SHIHINSKI v. WELLS FARGO BANK, N.A.
2:22-cv-07521
D.N.J.Oct 23, 2023Background:
- Plaintiff alleges he was assaulted twice; his phone, wallet, and IDs were stolen and used to make fraudulent transfers via Zelle and Cash App.
- He filed a police report and disputed the transfers with Wells Fargo and via Cash App; Wells Fargo denied his dispute on appeal and Cash App/Block provided no substantive response.
- Plaintiff wrote to Block, Inc. (Cash App) disputing the transactions and then sued Wells Fargo and Block under the Electronic Funds Transfer Act in federal court.
- Block moved to compel arbitration under the Federal Arbitration Act, relying on Cash App’s General Terms of Service (General TOS) that plaintiffs allegedly accepted when registering the account on March 16, 2019.
- The registration included a verification text containing a hyperlink to the General TOS; the TOS contains an individual-arbitration clause and a delegation clause assigning threshold arbitrability questions to the arbitrator.
- Plaintiff did not oppose Block’s motion; the magistrate judge found the arbitration agreement valid and covering the claims and recommended dismissal without prejudice and referral to binding arbitration under Section 21 of the General TOS.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/enforceability of arbitration agreement | Did not oppose / no challenge to TOS assent | Plaintiff assented by entering verification code; TOS binds users and covers disputes | Court found a valid agreement and that the claims fall within its scope; compelled arbitration |
| Who decides arbitrability (delegation clause) | Did not specifically challenge delegation | TOS expressly delegates threshold arbitrability to the arbitrator | Court enforced the delegation clause; arbitrator to decide arbitrability issues |
| Appropriate court remedy (dismissal vs stay) | No request made | Requests dismissal of Block from court case and referral to arbitration | Recommended dismissal without prejudice and directed arbitration (neither party asked for a stay) |
Key Cases Cited
- Singh v. Uber Techs. Inc., 939 F.3d 210 (3d Cir. 2019) (courts ordinarily resolve gateway arbitrability questions unless parties delegate them)
- Am. Express Co. v. Italian Colors Rest., 570 U.S. 228 (2013) (FAA requires enforcement of arbitration agreements according to their terms)
- Great W. Mortg. Corp. v. Peacock, 110 F.3d 222 (3d Cir. 1997) (court decides existence and validity of arbitration agreement)
- Century Indem. Co. v. Certain Underwriters at Lloyd's, 584 F.3d 513 (3d Cir. 2009) (elements required before compelling arbitration)
- Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156 (3d Cir. 2009) (scope analysis for arbitration clauses)
- AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643 (1986) (arbitration clauses should be interpreted broadly; doubts resolved in favor of arbitration)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (parties can delegate arbitrability to arbitrator; courts enforce clear delegation clauses)
- MacDonald v. CashCall, Inc., 883 F.3d 220 (3d Cir. 2018) (courts will not decide arbitrability if delegation clause is valid and unchallenged)