Christopher Alarcon v. Vital Recovery Services, Inc.
706 F. App'x 394
| 9th Cir. | 2017Background
- Plaintiff Alarcon sued Defendants; Defendants moved to compel arbitration based on an arbitration agreement allegedly binding Alarcon and assignee Galaxy.
- District court concluded there was a valid arbitration agreement covering the dispute and granted the motion to compel.
- Defendants relied primarily on a declaration from an "authorized representative" of Galaxy asserting Galaxy was assignee of Beneficial’s assets, including Alarcon’s loan account.
- The Ninth Circuit reviewed whether there was admissible evidence showing an assignment and thus that Galaxy was bound by an arbitration agreement with Alarcon.
- The panel found the declaration contained only a legal conclusion, lacked supporting facts or business records, and was inadmissible under the Federal Rules of Evidence.
- Because Defendants failed to produce admissible evidence of assignment or the underlying records, the Ninth Circuit reversed the order compelling arbitration and remanded with instructions to reinstate the complaint and deny the motion to compel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether there was a valid agreement to arbitrate between Alarcon and Galaxy via assignment from Beneficial | Alarcon argued no admissible evidence showed Beneficial assigned rights to Galaxy, so Galaxy isn’t bound | Defendants argued Galaxy became assignee of Beneficial’s assets and thus bound by the arbitration agreement | Reversed — no admissible evidence of assignment; arbitration not compelled |
| Admissibility of the Galaxy representative’s declaration as proof of assignment/business records | Declaration is conclusory and inadmissible; Defendants didn’t produce originals or business records | Declaration (as-authenticated) showed assignment and could authenticate records | Held inadmissible: conclusory, prepared for litigation, not a business-record affidavit or admissible summary; originals/records not produced |
Key Cases Cited
- Knutson v. Sirius XM Radio Inc., 771 F.3d 559 (9th Cir. 2014) (standard for proving existence of arbitration agreement)
- Norcia v. Samsung Telecomms. Am., LLC, 845 F.3d 1279 (9th Cir. 2017) (liberal policy on arbitrable issues not applicable to whether a party is bound)
- Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136 (9th Cir. 1991) (disputes over formation require giving nonmoving party reasonable doubts/inferences)
- Cockerell v. Title Ins. & Trust Co., 42 Cal.2d 284 (Cal. 1954) (assignment requires manifestation of intent to transfer rights)
- Cobb v. S.F. Residential Rent Stabilization and Arbitration Bd., 98 Cal.App.4th 345 (Cal. Ct. App. 2002) (evidence standard for proving assignment under California law)