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Iliev v. Elavon, Inc.

United States District Court, N.D. Illinois, Eastern Division

July 31, 2019

MAGGIE ILIEV and BULL TRANS GROUP, INC., d/b/a Playroom Café, Plaintiffs,



         Maggie Iliev and her company Bull Trans Group, Inc. (collectively Iliev) have sued Elavon, Inc. and U.S. Bank. The defendants have moved to compel arbitration.


         Iliev started a new business-Bull Trans, which does business as Playroom Café-and wanted to be able to accept debit and credit card payments. She decided to obtain a point-of-sale (POS) system for this purpose and met with Michael Dato, an Elavon employee, to discuss payment processing services that Elavon could provide. Dato said that Elavon could provide, in return for various fees, a system that would allow her to process payments, which would result in funds being deposited into a bank account of her choice.

         Iliev agreed to obtain a POS system from Elavon. She alleges that Dato told her she would have to submit an application and be approved. He asked for certain materials regarding Iliev and her company, told her she could e-mail them to him, and said that he would complete an application for her and then e-mail her a link allowing her to sign the application electronically.

         Iliev says that on November 17, 2017 she received an e-mail from Dato with a link that said "sign now." When she clicked the link, a web page opened and prompted her to create and enter a password and certain security questions. Once she did this, another web page appeared that, she alleges, "contained solely a blank rectangle white box with a line for an electronic signature," 2d Am. Compl. ¶ 40, and nothing else-no contract or agreement, and no reference to arbitration. Iliev signed as indicated, and shortly after this she alleges she received a text message from Dato saying her application for a POS system had been approved. She says that she never saw or received a written agreement.

         Elavon used Iliev's U.S. Bank account to deposit electronic payments. She alleges that transactions for several dates in March 2018 were erroneously deposited into some other business's account. She called U.S. Bank to find out why her account had not received any funds and was told that the POS equipment had been programmed incorrectly. The transactions were ultimately reversed and this time were deposited into Iliev's U.S. Bank account. However, this resulted in certain customers being charged twice, and this second problem was not corrected for several days. Iliev says that angry customers contacted her to complain, accused her of credit card fraud, vowed never to patronize her business again, and posted negative online reviews. They also disputed the payments, resulting in multiple chargebacks to Iliev's account.

         Iliev has sued the defendants for violating the Electronic Fund Transfer Act, 15 U.S.C. § 1693; for breaching an alleged oral contract to deposit correctly funds received via the POS system; for negligence; for breach of fiduciary duty; and for breach of the Illinois Consumer Fraud Act. As indicated earlier, the defendants have moved to stay the lawsuit and compel arbitration. They contend that all of Iliev's claims against both defendants arise from the contract they contend she entered into with Elavon. U.S. Bank also contends that her claims against it arise from her account agreement with the bank. Both agreements contain arbitration provisions.

         1. Claims against Elavon

         The purported agreement between Iliev and Elavon, which bears the title "Company Agreement," contains a term stating that "By signing this document below you are agreeing on behalf of the Company to a mandatory binding arbitration agreement set forth in the TOS and expressly incorporated herein." The terms of service contain a provision stating, in relevant part:

Arbitration. All claims, controversies or disputes between the parties arising out of or related to the Agreement, the schedules to this Agreement or the relationship between the parties will be submitted to and decided by arbitration held in the city and state in which the Company maintains its principal place of business and in accordance with the Commercial Arbitration Rules and Mediation Procedures of the American Arbitration Association . . . .

Terms of Service ¶ 18.6.

         There is no question that Iliev's claims against Elavon arise out of their relationship and are therefore within the scope of their alleged agreement. The dispute that the Court must address involves whether Elavon entered into the agreement, of which the arbitration requirement is a part. Arbitration is a matter of contract, and a party cannot be required to submit to arbitration a dispute that it has not agreed to arbitrate. AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648 (1986). When there is a dispute over the existence of an arbitration agreement, a court assesses the evidence as it would on a motion for summary judgment, viewing the facts and drawing reasonable inferences in favor of the non-movant, here Iliev. See Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002). If there is a genuine factual dispute, a trial regarding the existence of an agreement to arbitrate under 9 U.S.C. § 4 is required.

         The actual link that Dato sent to Iliev expired well before this lawsuit was filed and cannot be recreated. But Dato says in an affidavit that based on Elavon's standard practices, when an applicant like Iliev follows a link like the one he sent her and then creates the necessary password, the "Company Agreement"-which turns out to be the same thing as the customer application-opens electronically. The last page contains two signature lines, and the applicant may add her signature by using her finger or a stylus on a touch screen or by ...

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