Belyea v. GreenSky, Inc.

Background

Elizabeth Belyea brought a proposed class action against GreenSky of Georgia, LLC and GreenSky, LLC, alleging violations of California lending, credit-services, and consumer-protection laws. She sought financing for a $23,600 plumbing bill through a GreenSky-related loan. Belyea stated that she did not recall receiving or reviewing the loan terms before the GreenSky shopping pass was used to pay the plumbing company and did not intend to agree to those terms when the loan began.

GreenSky offered loan documents that included an arbitration provision. The installment loan agreement identified SunTrust Bank as the lender and “Liz Bely” as the borrower. SunTrust signed the agreement, but Belyea did not. The GreenSky shopping pass stated that the electronic record of purchases made under the loan would serve as the borrower’s signature.

GreenSky moved to compel arbitration. It argued that the arbitration provision’s delegation clause required an arbitrator to decide whether GreenSky could enforce the provision. In later briefing, GreenSky also argued that it could enforce the provision as SunTrust’s agent or under equitable-estoppel principles. The court allowed supplemental briefing on those arguments and heard oral argument.

Court’s Analysis

Under the Federal Arbitration Act, a court must enforce a valid arbitration agreement according to its terms. But the party seeking to compel arbitration must prove, by a preponderance of the evidence, that an agreement to arbitrate exists and covers the dispute.

The court rejected GreenSky’s argument that the arbitrator should decide whether Belyea agreed to arbitrate. Questions about whether a contract was formed—including whether the parties agreed to the arbitration provision—are for the court. The delegation clause and the provision’s references to the rules of the American Arbitration Association and JAMS did not change that result. Those provisions may delegate questions about the scope or enforceability of an existing arbitration agreement, but they do not delegate the initial question whether an agreement was formed.

The court applied California law to contract formation. Under that law, a contract requires mutual assent. A signature is not always required, but the party seeking enforcement must present evidence showing agreement, including evidence that conduct amounted to acceptance.

The court characterized GreenSky’s theory as similar to a “browsewrap” agreement, in which use of a service allegedly signifies acceptance without an affirmative click or signature. In that setting, the company must show that the user had actual knowledge of the terms or was placed on reasonable notice of them.

GreenSky offered a declaration from its president and chief risk officer stating that Belyea was sent several documents, including the shopping pass and installment loan agreement. The court found that this general statement did not establish who sent the documents, when they were sent, how they were sent, or whether Belyea received them. GreenSky also offered no evidence showing that Belyea had actual, constructive, or inquiry notice of the arbitration provision before using the loan proceeds. Because GreenSky failed to prove assent, the court did not need to decide Belyea’s separate argument about whether the electronic-signature statute had been satisfied.

Disposition

The court denied without prejudice GreenSky’s motion to compel arbitration. The parties may conduct limited discovery concerning whether an agreement to arbitrate was formed. The order also set deadlines concerning a proposed amended complaint and scheduled a case-management conference. Judge Jacqueline Scott Corley stated that the order disposed of Docket No. 5.