Melo v. Zumper, Inc.
- Phyllis Hamilton
- 4:20-cv-00714
- U.S. District Court · Northern District of California
- 29
In Melo v. Zumper, Judge Novak transferred the case to California, denied Trade House’s stay request without prejudice, and did not decide arbitration.
Ernest Melo, Zumper, Inc., Trade House Data, and the proposed class were affected because the entire action was transferred to the Northern District of California. Trade House’s request to join the stay motion was denied without prejudice, and the underlying Fair Credit Reporting Act claims remained undecided.
What happened
Melo v. Zumper, Inc. concerns Ernest Melo’s claims that Zumper and Trade House violated the Fair Credit Reporting Act by reporting inaccurate information and failing to provide his consumer file. Melo also sought to represent a proposed class on one of those claims.
Zumper argued that Melo accepted online terms requiring arbitration or, for claims not subject to arbitration, lawsuits in San Francisco. Melo disputed accepting those terms and challenged the evidence supporting Zumper’s argument. The court found that Melo had constructive knowledge of the terms and accepted them by creating his account, and that the forum-selection clause required court proceedings in the Northern District of California.
Judge David J. Novak granted Zumper’s motion to transfer the entire case to the Northern District of California and denied Trade House’s request to join the motion to stay without prejudice. The court did not decide whether the case should be sent to arbitration or whether all of Melo’s claims were covered by the agreement.
The detailed version
- Melo v. Zumper, Inc. · No. 4:20-cv-00714
- Phyllis Hamilton
- Jan. 28, 2020
Background
Ernest Melo sued Zumper, Inc. and Trade House Data under the Fair Credit Reporting Act, a federal law governing consumer reports. He alleged that Trade House and Zumper failed to use reasonable procedures to ensure the accuracy of information reported about him. He also alleged that Zumper failed to provide his consumer file and related information after he requested it. Melo brought the consumer-file claim for himself and a proposed class.
Melo alleged that, after he applied to rent a condominium, Zumper provided a prospective landlord with reports containing derogatory information that belonged to his father rather than to him. He also alleged that Zumper did not respond to his later request for his consumer file.
Evidence and Online Agreement
Zumper submitted an affidavit from Brian Coyne, its Chief Business Officer, describing its website, account-creation process, and records concerning Melo’s account. Melo argued that the affidavit and screenshots were speculative, based on hearsay, lacked foundation, and were not properly authenticated. The court rejected those objections. It found that Coyne could rely on his personal knowledge and Zumper’s business records, and that he properly authenticated the screenshots.
The account-creation screen displayed a statement that creating a Zumper account meant accepting the “Terms and Conditions” and “Privacy Policy.” The linked terms included an arbitration provision and a clause requiring court proceedings that were not arbitrated to occur exclusively in state or federal courts in San Francisco, California.
Contract and Forum Selection Clause
Applying Virginia contract law, the court found that Melo had at least constructive knowledge of the online terms and assented to them by clicking “Create Account.” The court concluded that the agreement did not fail because of an alleged conflict between its arbitration and forum provisions. It interpreted the provisions as allowing most disputes to be arbitrated while requiring San Francisco as the venue for court proceedings that were not arbitrated.
The court also held that the agreement contained a valid mandatory forum-selection clause. It found no fraud, overreaching, extraordinary inconvenience, or strong Virginia public policy that would make the clause unreasonable. Because the parties had agreed to that forum, the court determined that transfer under 28 U.S.C. § 1404(a) was proper.
Disposition
The court granted Zumper’s Motion to Transfer Venue and transferred the entire action to the United States District Court for the Northern District of California. It denied without prejudice Trade House’s Joinder in Motion to Stay Pending Arbitration. The court declined to decide whether the case should be stayed pending arbitration, whether Trade House could enforce the arbitration clause, or whether the agreement covered all of Melo’s claims. The opinion therefore did not decide the merits of Melo’s Fair Credit Reporting Act claims.
Read the full 29-page opinion on CourtListener, the free public archive maintained by the Free Law Project.