. 1932) (meeting of the minds is essential to contract formation)