Juarez v. Social Finance, Inc.

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 RUBEN JUAREZ, et al., Case No. 20-cv-03386-HSG 8 Plaintiffs, ORDER DENYING MOTION TO COMPEL ARBITRATION AND 9 v. GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS 10 SOCIAL FINANCE, INC., et al., Re: Dkt. No. 38 11 Defendants. [12] 13 Pending before the Court is the motion to compel arbitration and motion to dismiss filed by 14 the Defendants Social Finance Inc. and Social Finance Lending Corp (collectively, “SoFi”). Dkt. 15 No. 38. The Court held a hearing on December 3, 2020. For the reasons detailed below, the Court 16 DENIES the motion to compel and GRANTS IN PART and DENIES IN PART the motion to 17 dismiss. 18 I. BACKGROUND 19 Plaintiffs Ruben Juarez and Calin Constantin Segarceanu filed this putative class action 20 against SoFi on May 19, 2020. See Dkt. No. 1. In July 2020, Plaintiffs filed an amended 21 complaint. See Dkt. No. 33 (“FAC”). In the amended complaint, Plaintiffs allege that SoFi 22 denied their attempts to apply for loans due to Mr. Juarez’s status as a Deferred Action for 23 Childhood Arrivals (“DACA”) recipient1 and Mr. Segarceanu’s status as a conditional permanent 24 resident (“CPR”). Plaintiffs allege that such policies and practices constitute unlawful 25 discrimination. See FAC at ¶¶ 7, 111, 115. 26 // [27] 1 A. Plaintiff Juarez 2 Mr. Juarez became a DACA recipient on October 25, 2012. FAC at ¶ 59. To finance his 3 education in the United States, Mr. Juarez obtained private student loans. See id. at ¶¶ 63–64. 4 Plaintiffs allege that in 2016, Mr. Juarez received promotional material from SoFi offering student 5 loan refinancing services. Id. at ¶ 65. In approximately November 2016, Plaintiff first visited 6 SoFi’s website to begin the application process to refinance his student loans. Id. at ¶¶ 66–68. 7 After entering basic information such as his name and email, the website prompted Mr. Juarez to 8 indicate whether he was a U.S. citizen, lawful permanent resident (“LPR”), or visa-holder. Id. at 9 ¶ 68. Plaintiffs allege that because Mr. Juarez is a DACA recipient—and not a U.S. citizen, LPR, 10 or visa-holder—SoFi’s online application process did not allow him to complete and submit his 11 online application. Id. at ¶ 68. 12 Plaintiffs further allege that Mr. Juarez made subsequent attempts to apply for student loan 13 refinancing on June 13, 2017 and December 8, 2018, and in late July 2019. Id. at ¶¶ 70–72, 74. 14 Plaintiffs explain that in 2017 and 2018, Mr. Juarez called SoFi’s customer service number to ask 15 whether SoFi had changed its eligibility policy for DACA recipients. Id. at ¶¶ 71–72. Plaintiffs 16 allege that in both instances, a SoFi customer service representative informed Mr. Juarez that the 17 policy had not changed. Id. In 2019, Mr. Juarez attempted to submit another application through 18 SoFi’s website, but as in 2016, he was unable to complete or submit the online application because 19 he was not a U.S. citizen, LPR, or visa-holder. Id. at ¶ 74. Plaintiffs allege that SoFi only 20 changed its policies in December 2019, allowing DACA recipients to apply for lending services if 21 they had “a creditworthy U.S. citizen or LPR co-signer.” Id. at ¶ 77. 22 B. Plaintiff Segarceanu 23 In October 2018, Mr. Segarceanu, a Romanian national, married his wife, a U.S. citizen, 24 and thereafter applied for permanent residency. FAC at ¶¶ 80, 84. On September 11, 2019, he 25 obtained a conditional green card with a two-year validity period. Id. at ¶ 84. On June 19, 2020, 26 Mr. Segarceanu completed SoFi’s online application for a personal loan. See id. at ¶¶ 86–88. As 27 part of this process, he was asked to upload a copy of his green card. See id. at ¶ 89. That same 1 the time, SoFi had a policy that permanent residents were ineligible for loans if their green cards 2 had a validity period of two years or less. See id. at ¶ 6. On June 20, SoFi emailed Mr. 3 Segarceanu requesting that he provide a copy of his Form I-751 as proof that he had applied for, or 4 had been granted an extension of, his green card. Id. at ¶ 92. But Mr. Segarceanu could not 5 provide the form because his green card was not yet eligible for renewal. Id. at ¶ 93. On June 30, 6 SoFi notified Mr. Segarceanu that his application had been denied due to his status as a CPR. Id. 7 at ¶¶ 94–95. 8 * * * 9 Based on these facts, Plaintiffs assert causes of action for (1) alienage discrimination, in 10 violation of 42 U.S.C. § 1981 ; (2) discrimination, in violation of the California Unruh Civil Rights 11 Act §§ 51, et seq.; and (3) obtaining consumer reports without a permissible purpose, in violation 12 of the Fair Credit and Reporting Act, 15 U.S.C. §§ 1681 , et seq. (“FCRA”). Id. at ¶¶ 135–69. 13 Plaintiffs also indicate that they will seek to certify three classes: (1) a Section 1981 class2 14 pursuant to Fed. R. Civ. P 23(b)(2); (2) an Unruh Act class3 pursuant to Fed. R. Civ. P. 23(b)(3); 15 and (3) a FCRA class4 pursuant to Fed. R. Civ. P. 23(b)(2) and (b)(3). Id. at ¶ 118 . 16 SoFi now moves to compel arbitration as to Mr. Juarez’s claims, and to dismiss all 17 Plaintiffs’ claims under Federal Rule of Civil Procedure 12(b)(6). See Dkt. No. 38. 18 II. LEGAL STANDARD 19 A. Motion to Compel Arbitration 20 The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., sets forth a policy favoring 21 arbitration agreements and establishes that a written arbitration agreement is “valid, irrevocable, [22] 2 The Section 1981 Class is defined as “all non-United States citizens who resided in the United [23] Sates and had DACA or were CPRs at the time they applied and were denied or unsuccessfully sought to apply for any SoFi Loan from May 19, 2017 through the date of the final judgement in [24] this action.” FAC at ¶ 119. 3 The Unruh Act Class is defined as “all non-United States citizens who resided in the United [25] States and had DACA or were CPRs at the time they applied and were denied or unsuccessfully sought to apply for any SoFi Loan from May 19, 2018 through the date of final judgement in this [26] action.” Id. at ¶ 120 . 4 The FCRA Class is defined as “all non-United States citizens who resided in the United States [27] and were CPRs at the time they applied and were denied or unsuccessfully sought to apply for any 1 and enforceable.” 9 U.S.C. § 2 ; Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018) (noting 2 federal policy favoring arbitration); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 3 U.S. 1, 24 (1983) (same). The FAA allows that a party “aggrieved by the alleged failure, neglect, 4 or refusal of another to arbitrate under a written agreement for arbitration may petition any United 5 States district court . . . for an order directing that . . . arbitration proceed in the manner provided 6 for in such agreement.” 9 U.S.C. § 4 . This federal policy is “simply to ensure the enforceability, 7 according to their terms, of private agreements to arbitrate.” Volt Info. Sciences, Inc. v. Bd. of 8 Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 476 (1989). Courts must resolve any 9 “ambiguities as to the scope of the arbitration clause itself . . . in favor of arbitration.” Id. 10 When a party moves to compel arbitration, the court must determine (1) “whether a valid 11 arbitration agreement exists” and (2) “whether the agreement encompasses the dispute at issue.” 12 Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). The 13 agreement may also delegate gateway issues to an arbitrator, in which case the court’s role is 14 limited to determining whether there is clear and unmistakable evidence that the parties agreed to 15 arbitrate arbitrability. See Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). In either 16 instance, “before referring a dispute to an arbitrator, the court determines whether a valid 17 arbitration agreement exists.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 , 18 530 (2019) (citing 9 U.S.C. § 2 ). 19 B. Motion to Dismiss 20 Under Federal Rule of Civil Procedure 12(b)(6), the Court must dismiss a complaint if it 21 fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to 22 dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its 23 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard 24 requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant 25 has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court accepts as true a 26 plaintiff’s well-pleaded factual allegations and construes all factual inferences in the light most 27 favorable to the plaintiff. Id. However, a plaintiff must provide “more than labels and 1 conclusory, unwarranted deductions of fact, or unreasonable inferences. Kwan v. SanMedica Int'l, 2 |} 854 F.3d 1088, 1096 (9th Cir. 2017). 3 || II. DISCUSSION 4 A. Motion to Compel Arbitration® 5 In support of its motion to compel, SoFi contends its records indicate that Mr. Juarez 6 || expressly consented to arbitration in 2016 when he first registered as a new user on SoFi’s 7 || website. See Dkt. No. 38 at 7; see also Dkt. No. 38-1 (“Donohoe Decl.”) at § 7, & Exs. C-D. 8 SoFi explains that to register as a new user, Mr. Juarez had to acknowledge and agree to be bound 9 || by several agreements, including an arbitration agreement. See id. at 5—6, & Ex. A-B. This is 10 || reflected on the sign-in page as reproduced below: ll 333 : Services: | □□□□□□□□□□□□ 12 See what SoFi can offer you in z minutes 13 First Name oy 14 Last Name State of Residence Select Email Q 16 Password eo = 17 Confirm Password 18 lhave read, understood and consent to the language and authorizations outlined in SoFi's Electronic Communication Policy, foF! Focial Policy, @LBA Privecy Motice, avd Arbitration Agreement. We recommend that you retain # copy for 19 ioe [22] 23 || See id. at Ex. A. SoFi explains that without affirmatively checking the box manifesting his 24 || consent, Mr. Juarez could not have signed in or proceeded with any loan application on the 25 website. See id. at | 6. SoFi therefore argues that Mr. Juarez must have affirmatively checked the [26] 27 > SoFi’s motion to compel only applies to Mr. Juarez, as Plaintiffs allege—and SoFi appears to 2g || concede—that Mr. Segarceanu opted out of SoFi’s alternative dispute resolution agreement. See FAC at J 99. 1 box stating, “I agree.” See Dkt. No. 38 at 10; see also Donohoe Decl., Ex. A. 2 The arbitration agreement itself states: [3] [A]ny claim, dispute or controversy arising out of or related to (i) my 4 registration on SoFi’s website, (ii) my submission of information to SoFi in connection with any non-mortgage loan offered by SoFi, (iii) 5 my application for any non-mortgage loan offered by SoFi, (iv) my participation in SoFi’s career services or entrepreneur program, or (v) 6 the disclosures provided to me by SoFi in connection with any nonmortgage loan that SoFi offers (collectively, “Claim”) shall be, at my 7 or your election, submitted to and resolved on an individual basis by binding arbitration under the Federal Arbitration Act, 9 U.S.C. §§ 1 8 et seq. (the “FAA”) before the American Arbitration Association (“AAA”) under its Consumer Arbitration Rules (“AAA Rules”) in 9 effect at the time the arbitration is brought . . . . 10 See Donohue Decl., Ex. B. 11 SoFi contends that all Mr. Juarez’s claims “plainly fall within the Arbitration Agreement,” 12 even those that relate to his 2017, 2018, and 2019 applications. See Dkt. No. 38 at 12. Plaintiffs 13 do not appear to contest SoFi’s representation about the design and content of the website or the 14 language of the arbitration agreement. Instead, Plaintiffs respond that (1) the arbitration 15 agreement lacked adequate consideration because Mr. Juarez was ineligible for a loan under 16 SoFi’s polices from the outset; and (2) even if there were a valid agreement, it only applies to Mr. 17 Juarez’s 2016 application, not his subsequent efforts to refinance his student loans. See Dkt. No. 18 41 at 5–9. 19 i. Consideration 20 Plaintiffs first argue that the arbitration agreement Defendant says was entered in 2016 21 “lacks consideration to be binding.” See Dkt. No. 41 at 5. Plaintiffs explain that because there 22 was no possibility that Mr. Juarez could have contracted with SoFi for any of its services—due to 23 his DACA status—any consideration was illusory. See id. The Court is not persuaded. 24 Plaintiffs’ own authorities recognize that a “promise to be bound by the arbitration process 25 itself serves as adequate consideration.” See id. (citing Circuit City Stores, Inc. v. Najd, 294 F.3d 26 1104, 1108 (9th Cir. 2002)). Courts have repeatedly found under California law that “[w]here an 27 agreement to arbitrate exists, the parties’ mutual promises to forego a judicial determination and to 1 rights and thus neither gains an advantage over the other.” Strotz v. Dean Witter Reynolds, 223 2 Cal. App. 3d 208, 216 (Cal Ct. App. 1990), overruled on other grounds by Rosenthal v. Great 3 Western Fin. Secs. Corp., 14 Cal. 4th 394 (Cal. 1996).6 The Ninth Circuit has made clear that the 4 inquiry into the adequacy of consideration is very limited, noting that “the first lesson in contracts 5 [is] the peppercorn theory—that courts will not inquire into the adequacy of consideration, so long 6 as it was true and valuable.” See Pope v. Sav. Bank of Puget Sound, 850 F.2d 1345, 1356 (9th Cir. 7 1988). 8 In the face of this well-established and binding case law, Plaintiffs rely on a single Texas 9 state law case they claim carves out an exception to the general rule. See Dkt. No. 41 at 6 (citing 10 In re Rio Grande Reg’l Hosp., No. 13 Civ. 352, 2009 WL 481886 , at *3, *7–8 (Tex. App. Feb. 25, 11 2009)). In In re Rio Grande, the court applied Texas law in holding that a temporary hospital 12 employee who was injured on the job was not compelled to arbitrate her claim based on an 13 arbitration provision contained in the hospital’s employee health plan. Id. at *7 . Although the 14 plaintiff signed plan documents in which she elected to receive benefits, as a temporary employee 15 she was ineligible. See id. The court reasoned that because under the terms of the health plan the 16 plaintiff only “agreed to arbitrate her disputes in exchange for being allowed to participate in the 17 benefit plan established by Rio Grande,” the agreement lacked consideration. Id. Even if the 18 Court found this reasoning persuasive and applicable to the question of California law presented 19 here, there is no evidence before the Court that Plaintiff only agreed to arbitrate in exchange for 20 consideration or approval of his refinance application. The Court finds that the parties’ mutual 21 agreement to arbitrate is thus sufficient consideration. 22 ii. Scope 23 Next, Plaintiffs contend that even if the 2016 arbitration agreement is valid, it is limited in 24 scope and does not apply to Mr. Juarez’s applications in 2017, 2018, and 2019. See Dkt. No. 41 at 25 7. In their opposition brief, Plaintiffs explain that Mr. Juarez’s claims are not premised on the 26 2016 application at all. See Dkt. No. 41 at 1, 8, & n.6. Plaintiffs even acknowledge that such [27] 1 claims likely would fall outside the statute of limitations under both § 1981 and the Unruh Civil 2 Rights Act. Id. at 8, n.6. However, SoFi does not present any additional arbitration agreements 3 related to the subsequent applications. Nor does it suggest that when consumers attempt to submit 4 applications or make inquiries over the telephone they are required to agree to any specific terms. 5 SoFi’s motion, therefore, asks the Court to find that the 2016 arbitration agreement extends 6 beyond that single student loan refinance application. 7 First, the Court considers the plain language of the 2016 arbitration agreement. When 8 deciding whether parties agreed to arbitrate a certain matter, “courts generally . . . should apply 9 ordinary state-law principles that govern the formation of contracts.” First Options of Chicago, 10 Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Under California law, “the mutual intention of the 11 parties at the time the contract is formed governs interpretation.” AIU Ins. Co., v. Super Ct., 51 12 Cal. 3d 807, 821 (Cal. 1990) (citing Cal. Civ. Code § 1636 ). “Such intent is to be inferred, if 13 possible, solely from the written provisions of the contract.” Id. (citing Cal. Civ. Code § 1639 ). 14 The Court interprets terms “in their ‘ordinary and popular sense.’” Id. Ambiguous language is 15 construed against the drafter. Id. (citing Cal. Civ. Code § 1654 ). 16 Here, the arbitration agreement is limited in scope. Although it states that it applies to 17 “any claim, dispute, or controversy arising out of or related to” Mr. Juarez’s registration on SoFi’s 18 website; submission of information to SoFi in connection with a non-mortgage loan; or application 19 for any non-mortgage loan, it is framed to reference a single “registration,” “submission” or 20 “application” to SoFi. See Donohue Decl., Ex. B. Despite SoFi’s urging, the arbitration 21 agreement does not state that it applies to all registrations, submissions, or applications ever made 22 to SoFi. Rather, it applies on a transaction-by-transaction basis. SoFi’s suggestion that this 23 arbitration agreement nevertheless extends in perpetuity to all future registrations, submissions, or 24 applications is simply not supported by the plain language of the agreement. 25 SoFi also points to a “survival” clause in the arbitration agreement. See Donohue Decl., 26 Ex. B. The clause states: 27 This Dispute Resolution Agreement shall survive the conclusion of forbearance or modification granted pursuant to this Agreement, any 1 cancellation or request for cancellation of the Agreement or any disbursements under the Agreement. [2] 3 See id. Based on this language, SoFi argues that the agreement survives the “conclusion of any 4 SoFi consumer product or service,” and therefore extends beyond the 2016 application. Dkt. No. 5 38 at 12. But Mr. Juarez was never approved for any SoFi product or service. And in any event, 6 that the arbitration agreement may “survive” after the conclusion of such a product or service only 7 alters its duration, not its scope. 8 Second, SoFi suggests that Mr. Juarez’s interactions with SoFi in 2017, 2018, and 2019 9 were merely a continuation of his 2016 student loan refinance application. Dkt. No. 43 at 5. SoFi 10 thus argues that the 2016 arbitration agreement should still govern claims arising from these 11 communications. However, the allegations in the amended complaint do not support this 12 contention. As alleged, Mr. Juarez attempted to apply for student loan refinancing in 2016, but he 13 was not able to complete and submit the application. See FAC at ¶ 68. Mr. Juarez asserts that he 14 was thus “denied the ability to contract for student loan refinancing with SoFi.” Id. Plaintiffs 15 explain that Mr. Juarez later received additional student loan refinancing offers from SoFi in 2017, 16 2018, and 2019. Id. at ¶ 69 . Based on these offers, he unsuccessfully attempted to apply for 17 refinancing by calling SoFi’s customer service number in 2017 and 2018, and submitting a new 18 application online in 2019. See id. at ¶¶ 70–75. Critically, Mr. Juarez does not contend that he 19 was seeking to reopen, or asking SoFi to reconsider, his 2016 application. Rather, the complaint 20 asserts that these were standalone attempted transactions with SoFi. The Court therefore 21 concludes that Mr. Juarez’s inquiries to SoFi in 2017, 2018, and 2019 do not fall within the scope 22 of the 2016 arbitration agreement, and accordingly DENIES SoFi’s motion to compel arbitration. 23 * * * 24 SoFi argues, in the alternative, that the Court should nonetheless strike the class allegations 25 because Plaintiffs do not limit the putative classes to those who sought to obtain only student loan 26 refinancing or personal loans, as Mr. Juarez and Mr. Segarceanu did. See Dkt. No. 38 at 23–25. 27 Rather, the proposed classes include individuals who sought to apply for any SoFi loan, including 1 loans, and offers [for] credit card consolidation.” See FAC at ¶¶ 2, 119–121. As this Court has 2 previously explained, a growing number of courts generally disfavor motions to strike, finding that 3 they “serve little useful purpose in modern federal practice, and are often wielded mainly to cause 4 delay and inflict needless burdens on opposing parties.” See Stiner v. Brookdale Senior Living, 5 Inc., 354 F. Supp. 3d 1046, 1063, n.7 (N.D. Cal. 2019) (quoting Inn S.F. Enter., Inc. v. Ninth St. 6 Lodging, LLC, No. 3:16-CV-00599-JD, 2016 WL 8469189 , at *1 (N.D. Cal. Dec. 19, 2016)). And 7 although district courts have authority to strike class allegations at the motion to dismiss stage, 8 courts generally refrain from doing so because such motions are usually premature before the issue 9 of class certification is before the court. See, e.g., Smith v. Keurig Green Mountain, Inc., 393 F. 10 Supp. 3d 837, 849 (N.D. Cal. 2019); Astiana v. Ben & Jerry's Homemade, Inc., 2011 WL 11 2111796, at *14–15 (N.D. Cal. May 26, 2011); Rosales v. FitFlop USA, LLC, 882 F. Supp. 2d 12 1168, 1179 (S.D. Cal. 2012). 13 In keeping with the general practice of disfavoring motions to strike in this context, the 14 Court declines to strike the class allegations here. Plaintiffs allege that SoFi discriminates against 15 DACA recipients and CPRs, regardless of the type of loan the applicants sought. See, e.g., FAC at 16 ¶¶ 140–141. At least as alleged, therefore, the conduct and injury to class members are the same 17 regardless of the specific type of loan sought. SoFi has not shown that the Court should strike the 18 class allegations at this early stage. To the extent the case proceeds, SoFi may address these issues 19 at the class certification stage. 20 B. Motion to Dismiss 21 i. 42 U.S.C. § 1981 22 SoFi argues that Plaintiffs’ § 1981 claim must be dismissed because SoFi’s policies do not 23 constitute alienage discrimination. SoFi asserts that its conduct is permissible under the Equal 24 Credit Opportunity Act (the “ECOA”), 15 U.S.C. §§ 1691 , et seq. Dkt. No. 38 at 16. The Court 25 thus considers the meaning of § 1981 and the scope of the ECOA. 26 a. Alienage Discrimination 27 Section 1981(a) provides, in relevant part, that “[a]ll persons within the jurisdiction of the 1 contracts . . . and to the full and equal benefit of laws and proceedings for the security of persons 2 and property as is enjoyed by white citizens . . . .” 42 U.S.C. § 1981 (a). The Supreme Court has 3 explained that the protections under the statute “extend to aliens as well as to citizens.” See 4 Graham v. Richardson, 403 U.S. 365, 377 (1971); see also Sagana v. Tenorio, 384 F.3d 731 , 738 5 (9th Cir. 2004), as amended (Oct. 18, 2004) (holding “[j]ust as the word ‘white’ indicates that 6 § 1981 bars discrimination on the basis of race, the word ‘citizen’ attests that a person cannot face 7 disadvantage in the activities protected by § 1981 solely because of his or her alien status”). 8 Here, SoFi contends that it does not discriminate on the basis of citizenship status at all, 9 but rather takes immigration status into account. SoFi thus suggests that discrimination based on 10 immigration status and discrimination based on citizenship, or alienage, are two distinct types of 11 discrimination that are treated differently under § 1981. Dkt. No. 38 at 13. On a practical level, 12 SoFi asserts that it does not discriminate against non-citizens because some non-citizens—namely 13 LPRs and some visa-holders—are still eligible to contract for credit with SoFi. Id. at 16. This 14 distinction, however, is not supported by the language of the statute. 15 As the Ninth Circuit has explained, “the plain language of a statute should be enforced 16 according to its terms, [and] in light of its context.” ASARCO, LLC v. Celanese Chem. Co., 792 17 F.3d 1203, 1210 (9th Cir. 2015). Under the plain language of the statute, the protections of § 1981 18 extend to “all persons within the jurisdiction of the United States.” 42 U.S.C. § 1981 (emphasis 19 added). The Supreme Court has interpreted “all persons” to include all lawfully present 20 immigrants. See Torao Takahashi v. Fish & Game Comm’n, 334 U.S. 410, 419 (1948). And 21 DACA recipients and CPRs are considered lawfully present immigrants. See, e.g., Peña v. Wells 22 Fargo Bank, N.A., No. 1-cv-04065-MMC, 2019 WL 7050148 at *2 (N.D. Cal. Dec. 23, 2019) 23 (citing Arizona Dream Act Coalition v. Brewer, 757 F.3d 1053, 1059 (9th Cir. 2014)). That SoFi 24 (allegedly) discriminates against only a subset of lawfully present immigrants does not somehow 25 insulate its policies from scrutiny under § 1981. 26 Moreover, § 1981’s legislative history underscores that it was intended to apply broadly. 27 The operative language of § 1981 originated in § 1 of the Civil Rights Act of 1866, which was 1 protecting “citizens of every race and color.” See Gen. Bldg. Contractors Ass’n, Inc. v. 2 Pennsylvania, 458 U.S. 375 , 384–88 (1982) (detailing legislative history); McDonald v. Santa Fe 3 Trail Transp. Co., 427 U.S. 273 , 285–96 (1976) (same). In 1870, Congress replaced the phrase 4 “citizens of every race and color” with the current language, “all persons within the jurisdiction of 5 the United States.” See Sagana, 384 F.3d at 737–38, & n.3. As the Ninth Circuit has noted, 6 “Congress chose with care the word ‘persons’” to “extend[] the safeguards of the civil rights 7 statutes to aliens.” Id. at 738. Neither § 1981’s plain language nor its legislative history supports 8 SoFi’s suggestion that the statute contains a carveout for specific categories of immigrants. See 9 BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183 (2004) (“[We] presume that [the] legislature 10 says in a statute what it means and means in a statute what it says there.”). 11 Because both Messrs. Juarez and Segarceanu are immigrants lawfully present in the United 12 States, FAC at ¶¶ 119–121, Plaintiffs have adequately alleged that SoFi’s policies discriminated 13 against them in violation of § 1981. 14 b. ECOA 15 SoFi next suggests that its policies are consistent with, and permissible under, the ECOA. 16 Dkt. No. 43 at 8. The ECOA provides, in relevant part, that it is “unlawful for any creditor to 17 discriminate against any applicant, with respect to any aspect of credit transaction . . . on the basis 18 of race, color, religion, national origin, sex or marital status, or age . . . .” See 15 U.S.C. 19 § 1691(a)(1). It was initially enacted “to eradicate credit discrimination waged against women, 20 especially married women whom creditors traditionally refused to consider for individual credit.” 21 Bros. v. First Leasing, 724 F.2d 789 , 793–94 (9th Cir. 1984) (quotations omitted). The statute was 22 later expanded to include the other categories listed above as “one more tool to be used in our 23 vigorous national effort to eradicate invidious discrimination ‘root and branch’ from our society.” [24] Id. at 794 (quotations omitted). 25 On its face, the ECOA does not address discrimination on the basis of alienage or 26 immigration status. And there is no apparent conflict between that statute and § 1981. As the 27 court in Perez v. Wells Fargo reasoned, the ECOA and § 1981 “can be read to give effect to both, 1 the ECOA precludes a creditor from discriminating on additional grounds, such as religion and 2 national origin.” Perez v. Wells Fargo & Co., 2017 WL 3314797 at *3–4 (N.D. Cal. August 3, 3 2017). In Perez, the plaintiffs were a group of DACA recipients who applied for credit from 4 Wells Fargo and were denied because they were neither U.S. citizens nor permanent residents, as 5 required by the bank’s lending policies. See id. at *1 . The plaintiffs asserted claims for alienage 6 discrimination under § 1981. Id. As in this case, the bank argued that the § 1981 claims should be 7 dismissed based on the ECOA. But the Perez court rejected this argument, reasoning that the 8 ECOA was enacted to expand protections against credit discrimination. See id. at *2–4. The 9 Court finds the reasoning in Perez persuasive, and adopts it here. Accordingly, the Court finds 10 that the ECOA was not intended to limit any of the broad protections afforded by § 1981. 11 SoFi points to a regulation promulgated under the ECOA to suggest that “information as to 12 immigration status and permanence of residency are [nevertheless] appropriate risk factors to 13 consider in making lending decisions . . . .” See Dkt. No. 38 at 16. The Bureau of Consumer 14 Financial Protection issued Regulation B “to promote the availability of credit to all creditworthy 15 applicants without regard to race, color, religion, national origin, sex, marital status, or age.” See [16] 12 C.F.R. § 1002.1 . Regulation B states that a “creditor may inquire about the permanent 17 residency and immigration status of an applicant or any other person in connection with a credit 18 transaction.” See 12 C.F.R. § 202.5 (e). The Court has some concerns that this regulation could be 19 read to conflict with § 1981. The parties do not address this issue directly, and the Court has not 20 identified any case in which this issue was specifically discussed. In any event, at this early stage 21 in the litigation, the Court need not resolve this potential issue. Even assuming Regulation B is 22 consistent with § 1981, it does not empower a creditor to decline credit solely on the basis of 23 immigration status. See Perez, 2017 WL 3314797 , at *2, n.4. And as alleged here, SoFi did not 24 allow certain non-citizens to apply for credit, and they were ineligible solely on the basis of their 25 status. See generally FAC. The Court therefore denies SoFi’s motion to dismiss on this basis. 26 ii. Unruh Civil Rights Act 27 SoFi next moves to dismiss Plaintiffs’ claim for discrimination under California’s Unruh 1 Plaintiffs are not residents of California and the conduct alleged in the complaint did not occur in 2 California, the Unruh Civil Rights Act is inapplicable. Id. 3 The Act states: [4] All persons within the jurisdiction of this state are free and equal, and 5 no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital 6 status, sexual orientation, citizenship, primary language, or immigration status are entitled to the full and equal accommodations, 7 advantages, facilities, privileges, or services in all business establishments of every kind whatsoever. [9] Cal. Civ. Code § 51 (b) (emphasis added). It therefore expressly applies only to discrimination that 10 occurs in California. See, e.g., Moore v. Greyhound Bus Lines, Inc., No. 15-CV-1186-CAB 11 (MDD), 2018 WL 3361395 , at *2 (S.D. Cal. July 10, 2018) (collecting cases). The California 12 Supreme Court has also cautioned against the extraterritorial application of California’s laws. See 13 Sullivan v. Oracle Corp., 51 Cal. 4th 1191, 1207 (Cal. 2011) (“However far the Legislature’s 14 power may theoretically extend, we presume the Legislature did not intend a statute to be 15 operative, with respect to occurrences outside the state, . . . unless such intention is clearly 16 expressed or reasonably to be inferred from the language of the act or from its purpose, subject 17 matter or history.”) (quotations omitted). 18 Plaintiffs do not appear to dispute any of this. See Dkt. No. 41 at 13–14. Rather, they 19 suggest that “the alleged discriminatory conduct clearly occurred in California” because “SoFi 20 developed and implemented” the challenged policies “at its headquarters in California.” See id. at 21 14. In support of this contention, Plaintiffs point to a conclusory statement in their complaint that 22 “SoFi’s lending policies, including the policies that deprived Plaintiffs and Class Members of the 23 opportunity to contract for Loans on the same terms as U.S. citizens and LPRs, were developed in 24 California and all of its decision-making as to Loan applicants occurs in California because its 25 servers and headquarters are located there.” See FAC at ¶ 152. Yet Plaintiffs offer no factual 26 support for this contention, and the Court need not accept their conclusory allegations as true. See 27 Kwan, 854 F.3d at 1096 . Plaintiffs have failed to allege facts sufficient to plausibly suggest that 1 apply the Act to claims by individuals who, without dispute, are not California residents. The 2 Court therefore grants SoFi’s motion on this basis. 3 iii. FCRA 4 SoFi also moves to dismiss Plaintiffs’ FCRA claim. See Dkt. No. 38 at 20–22. The FCRA 5 ensures fair and accurate credit reporting, promotes efficiency in the banking system and protects 6 consumer privacy. Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 52 (2007). To further these 7 goals, the FCRA prohibits third parties from accessing consumer credit reports without a 8 statutorily-authorized purpose. See 15 U.S.C. §§ 1681 (b) et seq. Plaintiffs allege that SoFi 9 obtained Mr. Segarceanu’s consumer report without a permissible purpose under the FCRA 10 because SoFi knew or should have known that he was ineligible under SoFi’s lending policies 11 before it performed a “hard pull” of his credit. See FAC at ¶¶ 90, 91. In response, SoFi contends 12 that it did have a permissible purpose to pull Mr. Segarceanu’s credit because he had applied for 13 refinancing. Dkt. No. 38 at 20–21. SoFi therefore urges that it “intend[ed] to use the information 14 in connection with a credit transaction involving the consumer” and there was “a legitimate 15 business need,” as permitted under the statute. See 15 U.S.C. §§ 1681 (b)(a)(3)(A), (F). 16 Plaintiffs suggest that SoFi’s argument ignores the allegations in the complaint. Plaintiffs 17 allege that on June 19, 2020, Mr. Segarceanu uploaded a copy of the front and back of his green 18 card as part of his loan application. FAC at ¶ 89. Plaintiffs further allege that this copy showed 19 that the two-year validity period of the card ended on September 11, 2021. Id. Because SoFi had 20 a policy that permanent residents were ineligible for loans if their green cards had a validity period 21 of two years or less, see id. at ¶ 6 , Plaintiffs allege that on June 19 SoFi knew or should have 22 known that Mr. Segarceanu was facially ineligible under SoFi’s lending policies, id. at ¶ 91 . 23 Nevertheless, SoFi pulled Mr. Segarceanu’s credit report the next day, id., and only afterward 24 emailed him to ask for further information about the extension of his green card, id at ¶ 92. 25 Plaintiffs conclude that there was no business need to pull Mr. Segarceanu’s credit report because 26 SoFi already had information—the copy of his green card—showing that he was ineligible. See 27 Dkt. No. 41 at 15. SoFi responds that Mr. Segarceanu’s eligibility was not determined until after 1 Dkt. No 43 at 11–13. SoFi further suggests that the fact that it requested this form at all indicates 2 that Mr. Segarceanu was not facially ineligible based on his application materials received at that 3 time. See id. at 12–13. 4 The parties appear to dispute SoFi’s actual knowledge regarding Mr. Segarceanu’s 5 ineligibility. But at this stage, the Court must accept as true Plaintiffs’ well-pleaded factual 6 allegations. And the complaint alleges that SoFi had a copy of Mr. Segarceanu’s green card 7 before it pulled his credit report; the green card indicated that it expired in less than two years; and 8 as a matter of USCIS policy, Mr. Segarceanu could not renew his green card at that time to extend 9 its validity period.7 See FAC at ¶¶ 89, 92–93. The complaint further alleges that SoFi “had actual 10 knowledge that he was not eligible under its lending policies.” See id. at ¶ 91 . The Court finds 11 that Plaintiffs have therefore sufficiently alleged that Mr. Segarceanu’s credit report could not 12 have been “in connection with a credit transaction involving the consumer” and there was not “a 13 legitimate business need” to obtain his credit report. See 15 U.S.C. §§ 1681 (b)(a)(3)(A), (F). The 14 Court therefore denies SoFi’s motion to dismiss the FCRA claim. Once the parties develop a 15 factual record in discovery, the Court can revisit this issue at a later stage as necessary. 16 IV. CONCLUSION 17 Accordingly, the Court DENIES SoFi’s motion to compel arbitration and GRANTS IN 18 PART and DENIES IN PART the motion to dismiss. The Court will grant Plaintiffs an 19 opportunity to amend the complaint to address the deficiencies identified above as to the Unruh 20 Civil Rights Act claim. Any amended complaint must be filed within 21 days of this order. The 21 Court further SETS a telephonic case management conference on May 4, 2021, at 2:00 p.m. All 22 parties, counsel, and members of the public and press may use the following dial-in information 23 below to access the conference line: 24 Dial In: 888-808-6929 25 Access Code: 6064255 26 // [27] 1 The parties shall also file a joint case management statement by April 27, 2021, and must 2 || be prepared to discuss at the case management conference how to move this case forward 3 efficiently. 4 IT IS SO ORDERED. 5 Dated: 4/12/2021 ° HAYWOOD S. GILLIAM, JR. 7 United States District Judge [13] © [16] = 17 Z 18