Labertew v. WinRed, Inc.

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MICHAEL L. LABERTEW, attorney-in-fact for, and on behalf of, P.B., and as co-trustee of THE P.B. LIVING TRUST, Plaintiff, v. WINRED, INC., Defendant.

No. 2:21-cv-555-TC

United States District Court, D. Utah, Central Division

September 24, 2024

ORDER AND MEMORANDUM DECISION DENYING SECOND MOTION TO DISMISS AND MOTION TO STAY AND COMPEL ARBITRATION

Tena Campbell United States District Judge.

Before the court are Defendant WinRed, Inc.'s (WinRed) second motion to dismiss for lack of subject matter jurisdiction (ECF No. 71) and WinRed's motion to stay and compel arbitration. (ECF No. 43.)^[1] For the reasons stated below, the court denies WinRed's motion to dismiss, denies WinRed's motion to compel arbitration, and denies WinRed's motion for a stay but grants WinRed leave to file a renewed motion to compel arbitration after the close of a summary proceeding.

BACKGROUND

Plaintiff Michael Labertew brings this action as the attorney-in-fact for P.B. (Mrs. B) and as co-trustee of The P.B. Living Trust. (See Compl., ECF No. 2 at 1.) Mr. Labertew represents Mrs. B's interests because Mrs. B, who is elderly, has severe memory loss, poor executive functioning skills, advanced dementia, and requires home care. (Id. ¶ 2.)

WinRed is a for-profit fundraising platform for political candidates and campaigns that accepts contributions from its donors through at least two processes. (Id. ¶ 4; ECF No. 27 at 9.) For “one-time donations,” a user makes a single, one-time donation to a given candidate or campaign on WinRed's platform. (Compl. at ¶ 19.) For a “recurring contribution,” WinRed makes repeated, regular charges to a donor's credit card based on a donation transaction from hours, days, months, or years prior. (Id.) Mr. Labertew alleges that WinRed's use of the recurring charge feature requires “contributors to opt-out or edit the feature in order to avoid the recurring charges and contributions to Defendant's political action committee.” (Id.) Mr. Labertew also alleges that WinRed has preyed upon senior citizens and vulnerable adults, including Mrs. B, through repeated email, internet, electronic, text and other telephonic solicitations and telemarketing campaigns. (Id. ¶¶ 4, 13, 21-22, 25, 27.)

Mr Labertew alleges that WinRed targeted Mrs. B despite knowing that, given her age and her disabilities, she is a vulnerable adult who does not have the capacity to make financial decisions. (Id. ¶¶ 10-12.) Mr. Labertew also asserts that WinRed continued its efforts to prey upon Mrs. B even after he sent them two cease-and-desist letters. (Id. ¶¶ 28-29.) Based on these allegations, Mr. Labertew brought three claims against WinRed for: (1) theft; (2) conversion; and (3) exploitation of a vulnerable adult. (See id. ¶¶ 34-52.)

Shortly after Mr. Labertew filed his complaint, he filed a motion for a temporary restraining order (TRO). (ECF No. 3.) The court granted this motion. (Order granting TRO dated Sept. 24, 2021, ECF No. 5.) The court later dissolved the TRO (see Order Dissolving TRO dated Oct. 8, 2021, ECF No. 20), and then granted Mrs. B a second TRO (see Order Granting Second TRO dated Oct. 8, 2021, ECF No. 21). In lieu of pursuing a preliminary injunction, the parties stipulated that WinRed would refrain from contacting Mrs. B and obtaining any money or property from her. (Stipulation, ECF No. 23.) The parties also agreed that if either party became aware or reasonably suspected that Mrs. B was using or had attempted to use new methods of payment to make contributions, that party would provide written notice to the other party as soon as practicable. (Id.)

On November 1, 2021, WinRed filed a motion to dismiss Mr Labertew's claims. (ECF No. 27.) WinRed argued that the court lacked subject matter jurisdiction because Mr. Labertew lacked standing and had failed to allege an adequate amount in controversy. WinRed maintained that its platform was “simply a conduit to better assist individuals in donating to political committees” and that it did not affirmatively solicit donations from anyone, including Mrs B. (Id. at 2.) As evidence, WinRed attached a declaration from its President, Gerrit Lansing, which stated that “WinRed does not solicit donors to make contributions via the website. All earmarked contributions that pass through the website are the result of marketing efforts and solicitations made by the campaigns and committees who use the platform.” (Decl. Gerrit Lansing ¶ 5, Ex. B to Mot. to Dismiss, ECF No. 27-2.) According to WinRed, Mr. Labertew had not adequately alleged conduct fairly traceable to WinRed and harm that could be redressed by a decision from this court. WinRed also contended that Mr. Labertew failed to state a claim upon which relief could be granted.

The court granted in part and denied in part WinRed's motion. (See Order & Mem. Decision dated May 18, 2022, ECF No. 37.) The court held that the amount in controversy requirement was met. (Id. at 3-6.) And the court found that Mr. Labertew's well-pled allegations withstood WinRed's argument about causation and redressability. (Id. at 6-10.) Finally, the court dismissed Mr. Labertew's theft claim with prejudice for failure to state a claim (id. at 15), but allowed his claims for conversion and exploitation of a vulnerable adult to proceed. (Id. at 19-20.)

On December 20, 2022, WinRed filed a second motion to dismiss for lack of standing and failure to show causation and redressability. (ECF No. 71.) WinRed argues that new facts emerged following the court's order on its first motion to dismiss “which show that WinRed is not the cause of [Mr. Labertew's] alleged harm and that the relief sought-injunctive relief against WinRed-will not redress [Mr. Labertew's] alleged harm.” (ECF No. 71 at 2.) Specifically, WinRed informed the court that between the parties' October 13, 2021 stipulation and December 5, 2022, “Mrs. B ... attempted to contribute some 3,142 times ... using known methods of payment and email addresses, each of which was blocked by WinRed.” (Id. at 3.) Further, between October 10 and 14, 2022, Mrs. B allegedly attempted to use new combinations of payment methods and email addresses to make 11 contributions through WinRed. (Id.) WinRed argues that these facts demonstrate that Mrs. B-and not WinRed's direct or indirect donation solicitation methods-is to blame for her contributions on the platform.

WinRed separately filed a motion to stay this proceeding and compel arbitration (ECF No. 43), arguing that all of Mr. Labertew's remaining claims are “subject to WinRed's end user agreement, its ‘Terms of Use,' because any contributions made through WinRed's platform require the contributor first to agree to the Terms of Use before making a contribution.” (Id. at 2.) It cites to arbitration clauses in four online agreements (the Terms of Use), between users (those who donated on WinRed's website between January 1, 2018, and October 7, 2021) and “TS.”^[2] (See Exs. A-1 to A-4 to Mot. to Compel Arbitration, ECF Nos. 43-1 to 43-4.)^[3] TS refers to WinRed Technical Services, LLC, a limited liability company organized in Delaware on February 27, 2019. (Resp. in Opp'n to Mot. to Stay & Compel Arbitration, ECF No. 53 at 5.) TS is separate and distinct from WinRed. (Id.) The arbitration clauses read: “You and TS agree that any controversy or claim arising out of or relating to the Platform, use of the Platform, this Agreement and/or the Privacy Policy shall be settled by binding arbitration[.]” (ECF No. 43-1 at 4.)^[4] The term “Platform” refers to the website through which individuals like Mrs. B donate money to political candidates and campaigns.

The agreements also state:

BY AGREEING TO THE ARBITRATION OF DISPUTES ... YOU AGREE THAT YOU ARE WAIVING YOUR RIGHT TO A JURY TRIAL AND ... WAIV[E] YOUR RIGHTS TO ... COURT ACTIONS.

(Id.) When users make contributions on WinRed's platform, they are required to click a donation button accompanied by some close variation of the following disclaimer: “By clicking ‘Donate' [I] accept WinRed's terms of use.” (ECF No. 56 at 9 (citation omitted).) WinRed is named as a third-party beneficiary in newer versions of its Terms of Use, those published on and after February 26, 2020, but is not named in earlier versions of the terms. (Compare “February 2020 Terms of Use,” ECF No. 43-1, with “March 2018 Terms of Use,” ECF No. 43-4, “February 2019 Terms of Use,” ECF No. 43-2, and “June 2019 Terms of Use,” ECF No. 43-3.) Specifically, the final section of the February 2020 Terms of Use, labelled “Miscellaneous,” states:

These Terms constitute a binding agreement between you and TS, and is accepted by you upon your use of the Platform or your account. These Terms constitute the entire agreement between you and TS regarding the use of the Platform and your account. By using the Platform, you represent that you are capable of entering into a binding agreement, and that you agree to be bound by these Terms. You acknowledge and agree that WinRed and the Indemnified Parties are intended third-party beneficiaries of these terms.

(February 2020 Terms of Use at 13 (emphasis added).) The final sentence indicating that WinRed is an “intended third-party beneficiar[y]” is omitted from the March 2018, February 2019, and June 2019 Terms of Use. (See ECF Nos. 43-2 to 43-4.)

In its motion to stay this proceeding and compel arbitration, WinRed argues that it may invoke the arbitration agreement for claims arising out of each of Mrs. B's contributions on the WinRed platform, even her contributions that precede the introduction of the February 2020 Terms of Use, when WinRed was first named a third-party beneficiary. (ECF No. 43-2.)

ANALYSIS

I. Motion to Dismiss for Lack of Subject Matter Jurisdiction

Before the court can decide WinRed's ...