Ballou v. Asset Marketing Services, LLC

Background

William Ballou, Joan Williamson, and William Culver brought two related class actions against Asset Marketing Services, LLC, doing business as GOVMINT.COM. They alleged that the company intentionally misrepresented the quality and value of coins it sold. The Ballou matter asserted claims under Minnesota consumer-protection statutes, unjust enrichment, and for injunctive relief. The Culver matter asserted the same claims and also negligence per se.

The plaintiffs placed telephone orders for coins between 2013 and 2019. The company’s terms and conditions contained an arbitration provision. The company generally sent order-confirmation emails with a link to those terms and shipped the coins with invoices. The company argued that the plaintiffs accepted the terms, including arbitration, by keeping the coins for more than 30 days, receiving the invoices or emails, or participating in an order-verification process.

The plaintiffs argued that they never saw or agreed to the arbitration provision and that the company’s terms were provided only after their telephone orders. They also argued that the company could not rely on its terms because of a 2016 consent order issued by the Minnesota Department of Commerce.

Motions to Strike

The plaintiffs asked the court to strike portions of declarations and transcripts submitted in support of the arbitration motions. The court held that the Federal Rules of Civil Procedure and the local rules did not authorize motions to strike affidavits or declarations in this context. It therefore denied both motions to strike as procedurally improper.

Arbitration Analysis

The court applied Minnesota contract principles and placed the burden on Asset Marketing Services to prove that a valid arbitration agreement existed. Because evidence outside the pleadings was presented and considered, the court analyzed the arbitration motions under the summary-judgment standard.

The court rejected the company’s argument that the parties formed valid “shrinkwrap” agreements. Unlike cases in which customers received clear notice before or with a product and had an opportunity to return it after reviewing the terms, the court found no evidence that these plaintiffs saw the invoices, email confirmations, or terms and conditions, or understood that keeping the coins would constitute acceptance.

The court found that the telephone contracts were formed when Asset Marketing Services promised to ship the products. The terms later provided in email confirmations and on the backs of invoices were therefore proposals for additional terms, not terms the plaintiffs had accepted. The order-verification process did not change that result because it occurred after orders were placed and verified already placed orders. The court concluded that Asset Marketing Services failed to show that any plaintiff entered a valid arbitration agreement. It did not reach whether the disputes fell within the alleged arbitration provision.

2016 Consent Order

The court separately held that, even if valid shrinkwrap agreements had existed, Asset Marketing Services could not rely on its terms and conditions to compel arbitration. The December 5, 2016 consent order prohibited the company from relying on written terms or conditions for bullion coin or product sales unless the term was disclosed as required by Minnesota law or the consumer and company signed a written agreement disclosing the term.

The court limited this part of its analysis to sales after the consent order became effective. It also did not address the portion of the order connected to a Minnesota statute that another decision had found unconstitutional when applied outside Minnesota.

The court held that the plaintiffs could enforce the relevant consent-order provision. Asset Marketing Services agreed that the plaintiffs were third-party beneficiaries, and the court found that the order’s language showed an intent to give consumers an enforceable benefit. The court further found that the company presented no evidence that it complied with the consent order. Because the company sought to rely on its terms and conditions, including the arbitration provision, it could not use those terms to compel arbitration here.

Disposition

The court denied Asset Marketing Services’ motions to compel arbitration and stay proceedings in both related cases. It also denied the plaintiffs’ motions to strike evidence in both cases.