Farr v. Acima Credit, LLC

Background

Sieara Farr brought a proposed consumer class action against Acima Credit LLC. She alleged that Acima charged her a $50 processing fee when she applied to finance furniture through a rental-purchase agreement. She claimed that the fee violated California’s Karnette Rental-Purchase Act and that the same conduct violated California’s Consumers Legal Remedies Act and Unfair Competition Law.

Farr proposed representing California consumers who entered into rental-purchase agreements with Acima during the relevant limitations period and were charged a processing fee. Her agreement contained an arbitration clause requiring disputes to be resolved in individual arbitration or small-claims court and waiving class-action rights. The agreement also said that the parties could seek remedies that did not claim money damages, including injunctions or equitable relief. Farr timely opted out of the arbitration clause.

Acima filed a preemptive motion for an order denying class certification before Farr filed her class-certification motion. Acima submitted evidence that only three customers who met specified California-related criteria had opted out of the arbitration provision, including Farr. Acima’s notice of removal stated that it had entered into at least 227,375 rental-purchase agreements with people who listed California addresses.

Analysis

The court first addressed whether the agreement exempted Farr’s equitable claims from arbitration. Applying contract-interpretation principles, the court found tension between the provision describing all disputes as covered and the provision allowing the parties to seek equitable relief. The court concluded that the latter provision did not exempt all equitable claims from arbitration. Instead, it allowed equitable relief in aid of arbitration, such as relief needed to preserve the arbitration process.

Farr sought a public injunction barring Acima from charging the processing fee in California. The court found that this requested injunction depended on the merits of Farr’s claims and would not aid arbitration. It therefore held that the arbitration clause did not exempt the equitable claims in this case.

The court next considered whether Farr could represent a class that included people who had not opted out of arbitration. Class representatives must have claims or defenses typical of the class and must fairly and adequately protect the class’s interests. The court found that proposed class members who had not opted out could face arbitration and class-waiver defenses that did not apply to Farr. Those different defenses could become a major focus of the litigation. The court therefore held that Farr could not satisfy the typicality and adequacy requirements for the proposed class.

The court did not resolve the separate question of numerosity because its findings on typicality and adequacy were sufficient. It also concluded that the additional class discovery Farr identified would not change those findings.

Disposition

The court GRANTED Acima’s motion for an order denying class certification. The order did not decide the merits of Farr’s allegations that Acima violated California law. The court noted that Farr’s motion for leave to file a second amended complaint was pending and allowed her to file a supplemental brief addressing whether amendment would be futile. The court stated that it would deny that motion if no supplemental brief was filed, but this order did not itself state a disposition of the amendment motion.