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Nevada Federal Court Denies Motion to Compel Arbitration by Rapid Financial Solutions in Debit Card Suit

by David M. Reutter

On August 30, 2021, a federal district court in Nevada denied a motion to compel arbitration in a lawsuit alleging that forcing prison release debit cards upon prisoners violates state and federal laws. Chief Judge Miranda M. Du ruled the plaintiff did not assent to the Cardholder Agreement and that by paying his release money with it, an “unconscionable adhesion contract” was formed by the card issuer, Rapid Financial Solutions (RFS).

The order by the U.S. District Court for the District of Nevada was issued in a lawsuit filed by former state prisoner Christopher Watkins. Ten days prior to his release from Stewart Conservation Camp, a facility housing prisoner firefighters, Watkins was instructed by his case worker to sign documentation to close out his prison trust account. On April 6, 2020, the Nevada Department of Corrections (DOC) then credited $431.20 onto an RFS “Access Freedom Card.” Four days later, on April 10, a weekly account maintenance fee of $1.50 began to be charged.

Watkins was released from DOC custody on April 13, 2020. He was dropped off at a convenience store down the street from the prison and given the release card with a tri-folded Cardholder Agreement affixed to it. When he attempted to use the card at an ATM to obtain money to purchase a bus pass, the transaction was denied. He called the number on the card and was told it was not activated, but that he could use the card in a few minutes. He subsequently made three transactions that day.

The Cardholder Agreement provided that by using the card Watkins accepted the Agreement’s terms, which include a waiver to bring a court action and a submission to binding arbitration. Based upon that provision, RFS moved to compel arbitration of Watkins’ claims.

To enforce an arbitration agreement, the Court said it must determine (1) whether the parties agreed to arbitrate their disputes and (2) if the claims in dispute are within the scope of the arbitration agreement.

RFS argued that Watkins’ telephone call to activate the release card constituted acceptance of the Cardholder Agreement. The Court disagreed. It found there was no evidence that Watkins had a copy of the Agreement when he called RFS, nor had he ever signed anything agreeing to any terms of the release card.

RFS also argued that because the Agreement provided “your acceptance and/or use of the Card will be evidence of your agreement,” there existed an adhesion contract, which is a standardized agreement under which goods or services are offered on a ‘take it or leave it’ basis. But if procedural and substantive unconscionability exists, a court can exercise discretion not to enforce it. In this instance the Court found both.

Watkins was unaware and had no reason to believe that his acceptance of the card bound him to a contract with Defendants. Moreover, he had to take the card if he wanted the return of his money because it had been preloaded onto the card before he called to activate it, at which point he was already subject to a $1.50 weekly maintenance fee.

“That amount may appear nominal to some, but to an inmate earning $1.00 per hour as a voluntary firefighter, with only $0.10 going into his account, that amount cannot be understated,” the Court wrote. “Moreover, he did not have any cash or any method of payment other than the release card and had no means of transportation. His only option was to use the card to purchase a bus pass.”

As Watkins was not in a position to negotiate a contract or its terms, the Court found there was procedural unconscionability. It found substantive unconscionability existed because Watkins neither applied for or requested the card and he was subject to fees even before receiving the card.

In other words, the Court found there is no consent in foisting a card on a prisoner.

Thus Defendant’s motion was denied. Watkins is represented by Christian J. Gabroy and Kaine M. Messer of the Law Office of Christian Gabroy in Henderson; Joshua D. Buck, Leah Lin Jones, Mark R. Thierman, and Joshua R. Hendrickson of Thierman Buck, LLP, in Kensington, California; and Lance J. Hendron, Attorney at Law, of Las Vegas. See: Watkins v. Rapid Fin. Sols., 2021 U.S. Dist. LEXIS 163544 (D. Nev.).

The case has now returned to the discovery phase. PLN will report updates as they become available. See: Watkins v. Rapid Fin. Sols., USDC (D. Nev.), Case No. 3:20-cv-00509.

The Human Rights Defense Center (HRDC), PLN’s publisher, is also suing RFS for its debit card practices in federal district court in Tacoma, which has already certified a national class and has also defeated attempts at compelling arbitration. [See: PLN, Sept. 2019, p.46; and Aug. 2021, p.60.] See also: Reichert v. Keefe Commissary Network, USDC (W.D. Wa.), Case No. 3:17-CV-05848.

Additionally, HRDC is suing debit card companies NUMI in federal court in Oregon and JPay in federal court in California. If you had a debit card issued to you after being released from prison or a jail and were charged fees to access your own money please contact: Dan Marshall, Litigation Director, Human Rights Defense Center, P.O. Box 1151, Lake Worth, FL 33460. 561 360-2523 or e mail:

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