govinfo:USCOURTS-azd-2_21-cv-00835-0

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WO 
 
 
 
 
IN THE UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF ARIZONA 
 
 
Eva Cornell, 
 
Plaintiff, 
 
v. 
 
Desert Financial Credit Union, et al., 
 
Defendants. 
No. CV-21-00835-PHX-DWL 
 
ORDER 
 
 
 
In this putative class action, Eva Cornell (“Plaintiff”) alleges that Desert Financial 
Credit Union ( “Desert Financial” ) violated certain federal regulations that require clear 
disclosure of a bank’s overdraft practices. In response, Desert Financial has moved to 
compel arbitration based on an arbitration clause that it added to its standard terms and 
conditions several years after Plaintiff opened her account . (Doc. 11.) For the following 
reasons, the Court will order the parties to file supplemental briefing concerning whether 
the addition of this clause resulted in a valid contract modification. 
BACKGROUND 
I. Factual Background And Arbitration Agreement 
Although Plaintiff alleges a significant number of facts in her complaint, only a few 
are relevant to the motion to compel arbitration. The Court accordingly limits its recitation 
to uncontested facts that bear on arbitrability and deals with disputed facts as they become 
relevant to the Court’s analysis. 
It is undisputed that, when P laintiff originally opened her account with Desert 

 
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Financial, there was no arbitration clause in the account agreement. (Doc. 11 at 3; Doc. 
12-3; Doc. 14 at 6.) However, when signing the relevant applications, Plaintiff agreed to 
be bound by Desert Financial’s account terms and conditions and agreed that Desert 
Financial “may change those terms and conditions from time to time.” (Doc. 12-1 at 2; 
Doc. 12-2 at 2.) Plaintiff also elected to receive monthly bank statements from Desert 
Financial via email. (Doc. 12 ¶ 7; Doc. 12-8; Doc. 12-9.) 
It is undisputed that Desert Financial sent Plaintiff’s monthly statement for the 
period ending on March 20, 2021 “to the primary email address it has on file for [Plaintiff].” 
(Doc. 12 ¶ 6.)1 However, Plaintiff avows in a declaration that she did not actually review 
that statement (or any of the other monthly statements that Desert Financial emailed to 
her). (Doc. 18 -1 ¶ 3.) At any rate, it is undisputed that the monthly statement at issue 
included a graphic inlay that communicated the following: 
 
NOTICE 
Change-in-Terms 
 
Effective February 10, 2021, Desert Financial updated its Statements of 
Terms, Conditions, and Disclosures to change how we will resolve legal 
disputes related to your accounts at Desert Financial. 
 
Please see the Dispute Resolution section of the Statement of Terms, 
Conditions, and Disclosures on www.desertfinancial.com/disclosures for 
more information. 
 
Visit DesertFinancial.com/Disclosures 
 
(Doc. 12-6 at 2.) It is also undisputed that the cross -referenced website displayed Desert 
Financial’s updated account agreement, which now includes the following arbitration 
clause: 
 
 
1 Shaun Mitchell, the regional manager of the Desert Financial branch where Plaintiff 
opened her account, declared under penalty of perjury that Desert Financial “sent copies of 
the[] periodic statements to the primary email address it has on file for [Plaintiff].” (Doc. 
12 at 2.) Although Plaintiff provides her own declaration avowing that she did not see the 
statement, she does not dispute that Desert Financial sent it. (Doc. 18 at 1.) As a result, 
there is no dispute as to whether Desert Financial sent the statement to Plaintiff. 

 
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DISPUTE RESOLUTION; MANDATORY ARBITRATION . 
READ THIS PROVISION CAREFULLY AS IT WILL HAVE A 
SUBSTANTIAL IMPACT ON HOW LEGAL CLAIMS YOU 
AND THE CREDIT UNION HAVE AGAINST EACH OTHER 
WILL BE RESOLVED. 
 
a. Except as expressly provided herein . . . , you agree that any 
controversy, dispute, or claim (‘Claim’) between you and Us t hat 
arises out of or relates to [this Agreement], your account, and/or the 
relationships of the parties hereto shall be resolved or otherwise 
settled by binding arbitration . . . . 
 
* * * 
 
f. THE PARTIES UNDERSTAND THAT THEY WOULD 
HAVE HAD THE RIGHT TO LITIGATE THROUGH A 
COURT AND TO HAVE A JUDGE OR JURY DECIDE THEIR 
CASE. HOWEVER, THEY UNDERSTAND AND CHOOSE TO 
HAVE ANY CLAIMS DECIDED THROUGH AN 
ARBITRATION. . . . 
 
* * * 
 
h. Arbitration is not a mandatory condition of you maintaining an 
account with Credit Union. If you do not want to be subject to this 
arbitration provision, YOU MAY OPT OUT of this Arbitration 
Provision . . . . 
 
(Doc. 12 ¶ 5; Doc. 12-4 at 6-7.) Finally, it is undisputed that Plaintiff never subsequently 
opted out of the arbitration provision. 
II. Procedural Background 
On May 5, 2021, Plaintiff filed the complaint. (Doc. 1.) 
On June 24, 2021, Desert Financial moved to compel arbitration. (Doc. 11.) That 
same day, Desert Financial separately moved to dismiss under Federal Rules of Civil 
Procedure 12(b)(1) and 12(b)(6). (Doc. 13.) 
On July 26, 2021, Plaintiff filed responses to both motions. (Docs. 18, 19.) 
On August 24, 2021, Desert Financial filed replies in support of both motions. 
(Docs. 22, 23.) 

 
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On September 30, 2021, Plaintiff filed a notice of supplemental authority . (Doc. 
24.) 
On October 4, 2021, Desert Financial responded to Plaintiff’s notice. (Doc. 25.) 
ANALYSIS 
The FAA provides that written agreements to arbitrate disputes “shall be valid, 
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the 
revocation of any contract.” 9 U.S.C. § 2. Thus, absent a valid contractual defense, the 
FAA “leaves no place for the exercise of discretion by a district court, but instead mandates 
that district courts shall direct the parties to proceed to arbitration on issues as to which an 
arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 
218 (1985). The district court’s role under the FAA is “limited to determining (1) whether 
a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses 
the dispute at issue.” Chiron Corp. v. Ortho Diagnostic Sys., Inc. , 207 F.3d 1126, 1130 
(9th Cir. 2000). 
I. Gateway Questions Of Arbitrability 
The questions of whether a valid agreement to arbitrate exists and whether the 
agreement encompasses the dispute at issue are sometimes called the “gateway” questions 
of arbitrability. Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010). Although the 
gateway questions are ordinarily resolved by the court, parties may agree to arbitrate one 
or both gateway issues by including a delegation cl ause in the arbitration agreement: “An 
agreement to arbitrate a gateway issue is simply an additional, antecedent agreement the 
party seeking arbitration asks the federal court to enforce, and the FAA operates on this 
additional arbitration agreement just as it does on any other.” Id. at 70. The evidence of 
the parties’ intent to delegate such issues to the arbitrator must be “clear and unmistakable.” 
Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). 
Desert Financial asserts that, because the gateway questions have been expressly 
delegated to an arbitrator, this Court must compel arbitration without considering any 
preliminary issues. According to Desert Financial, this outcome is compelled by the facts 

 
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that (1) the arbitration clause appe aring in the current version of the Desert Financial 
account agreement states that “all issues are for the arbitrator to decide, including . . . all 
gateway issues of arbitrability”; and (2) that arbitration clause also requires that the parties 
arbitrate under the American Arbitration Association’s (“AAA”) rules, which the Ninth 
Circuit has taken to generally mean that the parties agreed to arbitrate arbitrability. (Doc. 
11 at 5-7.) In response, Plaintiff asks the Court to retain this case until Desert Financial 
“demonstrate[s] that [Plaintiff], at the very least, gave implied consent to the [arbitration] 
term.” (Doc. 18 at 3.) Plaintiff also emphasizes that a “court always decides the threshold 
issue of contract formation.” (Id.) Desert Financial largely abandons the arbitrability issue 
in its reply. 
Plaintiff has the better side of this issue. It may be true that the arbitration clause 
appearing in the current version of Desert Financial’s account agreement allows an 
arbitrator to determine the gateway questions and requires the application of AAA’s rules 
during the arbitration, but “arbitration is a matter of contract and a party cannot be required 
to submit to arbitration any dispute which he has not agreed so to submit.” AT&T Techs., 
Inc., v. Commc’ns Workers of Am., 475 U.S. 643, 648 (1986) (quoting United Steelworkers 
of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960)). Plaintiff asserts there was 
never a “[m]eeting of the [m]inds” about the arbitration agreement and she thus cannot be 
bound by any of its terms. (Doc. 18 at 4.) The Court agrees—when, as in this case, there 
is a legitimate dispute about whether the party opposing arbitration assented to the 
modification of a contract to add an arbitration clause, it would be improper for a court to 
robotically compel arbitration based on delegation principles without conducting any 
independent analysis of the contract-modification issue. 
The primary case on which Desert Financial relies, Brennan, does not compel a 
different result. There, the “single issue” before the Ninth Circuit was “who—an arbitrator 
or a judge —should decide whether the Arbitration Clause is unconscionable.” 796 F.3d 
at 1128 (quotation marks omitted). The Brennan court took as a given that the parties had 
formed an agreement to arbitrate. Id. at 1127-28 (“Brennan . . . signed an Employment 

 
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Agreement with Opus Bank . . . [he] acknowledged that section 16 of the Employment 
Agreement (the Arbitration Clause), entitled ‘Dispute Resolution Procedures,’ was a 
mandatory arbitration provision . . . .”) Here, Plaintiff disputes that precise issue. Brennan 
also limited its holding “t o the facts of the present case, which [involved] an arbitration 
agreement between sophisticated parties.” Id. at 1131 (quotation marks omitted). The 
court explicitly did not decide “the effect [if any] of incorporating AAA arbitration rules 
into consumer contracts or into contracts of any nature between unsophisticated parties.” 
Id. (cleaned up). Here, Desert Financial does not assert that Plaintiff is a sophisticated 
party. 
Desert Financial’s reliance on t his Court’s ruling in Herrera v. Verra Mobili ty 
Corp., 2020 WL 6781269 (D. Ariz. 2020), is misplaced for similar reasons. There, the 
parties did not dispute the existence of an agreement to arbitrate and simply disagreed about 
who would decide whether a given party could bring a claim under that agreement. Id. at 
*3. 
II. Validity Of Contract Modification 
As noted, t he district court ’s role under the FAA is “limited to determining (1) 
whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement 
encompasses the dispute at i ssue.” Chiron Corp., 207 F.3d at 1130. Plaintiff seemingly 
does not dispute that, if she validly assented to the current version of Desert Financial’s 
account agreement, the arbitration clause within that agreement encompasses the dispute 
at issue. Thus, it is only necessary to address whether a valid agreement to arbitrate exists. 
If so, the Court must “direct the parties to proceed to arbitration on issues as to which an 
arbitration agreement has been signed.” Dean Witter Reynolds, 470 U.S. at 218. 
A. Legal Standard 
The party seeking to compel arbitration “bears the burden of proving the existence 
of a valid arbitration agreement by the preponderance of the evidence.” Bridge Fund Cap. 
Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1005 (9th Cir. 2010). “It is permissible 
to consider evidence outside the pleadings when resolving a motion to compel arbitration. 

 
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To the extent there are conflicts in the evidence submitted by the parties, the court applies 
a standard similar to that applicable for a motion for summary judgment.” Scott-Ortiz v. 
CBRE Inc., 501 F. Supp. 3d 717, 721 (D. Ariz. 2020) (citations and internal quotation 
marks omitted). If, after review of the parties’ arguments, there is a factual question about 
the formation of the agreement to arbitrate, the Court must deny the motion and resolve the 
dispute through an “evidentiary hearing or mini -trial.” McCarthy v. Providential Corp. , 
1994 WL 387852, *2 (N.D. Cal. 1994). 
B. The Parties’ Arguments 
As noted, it is undisputed that when Plaintiff opened her ac count with Desert 
Financial, the account agreement did not require arbitration. Nevertheless, Desert 
Financial asserts that “[b]efore Plaintiff filed this lawsuit, Desert Financial updated its 
Account Agreement. Desert Financial provided notice to Plaintiff that it had ‘updated its 
Statement of Terms, Conditions, and Disclosures to change how we will resolve legal 
disputes related to y our accounts’ and directed Plaintiff to those updated terms on Desert 
Financial’s website.” (Id. at 2.) The agreement then stated that “[a]rbitration is not a 
mandatory condition of you maintaining an account with Credit Union. If you do not want 
to be subject to this arbitration provision, YOU MAY OPT OUT of this Arbitration 
Provision.” (Id.) Desert Financial argues that because Plaintiff failed to “exercise her right 
to opt out of the arbitration provision,” “an agreement to arbitrate between the parties” 
exists. (Id. at 8.) 
Plaintiff responds that there was no “[m]eeting of the [m]inds” about the arbitration 
clause. (Doc. 18 at 4.) Because there was no arbitration clause in the account agreement 
when Plaintiff opened her account, Plaintiff asserts that the “motion to compel turns on 
how [Desert Financial] might have obtained Plaintiff’s consent to arbitrate, when she had 
not previously consented to do so.” (Id.) According to Plaintiff, although Desert Financial 
argues “ that it gave Plaintiff not ice of the arbitration clause on her monthly bank 
statement,” “Plaintiff did not actually receive notice through this method.” ( Id. at 6.) 
Additionally, Plaintiff asserts that, for several reasons, Desert Financial “failed to present 

 
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the necessary evidence required to demonstrate Plaintiff’s implied consent to the arbitration 
clause.” (Id.) 
Desert Financial replies that, when Plaintiff opened her account, she agreed that 
Desert Financial “may, at any time, change [the agreement] by pr oviding you with the 
appropriate notice required by law,” including “communications in electronic format,” 
such as “disclosures, notices, [and] agreements.” (Doc. 22 at 3.) Desert Financial notes 
that Plaintiff also agreed that communications would “be deemed to have been provided to 
you if . . . sent to your e -mail address previously provided to Credit Union” or “made 
available to you in electronic form on the Credit Union website.” ( Id.) Given that Desert 
Financial sent Plaintiff an electronic stateme nt providing notice that “Desert Financial 
updated its . . . Terms . . . to change how we will resolve legal disputes related to your 
accounts at Desert Financial,” Desert Financial concludes that it “sent Plaintiff notice of 
the updated [terms] in the exa ct manner Plaintiff agreed to receive such notice” and 
Plaintiff accepted the terms by failing to opt out. (Id. at 4-5.) 
C. Analysis 
Courts look to state law to determine whether a valid agreement to arbitrate exists. 
Davis v. Nordstrom, Inc., 755 F.3d 1089, 1093 (9th Cir. 2014). Here, the parties agree that 
Arizona law applies. (Doc. 18 at 4; Doc. 22 at 3.) 
The key question is whether Desert Financial validly modified its contract with 
Plaintiff, which did not originally include an arbitra tion clause, to add such a clause. In 
Arizona, “to effectively modify a contract, . . . there must be: (1) an offer to modify the 
contract, (2) assent to or acceptance of that offer, and (3) consideration. ” Demasse v. ITT 
Corp., 984 P.2d 1138, 1144 (Ariz. 1999). “An offer has no binding effect unless and until 
accepted by the offeree to whom the offer was directed.” Goodman v. Physical Res. Eng’g, 
Inc., 270 P.3d 852, 855 (Ariz. Ct. App. 2011). 
Here, the first and third elements of the modification test are not seriously 
disputed—it is clear that Desert Financial offered to modify the terms and conditions of its 
contractual relationship with Plaintiff, by providing notice in the March 2021 account 

 
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statement that it was changing those terms and conditions to add an arbitration clause, and 
Plaintiff does not dispute that Desert Financial gave adequate consideration for the 
proposed modification. Thus, the only disputed issue is whether Plaintiff “assent[ed] to or 
accept[ed]” the modification offer. 
Unfortunately, none of the cases cited by the parties provide authoritative guidance 
on how Arizona courts would resolve this issue. In support of its claim that Plaintiff did 
accept the modification offer, Desert Financial cites Hart v. Charter Commc’ns, Inc., 814 
F. App’x 211 (9th Cir. 2020), Needleman v. Golden 1 Credit Union, 4747 F. Supp. 3d 1097 
(N.D. Cal. 2020), CenTrust Mortg. Corp. v. PMI Mortg. Ins. Co., 800 P.2d 37 (Ariz. Ct. 
App. 1990), and W. Virginia CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 796 S.E.2d 
574 (W. Va. 2017) . (Doc. 22 at 4.) In support of her claim that she did not accept the 
modification offer, Plaintiff cites Velasquez-Reyes v. Samsung Elecs. Am., Inc. , 777 F. 
App’x 241 (9th Cir. 2 019), Norcia v. Samsung Telecommunications Am., LLC, 845 F.3d 
1279 (9th Cir. 2017) , Knutson v. Sirius XM Radio Inc. , 771 F.3d 559 (9th Cir. 2014) , 
Nguyen v. Barnes & Noble, Inc. , 763 F.3d 1171 (9th Cir. 2014) , Adams v. Liberty Bank , 
2021 WL 3726007 (D. Conn. 2021), and Coleman v. Alaska USA Fed. Credit Union, 2020 
WL 110742 (D. Alaska 2020). (Doc. 18 at 4-6; Doc. 24.) 
The problem with the parties’ reliance on Norcia, Nguyen, Knutson, Velasquez-
Reyes, Needleman, and Hart is that all of those cases apply California law or its equivalent.2 
California has a well-developed body of law concerning electronic consumer agreements, 
and in that state “mutual assent frequently turns on whether the consumer had reasonable 
notice of a merchant’s terms of service agreement.” Needleman, 474 F. Supp. 3d at 1103. 
When determining whether a consumer had reasonable notice, California courts apply the 
theories of “constructive notice” and “inquiry notice,” which may result in a finding of 
acceptance even when a consumer does not have actual notice of a contract’s terms. Id. 
However, the parties have not cited (and the Court has not fo und) any Arizona cases 
adopting similar theories of notice in a consumer contract setting. 
 
2 Nguyen applied New York law, but the Ninth Circuit found that “both California 
and New York law dictate the same outcome.” 763 F.3d at 1175. 

 
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Next, in Coleman, which applied Alaska law, it was “undisputed” that the defendant 
did not give notice to its members before adding an arbitration provision. 2020 WL 110742 
at * 5. Additionally, the court noted that the defendant “did not comply with the contract’s 
specified method for modification.” Id. For these reasons, Coleman is of little utility here. 
Plaintiff’s invocation of Adams is even more misplaced. It has nothing to do with 
arbitration or contract formation.3 
Finally, although CenTrust is an Arizona case that mentions the concept of “inquiry 
notice,” it did not apply that concept to the question of contract formation (or modification), 
let alone suggest that a consumer contract may be modified through inquiry notice —
instead, it simply recognize d that “ an insurer cannot rescind a policy because of an 
insured’s misrepresentations if the insurer knows the true facts or has sufficient indications 
that would put a prudent person on notice so as to induce an inquiry which, if done with 
reasonable thoroughness, would reveal the truth.” 800 P.2d at 43 (citations and internal 
quotation marks omitted). This discussion has little app arent relevance to the issues 
presented here. 
This leaves West Virginia CVS Pharmacy, which is a decision by the West Virginia 
Supreme Court applying Arizona law. There, a group of pharmacies signed “ Provider 
Agreements” with CVS in 2004. 796 S.E.2d at 583-84. By signing these agreements, the 
pharmacies agreed to be bound by CVS’s “Provider Manual.” Id. The Provider Manual, 
in turn, contained a provision stating that CVS could, “[f]rom time to time, . . . amend the 
Provider Agreement, including the Provider Manual . . . , by giving notice to Provider of 
the terms of the amendment and specifying the date the amendment becomes effective.” 
Id. Critically, although the Provider Manual did not contain an arbitration clause at the 
time the pharmacies signed the Provider Agreements, CVS added such a clause in 2009. 
Id. One question addressed in West Virginia CVS Pharmacy was whether the pharmacies 
 
3 Although Plaintiff may have cited Adams primarily for the purpose of respondin g 
to a separate Rule 12(b)(6) motion filed by Desert Financial, the final sentence of Plaintiff’s 
notice of supplemental authority states that “[t]his Court should adopt the reasoning in the 
foregoing case and should deny Defendant’s Motion to Compel Arbit ration . . . .” (Doc. 
24 at 3.) 

 
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had validly assented to the addition of the arbitration clause, such that they could be 
compelled to arbitrate their claims against CVS. Id. The West Virginia Supreme Court 
decided this question in the affirmative, concluding that, “ under Arizona law, the 
arbitration agreement was incorporated by reference .” Id. The court identified two 
Arizona cases as supporting this conclusion: (1) Capital One Bank (USA), N.A. v. Davey , 
2013 WL 6729261 (Ariz. Ct. App. 2013); and (2) Weatherguard Roofing Co. v. D.R. Ward 
Construction Co., 152 P.3d 1227 (Ariz. Ct. App. 2007). 
Although West Virginia CVS Pharmacy certainly provides support for Desert 
Financial’s position in this case, given its application of Arizona law and the close 
similarity between its facts and the alleged contract modification here, it is not dispositive. 
As an initial matter, “[i]n determining the law of the state for purposes of diversity, a federal 
court is bound by the decisions of the highest state court. If the state’s highest court has 
not decided an issue, it is the responsibility of the federal courts sitting in diversity to 
predict how the state high court would resolve it.” Albano v. Shea Homes Ltd. P'ship, 634 
F.3d 524, 530 (9th Cir. 2011) (citation and internal quotation marks omitted). Because 
West Virginia CVS Pharmacy was not a decision by the Arizona Supreme Court, it does 
not provide definitive guidance on how Arizona law would apply to the contract -
modification issue posed in this case. 
Additionally, the West Virginia Supreme Court relied heavily on Capital One Bank 
(USA), N.A. v. Davey , 2013 WL 6729261 (Ariz. Ct. App . 2013) , in formulating its 
understanding of Arizona law. The difficulty with this approach is that Capital One Bank 
is an unpublished decision issued by the Arizona Court of Appeals in 2013. Under Arizona 
law, such a decision is not only non-precedential—it is not even citable. See Ariz. R. Sup. 
Ct. 111(c)(1)(C) (“Memorandum decisions of Arizona state courts are not precedential and 
such a decision may be cited only . . . for persuasive value, but only if it was issued on or 
after January 1, 2015.”).4 
 
4 The Court also notes that Capital One Bank can be construed as containing some 
internal inconsistencies. On the one hand, Capital One Bank states that a contract -
modification offer “cannot be accepted unless the offeree actually knows of the offer’s 
existence.” 2013 WL 6729261 at *5 (emphasis added). This passage suggests that 

 
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The other Arizona decision on which the West Virginia Supreme Court relied, 
Weatherguard Roofing Co. v. D.R. Ward Construction Co., 152 P.3d 1227 (Ariz. Ct. App. 
2007), is a published decision , so it is fair game for purposes of assessing the status of 
Arizona law. Air-Sea Forwarders, Inc. v. Air Asia Co., 880 F.2d 176, 186 (9th Cir. 1989) 
(“The decisions of the state ’s intermediate appellate courts are data that a federal court 
must consider in undertaking this analysis.” ). Unfortunatel y, the Court does not read 
Weatherguard Roofing as directly addressing the issue posed here. In Weatherguard 
Roofing, a general contractor signed a prime contract with a client to build a residential 
home. 152 P.3d at 1229. This contract contained an arbitration clause. Id. Later, the 
general contract or entered into a series of separate contracts with a subcontractor to 
perform waterproofing and other tasks. Id. at 1228. Although the subcontracts did not 
specifically refer to arbitration, “the last p age of [each] subcontract stated, ‘The attached 
General Conditions are part of the subcontract. ’” Id. at 1229. Given this backdrop , the 
Arizona Court of Appeals concluded that the arbitration clause of the prime contract was 
properly incorporated by reference into the subcontracts, “even if [the general contractor] 
failed to attach a copy of the general conditions to the subcontract.” Id. at 1230. 
Weatherguard Roofing differs from this case because the question there wasn’t 
whether a contractual partner could modify a contract years after it was signed by adding 
an arbitration clause and then sending notice of the modification to its counterparty —
instead, the issue was whether an arbitration clause that exist ed at the time of contract 
formation (albeit in a different document) could be expressly incorporated into the contract 
by reference. Accordingly, Weatherguard Roofing does not compel a ruling in Desert 
 
subjective knowledge on the part of the offeree is required. O n the other hand, Capital 
One Bank goes on to hold, two sentences later, that the offeror’s modification attempt was 
invalid because it had “ not shown that the [offeree] received the new agreement or that it 
followed its own guidelines for supplying adequa te notice of a change in terms to their 
customer agreement.” Id. This language suggests that subjective knowledge on the part 
of the offeree isn’t required—instead, it may be enough for an offeror to send the proposed 
modification to the offeree through a communication channel to which the offeree 
previously agreed. This seeming inconsistency is problematic here because both 
circumstances are present —Plaintiff claims that she never actually saw the modification 
offer, even though it is undisputed that the offer was sent to her through a communication 
channel to which she consented. 

 
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Financial’s favor on the disputed contract-modification issue in this case. 
In sum, the cases cited in the parties’ briefs do not fully address the key legal issue 
in this case —whether, under Arizona law, it is enough for a party seeking to modify a 
contact to send notice of the proposed modification to the offeree through a communication 
channel to which the offeree previously consented (which, it is undisputed, occurred here), 
or whether the offeror must also show that the offeree had actual, subjective knowledge of 
the proposed modification (which, accordin g to Plaintiff’s evidence, was absent here). 
Rather than attempt to resolve this issue through its own independent research, the Court 
will solicit supplemental briefing from the parties. 
Accordingly, 
IT IS ORDERED that the parties submit supplemental bri efing on the issue 
identified above. Each party’s brief must be filed by October 22, 2021 at 5:00 p.m. and 
may not exceed seven pages. 
 Dated this 8th day of October, 2021. 
 
 
 

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