Hartranft v. Encore Capital Group, Inc et al

Filing 56

ORDER granting in part 28 Defendant's Motion to Compel Arbitration, strike Class allegations, and stay proceedings. The previous stay in place in this matter is vacated. Defendants Motion to Compel Arbitration is granted. Defendants Motion to Dismiss is granted with prejudice. Defendants Motion to Strike is denied as moot. Defendants Motion to Stay is denied as moot. Plaintiffs Evidentiary Objections are overruled. Signed by Judge Roger T. Benitez on 6/16/2021. (jpp)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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SEAN HARTRANFT, on behalf of
himself and on behalf of a Class of all
other persons similarly situated,

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Plaintiff,

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v.

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ENCORE CAPITAL GROUP, INC., a
Delaware Corporation; and DOES 1
through 100, inclusive,

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Defendant.

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Case No.: 3:18-cv-01187-BEN-RBB
ORDER GRANTING-IN-PART
DEFENDANT’S MOTION TO
COMPEL ARBITRATION, STRIKE
CLASS ALLEGATIONS, AND STAY
PROCEEDINGS
[ECF No. 28]

19 I.

INTRODUCTION

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Plaintiff SEAN HARTRANFT, on behalf of himself and on behalf of a Class of all

21 other persons similarly situated (“Plaintiff”) brings this putative class action against
22 Defendants ENCORE CAPITAL GROUP, INC., a Delaware corporation (“Defendant” or
23 “Encore”) and Does 1 through 100 for damages and injunctive relief for negligently and/or
24 willfully or knowingly contacting Plaintiff on his cellular telephone to collect a debt owned
25 by Defendant’s subsidiary, in violation of the Telephone Consumer Protection Act, 47
26 U.S.C. § 227, et seq. (the “TCPA”) and Fair Debt Collection Practices Act, 15 U.S.C. §
27 1692, et seq. (the “FDCPA”). Second Amended Complaint, ECF No. 20 (the “SAC”) at
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1 21:1-8; ECF No. 28 at 8:3-7. Plaintiff pled his TCPA claim as a putative class action but
2 pled his FDCPA claim as an individual action. ECF No. 28 at 8:7-8.
Before the Court is Defendant’s Motion to Compel Arbitration, Strike Class

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4 Allegations, and Stay Proceedings (the “Motion”). ECF No. 28. The Motion was
5 submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and
6 Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 39. After considering the
7 papers submitted, supporting documentation, and applicable law, the Court GRANTS-IN8 PART Defendant’s Motion. The Court compels arbitration and strikes the class allegations
9 but finds dismissal appropriate rather than a stay.
10 II.

BACKGROUND

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A.

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In August 2015, Plaintiff opened a Costco Anywhere Visa Card Account with

Statement of Facts

13 American Express. SAC at 4, ¶ 14; see also Mot. at 9:20-21; Oppo. at 7:21-22 (citing
14 Declaration of Sean Hartranft at ¶ 3); Exhibit “B” to Reply Brief, ECF No. 35-1 at 21.
Sometime between January and March 2016,2 Citibank, N.A. (“Citibank”) sent

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16 Plaintiff a notice that his Costco credit card with American Express would soon become a
17 Costco Visa credit card with Citibank.3 Peck Decl. at 3, ¶ 9; see also Exhibit “1” to Peck
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Unless otherwise indicated, all page number references are to the ECF generated
page number contained in the header of each ECF-filed document.
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Although the notice does not contain a date, it states under “WHAT HAPPENS
NEXT?” that from March-June 2016, Plaintiff should continue using his Costco card from
American Express. Exhibit “1” to Declaration of William Peck, ECF No. 28-2 (“Peck
Decl.”) at 7. Thus, the Court finds it reasonable to infer that the notice was sent sometime
before March 2016.
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Plaintiff’s declaration states that he does “not recall ever receiving a formal notice
containing the terms of the new cardholder agreement, let alone the arbitration agreement.”
Declaration of Sean Hartranft in Support of Plaintiff’s Opposition to Motion, ECF No. 301 (“Hartranft Decl.”) at 2, ¶ 7. However, despite stating he does not recall receiving the
Arbitration Agreement, he never disputes actual receipt of the notice. See id.
The common law “mailbox rule” presumes that an addressee receives a letter
properly mailed. United States v. Meyer, 914 F.3d 592, 595 (8th Cir. 2019); Vacek v. U.S.
Postal Serv., 447 F.3d 1248, 1251 (9th Cir. 2006). The Ninth Circuit has held that “a sworn
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1 Decl., ECF No. 28-2 at 7-8; Mot. at 9:21-10:2; Oppo. at 7:22-23. Plaintiff alleges in the
2 SAC that when the conversion occurred, the balance from the old card was transferred to
3 the new card along with a new creditor, Defendant. SAC at 4, ¶ 14.
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Later that spring, on April 8, 2016, Citibank sent Plaintiff a formal transfer notice

5 for the account, informing him that his new Costco Anywhere card from Citibank would
6 be sent within four to six weeks. Mot. at 10:3-5 (citing Peck Decl. at 4, ¶ 10; Exhibit “2”
7 to Peck Decl., Card Agreement Guide, ECF No. 28-2 (the “Card Agreement”)). This notice
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statement is credible evidence of mailing for purposes of the mailbox rule.” Schikore v.
10 BankAmerica Supplemental Ret. Plan, 269 F.3d 956, 964 (9th Cir. 2001). In his
11 declaration, Mr. Peck declared that (1) it was Citibank’s regular business practice to send
a new card agreement to customers at the time of transitioning into a new account; (2)
12 Exhibit 2 to his declaration reflects a true and correct copy of the form transfer notice and
13 card agreement that Citibank’s records reflect were sent to Plaintiff on August 8, 2016; and
(3) “[i]t was, and is, Citibank’s regular business practice to include a note in card members’
14 computerized account records when mail is returned undeliverable,” and Citibank had no
15 record that the postal service returned any mailings related to Plaintiff’s account. See Peck
Decl. at 4, ¶¶ 10-12. The presumption under the mailbox rule may be rebutted by evidence
16 showing the document never arrived, “[m]erely stating that the document isn’t in the
17 addressee’s files or records—which is all that the state has done in this case—is insufficient
to defeat the presumption of receipt.” Huizar v. Carey, 273 F.3d 1220, 1223 n.3 (9th Cir.
18 2001); see also Meyer, 914 F.3d at 595. However, “rebuttal evidence must rise beyond the
19 level of a mere denial of receipt; this is because the mailbox rule applies precisely to avoid
the type of swearing contest in which the parties are presently involved.” Izett v. Crown
20 Asset Mgmt., LLC, No. 18-CV-05224-EMC, 2019 WL 4845575, at *6 (N.D. Cal. Oct. 1,
21 2019) (internal quotations omitted).
Here, Plaintiff does not deny living at the address to which the Card Agreement was
22 sent. See generally Hartranft Decl. He also does not deny receiving other mail from
23 Citibank at that address. He also admits he knew the card was converted but simply denies
receiving a “formal notice.” Id. at 2, ¶ 7. Thus, the Court considers Mr. Peck’s declaration
24 as credible evidence that Citibank mailed the notice and agreement to Plaintiff, and that he
25 received them. See, e.g., Izett, 2019 WL 4845575 at *6 (rejecting a plaintiff’s similar
arguments that he did not recall receiving the same Card Agreement Guide from Citibank
26 because Mr. Peck’s nearly identical declaration provided credible evidence that the
27 document had been mailed). Further, the Court finds that Plaintiff has failed to rebut the
presumption that Citibank mailed him the Card Agreements, and the Court assumes as true
28 that Plaintiff received the notice in light of Mr. Peck’s declaration.
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1 included a copy of the Card Agreement, which, in turn, included the new terms and
2 conditions that would govern the account. Mot. at 10:5-6 (citing Peck Decl. at ¶ 10; Ex.
3 2).
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First, the Card Agreement Guide provided that the “Agreement takes effect once you

5 use your Card,” and “[e]ven if you don’t use your Card, this Agreement will take effect
6 unless you contact us to cancel your Account within 30 days after we sent you this
7 Agreement.” Card Agreement Guide at 16. A statement from September 9, 2016, showing
8 charges from August 8, 2016 through September 8, 2016 and a balance of $16,613.35,
9 indicates that Plaintiff, according to the terms of the notice in the Card Agreement,
10 accepted the Card Agreement. See Exhibit “3” to Peck Decl., ECF No. 28-2 at 28.
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Second,

the

Card

Agreement

Guide

also

had

a

section

entitled

12 “COMMUNICATIONS,” which stated, “You agree that we (and/or our service providers
13 or anyone we authorize) may contact you at any phone number, email address, or mailing
14 address you provide or we obtain in other ways,” which “includes communications to
15 mobile, cellular/wireless, or similar devices . . . by live operator, auto-dialer, recorded or
16 artificial voice, text, or email.” Card Agreement Guide at 22; compare 47 U.S.C. §
17 227(b)(1)(A) (making it “unlawful for any person within the United States, or any person
18 outside the United States if the recipient is within the United States . . . . to make any call
19 (other than a call . . . made with the prior express consent of the called party) using any
20 automatic telephone dialing system or an artificial or prerecorded voice”) (emphasis
21 added).
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Third, the Card Agreement Guide had a section entitled “Arbitration,” which stated

23 that it “you cannot go to court, have a jury trial or initiate or participate in a class action if
24 you have a dispute with us.” Card Agreement Guide at 14. Later, the Card Agreement
25 Guide dedicated over a full page to the arbitration terms (the “Arbitration Provision”):
ARBITRATION.
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PLEASE READ THIS PROVISION
CAREFULLY.

OF

THE AGREEMENT

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This section provides that disputes may be resolved by binding arbitration.
Arbitration replaces the right to go to court, have a jury trial or initiate or
participate in a class action. In arbitration, disputes are resolved by an
arbitrator, not a judge or jury. Arbitration procedures are simpler and more
limited than in court. This arbitration provision is governed by the Federal
Arbitration Act (FAA), and shall be interpreted in the broadest way the law
will allow.
Covered claims
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You or we may arbitrate any claim, dispute or controversy between you
and us arising out of or related to your Account, a previous related
Account, or our relationship (called “Claims”).
If arbitration is chosen by any party, neither you nor we will have the right
to litigate that Claim in court or have a jury trial on that Claim.

Except as stated below, all Claims are subject to arbitration, no matter what
legal theory they’re based on or what remedy (damages, or injunctive or
declaratory relief) they seek, including Claims based on contract, tort
(including intentional tort), fraud, agency, your or our negligence, statutory or
regulatory provisions, or any other sources of law; Claims made as
counterclaims, cross-claims, third-party claims, interpleader or otherwise;
Claims made regarding past, present, or future conduct; and Claims made
independently or with other claims. This also includes Claims made by or
against anyone connected with us or you or claiming through us or you, or by
someone making a claim through us or you, such as a co-applicant, authorized
user, employee, agent, representative, or an affiliated/parent/subsidiary
company.
....
Rules for rejecting this arbitration provision
You may reject this arbitration provision by sending a written rejection notice
to us at PO Box 790085; St. Louis, MO 63179-0085. Your rejection notice
must be postmarked by 08/03/2016.
Card Agreement Guide at 22-23.
Fourth, the arbitration provision included a class action waiver prohibiting Plaintiff

from participating in a class or acting as a class representative:
Claims brought as part of a class action, private attorney general or other
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representative action can be arbitrated only on an individual basis. The
arbitrator has no authority to arbitrate any claim on a class or representative
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basis and may award relief only on an individual basis. If arbitration is chosen
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by any party, neither you nor we may pursue a Claim as part of a class action
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or other representative action.

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2 Card Agreement Guide at 22.
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Fifth, the Card Agreement also contained a provision entitled, “Assignment,” which

4 stated, “We may assign any or all of our rights and obligations under this Agreement to a
5 third party.” Card Agreement Guide at 23.
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Finally, the Card Agreement provided that “[f]ederal law and the law of South

7 Dakota govern the terms and enforcement of this Agreement.” Card Agreement Guide at
8 23.
9

As of September 9, 2016, Plaintiff had an outstanding balance on his card of

10 $16,613.35. See Exhibit “2” to Peck Decl., ECF No. 28-3 at 8. Encore, the named
11 defendant in this case, is the ultimate corporate parent of Midland Funding, LLC (“Midland
12 Funding”), which purchased Plaintiff’s account, and Midland Credit Management
13 (“MCM”), which services and manages the debts Midland Funding purchases. Declaration
14 of Sarah Cosgrave, ECF No. 28-1 (“Cosgrave Decl.”) at 2, ¶ 4; see also Declaration of
15 Adam Swaninger in Support of Motion, ECF No. 28-3 (“Swaninger Decl.”) at 2, ¶¶ 3-4.
16 Just over ten months later, on July 28, 2017, Midland Funding purchased a portfolio of
17 charged-off Costco credit card accounts from Citibank. Cosgrave Decl. at 2, ¶ 4; see also
18 Exhibit “1” to Cosgrave Decl., ECF No. 28-1 at 5. One of the accounts sold under this
19 transaction was a Costco Anywhere card issued by Citibank to Plaintiff ending in 993. Id.
20 at 3, ¶ 4.
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Plaintiff claims that from September 19, 2017 to October 2, 2017, Encore called his

22 phone twenty-four times using an auto dialer from the numbers [phone] and (877)
23 445-4581. Hartranft Decl. at 2, ¶¶ 4-5; see also SAC at 2, 3, ¶ 9, 4, ¶¶ 14-16. However,
24 Encore, the only named defendant in this case, “does not own, purchase, collect, or service
25 consumer debt.” Id. at 2, ¶ 4.
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B.

Procedural History

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On June 6, 2018, Plaintiff filed this lawsuit, alleging two claims for relief for (1)

28 negligent violations of the TCPA and (2) knowing and/or willful violations of the TCPA.
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1 Compl., ECF No. 1 at 9. On June 18, 2018, before Defendant answered, Plaintiff failed a
2 First Amended Complaint. See ECF No. 3 at 9.
3

On July 10, 2018, Defendant filed an answer to the Complaint, ECF No. 4, and

4 Notice of Related Case, ECF No. 6. In the Notice of Related Case, Defendant advised that
5 there was a related Multidistrict Litigation currently pending in the United States District
6 Court for the Southern District of California before the Honorable Michael M. Anello: In
7 re: Midland Credit Management, Inc., Tel. Consumer Prot. Act Litig. (In re: MCM), Case
8 No. 11-md-2286-MMA-MDD (the “MDL”). ECF No. 6 at 2:1-5. Defendant informed the
9 Court that the MDL had been created by the Judicial Panel on Multidistrict Litigation in
10 October 2011, due to the pendency of multiple overlapping lawsuits alleging that Encore
11 and/or Midland Funding violated the TCPA by placing debt-collection calls to the
12 plaintiffs’ cellular phones using an automatic telephone dialing system. See In re Midland
13 Credit Mgmt., Inc., Tel. Consumer Prot. Act Litig. (In re MCM I), 818 F. Supp. 2d 1377,
14 1377-78 (J.P.M.L. 2011). Defendant noted that there were currently approximately 200
15 active cases in the MDL, all of which are TCPA lawsuits against Midland and/or Encore.
16 ECF No. 6 at 2:6-20. Encore also informed the Court that in both the MDL and this case,
17 (1) the plaintiffs alleged the defendants violated the TCPA by placings calls to their cellular
18 phones using an automatic telephone dialing system; (2) the plaintiffs sought to represent
19 a putative class consisting of consumers allegedly called by the defendants during
20 overlapping time periods; and (3) the complaints asserted the same TCPA claims, based on
21 the same alleged facts and legal theories. Id. at 2:16-27. Thus, Encore asked that this case
22 be transferred to Judge Anello for coordination with the MDL proceedings and to conserve
23 judicial resources, prevent duplication of work, and mitigate the risk of inconsistent rulings.
24 Id. at 3:9-13.
25

On September 20, 2018, Magistrate Judge Ruben B. Brooks issued the operative

26 Scheduling Order in this case, which set the deadline to file a motion for class certification
27 as April 22, 2019. Order, ECF No. 12 at 4, ¶ 9.
28

On October 11, 2018, Encore filed a Motion to Dismiss or Stay the Proceedings
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1 Pursuant to Local Rule 40.1, which provides that where a case qualifies as related, it will
2 be transferred to the judge with the low-numbered case. ECF No. 13. However, after
3 Plaintiff opposed, ECF No. 15, and Defendant replied, ECF No. 16, both parties filed a
4 Motion for Leave to File a Second Amended Complaint, ECF No. 18, which the Court
5 granted on November 29, 2018, ECF No. 19. The following day, on November 30, 2018,
6 Plaintiff filed the Second Amended Complaint, adding a third claim for relief for violations
7 of the FDCPA. See SAC. On December 14, 2018, Defendant answered. ECF No. 21.
8

On August 12, 2019, Plaintiff filed a Motion to Intervene in the MDL before Judge

9 Anello. ECF No. 698. Defendant did not oppose Plaintiff’s intervention. See ECF No.
10 699. On November 4, 2019, Judge Anello denied Plaintiff’s Motion to Intervene, finding
11 that (1) Plaintiff failed to meet any of the requirements necessary to intervene as a matter
12 of right; (2) Plaintiff’s permissive intervention “would effectively contravene and
13 circumvent [the] February 8, 2018[,] order that . . . barred new members [sic] cases from
14 entering the MDL”; and (3) Plaintiff’s motion failed “to detail what form or function
15 intervention would take.” In re Midland Credit Mgmt., Inc., Tel. Consumer Prot. Act Litig.
16 (In re MCM IV), No. 3:11-MD-2286-MMA-MDD, 2019 WL 5698234, at *1-3 n.4 (S.D.
17 Cal. Nov. 4, 2019), aff'd, 829 F. App’x 805 (9th Cir. 2020).
18

Almost one year after filling the SAC, on December 11, 2019, Defendant filed the

19 instant Motion to Compel Arbitration, Strike Class Allegations, and Stay Proceedings.
20 Motion, ECF No. 28 (“Mot.”). In the Motion, Defendant indicates that as of the date of
21 filing, no discovery had taken place in this case. Mot. at 13:2-3. On January 7, 2020,
22 Plaintiff opposed. Opposition, ECF No. 30 (“Oppo.”). On January 14, 2020, Defendant
23 replied. Reply, ECF No. 35 (“Reply”).
24

On January 7, 2020, while the instant Motion was pending, Plaintiff filed his own

25 Motion to Stay Proceedings Pending Plaintiff’s Appeal of the Denial of His Motion to
26 Intervene in the Midland Funding Case. ECF No. 29. On January 27, 2020, Defendant
27 filed a limited opposition to Plaintiff’s Motion to Stay. ECF No. 36. On February 3, 2020,
28 Plaintiff filed a limited reply, arguing that the Court should defer ruling on Defendant’s
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1 Motion to Compel Arbitration if it felt inclined to compel arbitration. ECF No. 40.
2 Accordingly, on July 30, 2020, this Court granted Plaintiff’s Motion to Stay the Case until
3 the Ninth Circuit reached a decision in Case No. 19-56390, In re: Sean Hartranft v.
4 Midland Funding, LLC. Order, ECF No. 46. The Court’s order granting the stay required
5 Plaintiff’s counsel to notify the Court within seven days of a decision in its appeal. Order,
6 ECF No. 46 at 2. In the order, the Court also noted that the parties in the MDL proceedings
7 before Judge Anello had asked for a stay pending the decision in a case recently granted
8 certiorari by the United States Supreme Court concerning the TCPA in Facebook Inc. v.
9 Duguid, Supreme Court Dkt. No. 19-511, cert. granted (July 9, 2020). At the time the
10 Court entered the order staying this case, the deadline for Plaintiff to file a motion for class
11 certification had passed nine (9) months earlier without Plaintiff ever filing such a motion
12 much less even seeking to extend the deadline.
13

On November 19, 2020, the Ninth Circuit issued an opinion, affirming Judge

14 Anello’s decision denying Plaintiff’s Motion to Intervene in the MDL while also finding
15 that he did not abuse his discretion by concluding that the motion to intervene was
16 untimely. In re Midland Credit Mgmt., Inc., Tel. Consumer Prot. Act Litig. (In re MCM
17 V), 829 F. App’x 805, 806 (9th Cir. 2020). Seven (7) days later, however, Plaintiff failed
18 to provide notice to this Court of the Ninth Circuit’s decision, as he had been ordered to
19 do. See Order, ECF No. 46.
20

According to the original Case Management Order in this case, the Settlement

21 Conference in this case had been scheduled for October 7, 2020 at 8:30 a.m. Thus, during
22 the stay, Judge Brooks vacated the settlement conference, re-scheduling it for April 6, 2021
23 at 8:30 a.m.
24

On April 1, 2021, the United States Supreme Court issued its opinion in the Duguid

25 case. See Facebook, Inc. v. Duguid, 141 S. Ct. 1163, 1167, 1169 (2021). The Court held
26 that (1) “[t]o qualify as an ‘automatic telephone dialing system,’ a device must have the
27 capacity either to store a telephone number using a random or sequential generator or to
28 produce a telephone number using a random or sequential number generator,” and (2)
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1 “[b]ecause Facebook’s notification system neither stores nor produces numbers ‘using a
2 random or sequential number generator,’ it is not an autodialer” within the meaning of the
3 TCPA. See id. Several days later, on April 6, 2021, at 8:30 a.m., the continued settlement
4 conference went forward in light of the fact that the Ninth Circuit had made its decision,
5 but Plaintiff’s counsel failed to appear. Minute Order, ECF No. 48. That same day,
6 Magistrate Judge Brooks issued an Order to Show Cause (“OSC”) to Plaintiff’s counsel as
7 to why sanctions should not issue, noting that (1) this Court’s previous order had ordered
8 Plaintiff to provide notice of the Ninth Circuit’s decision within seven days; (2) the Ninth
9 Circuit had issued its opinion on November 19, 2020; (3) and to date, Plaintiff’s counsel
10 had not notified the Court of the decision. Order, ECF No. 49. Judge Brooks set the
11 hearing on the OSC for May 4, 2021. See id.
On April 16, 2021, Plaintiff’s counsel, Richard E. Quintilone II, Esq. (“Mr.

12

13 Quintilone”) submitted a declaration in response to the OSC, stating that he was on a pre14 paid family vacation in Mexico on April 6, 2021, had planned on calling into the Settlement
15 Conference, but the “800” number provided did not work. ECF No. 51 at 2, ¶ 3. That
16 same day, Plaintiff also filed a Notice of Ninth Circuit Opinion. ECF No. 50.
17

On May 4, 2021, the OSC took place before Judge Brooks, but Mr. Quintilone again

18 failed to appear. Minute Order, ECF No. 52. Thus, Judge Brooks continued the hearing
19 on the OSC for Mr. Quintilone’s previous failure to appear on April 6th to June 9, 2021 at
20 8:30 a.m., ordering Mr. Quintilone to appear and show cause why sanctions should not be
21 issued for his second failure to appear. Order, ECF No. 53.
22

On May 7, 2021, Mr. Quintilone submitted a declaration in response to the new OSC,

23 stating that (1) his failure to appear on May 4, 2021 had been due to confusion as to who
24 was appearing (although the explanation is confusing and difficult to follow); (2) he had
25 tried to dial in late, explain the confusion, and “clarify whether the Court had placed a stay
26 on the proceedings while the matter is appealed”4; and (3) he has submitted a petition for
27

4

There should have been no confusion on this matter. Mr. Quintilone had been
28 ordered to inform the Court within seven (7) days of the Ninth Circuit’s decision so the
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1 Writ of Certiorari regarding the denial of Plaintiff’s Motion to intervene in the MDL case
2 to the United States Supreme Court. ECF No. 43 at 2-3.
3

On June 9, 2021, the OSC and Settlement Conference finally went forward, and the

4 case did not settle. Minute Order, ECF No. 55. Further, Judge Brooks exercised his
5 discretion to not impose sanctions for Mr. Quintilone’s failure to appear on April 6, 2021
6 and May 4, 2021. See id.
7 III.

LEGAL STANDARD

8

A.

9

Under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., arbitration

Motion to Compel Arbitration

10 agreements “shall be valid, irrevocable, and enforceable, save upon such grounds that exist
11 at law or in equity for the revocation of a contract.” 9 U.S.C. § 2. “Once the court has
12 determined that an arbitration agreement relates to a transaction involving interstate
13 commerce, thereby falling under the FAA, the court’s only role is to determine [1] whether
14 a valid arbitration agreement exists and [2] whether the scope of the dispute falls within
15 that agreement.” Ramirez v. Cintas Corp., No. C 04-00281 JSW, 2005 WL 2894628, at
16 *3 (N.D. Cal. Nov. 2, 2005) (citing 9 U.S.C. § 4; Chiron Corp. v. Ortho Diagnostic Sys.,
17 Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)).
Motion to Dismiss Under Rule 12(b)(1)5

18

B.

19

Rule 12(b)(1) of the Federal Rules of Civil Procedure (“Rule 12(b)(1)”) allows a

20 defendant to seek dismissal of a claim or lawsuit by asserting the defense of lack of subject
21 matter jurisdiction. FED. R. CIV. P. 12(b)(1). “If the court determines at any time that it
22
23 Court could lift the stay but never did. The MDL case, and Plaintiff’s appeal of the denial
of his motion to intervene, although related to this case, are not part of this case as the
24 matters have not been consolidated. Thus, the stay should have been lifted after the Ninth
25 Circuit’s decision, so the Court could address the matters it addresses now in the instant
Motion.
26 5
Although Defendant labeled the Motion as “Motion to Compel Arbitration, Strike
27 Class Allegations, and Stay Proceedings,” Defendant’s substantive Motion asks for the
case to be either “dismissed or stayed pending the arbitration’s conclusion.” Mot. at 23:2528 27. Thus, the Court construes the Motion as including a request to dismiss as well.
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1 lacks subject matter-jurisdiction, the court must dismiss the action.” FED. R. CIV. P.
2 12(h)(3). “Dismissal for lack of subject matter jurisdiction is appropriate if the complaint,
3 considered in its entirety, on its face fails to allege facts sufficient to establish subject matter
4 jurisdiction.” In re Dynamic Random Access Memory (DRAM) Antitrust Litig., 546 F.3d
5 981, 984-85 (9th Cir. 2008). “Although the defendant is the moving party in a motion to
6 dismiss brought under Rule 12(b)(1), the plaintiff is the party invoking the court’s
7 jurisdiction.” Brooke v. Kashl Corp., 362 F. Supp. 3d 864, 871 (S.D. Cal. 2019). As a
8 result, the plaintiff, as “[t]he party asserting jurisdiction[,] bears the burden of establishing
9 subject matter jurisdiction on a motion to dismiss for lack of subject matter jurisdiction.”
10 DRAM, 546 F.3d at 984.
11

C.

Motion to Strike Under Rule 12(f)

12

Federal Rule of Civil Procedure 12(f) allows a court to “strike from a pleading an

13 insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.”
14 Immaterial matters are “those which ha[ve] no essential or important relationship to the
15 claim for relief or the defenses being pleaded.” Fantasy, Inc. v. Fogerty, 984 F.2d 1524,
16 1527 (9th Cir. 1993), rev’d on other grounds, 510 U.S. 517 (1994) (internal quotation
17 marks omitted). Impertinent matters “do not pertain, and are not necessary, to the issues
18 in question.” Id. (internal quotation marks omitted).
19

The purpose of a Rule 12(f) motion “is to avoid the expenditure of time and money

20 that must arise from litigating spurious issues by dispensing with those issues prior to trial.”
21 Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (internal quotation
22 marks omitted). “Motions to strike are generally disfavored and ‘should not be granted
23 unless the matter to be stricken clearly could have no possible bearing on the subject of the
24 litigation.’” Luxul Tech. Inc. v. NectarLux, LLC, 2015 WL 4692571, at *3 (N.D. Cal. Aug.
25 6, 2015) (quoting Platte Anchor Bolt, Inc. v. IHI, Inc., 352 F. Supp. 2d 1048, 1057 (N.D.
26 Cal. 2004)). The decision to grant a motion to strike ultimately lies within the discretion
27 of the trial court. Rees v. PNC Bank, N.A., 308 F.R.D. 266, 271-72 (N.D. Cal. 2015) (citing
28 Whittlestone, 618 F.3d at 973); see Whittlestone, 618 F.3d at 973 (“We review the district
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1 court’s decision to strike matter pursuant to Federal Rule of Civil Procedure 12(f) for abuse
2 of discretion.” (internal quotation marks omitted)).
3

D.

Motion to Stay

4

Where a plaintiff files suit “in any of the courts of the United States upon any issue

5 referable to arbitration under an agreement in writing for . . . arbitration, the court in which
6 such suit is pending, upon being satisfied that the issue . . . is referable to arbitration . . .
7 shall on application of one of the parties stay the trial of the action until such arbitration.”
8 9 U.S.C. § 3. A court’s power to stay proceedings is incidental to the inherent power to
9 control the disposition of its cases in the interests of efficiency and fairness to the court,
10 counsel, and litigants. Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936). A stay may be
11 granted pending the outcome of other legal proceedings related to the case in the interests
12 of judicial economy. Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863-64 (9th
13 Cir. 1979). Discretion to stay a case is appropriately exercised when the resolution of
14 another matter will have a direct impact on the issues before the court, thereby substantially
15 simplifying the issues presented. Mediterranean Enters., Inc. v. Ssangyong Corp., 708
16 F.2d 1458, 1465 (9th Cir. 1983). In determining whether a stay is appropriate, a district
17 court “must weigh competing interests and maintain an even balance.” Landis, 299 U.S.
18 at 254-55. “[I]f there is even a fair possibility that the stay . . . will work damage to some
19 one else, the stay may be inappropriate absent a showing by the moving party of hardship
20 or inequity.” Dependable Highway Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059,
21 1066 (9th Cir. 2007) (citation and internal quotation marks omitted).
22 IV.

DISCUSSION

23

Although Plaintiff never pleads what the calls about which he complains were

24 regarding in the operative complaint, see generally SAC, Defendant states “[t]he calls at
25 issue were to collect Hartranft’s unpaid Costco Anywhere account.”

Mot. at 8:12.

26 Defendant also states that “[a]fter Hartranft charged over $16,000 on his Costco card and
27 did not pay his bill, the issuer of the card, Citibank, assigned his account and all of its rights
28 under the cardholder agreement to Midland Funding.” Id. at 8:15-17. As the assignee of
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1 Citibank’s rights,6 “Midland Funding stepped into the shoes of Citibank and has the same
2 rights to compel arbitration that Citibank would have.” Mot. at 8:17-19. Defendant argues
3 that given Plaintiff’s claims are subject to mandatory arbitration with a class action waiver,
4 the Court should compel Plaintiff to arbitration with Defendant, Midland Funding’s parent
5 company, while staying the case pending the arbitration proceeding. Id. at 8:8-11.
6

Instead of arguing that Encore cannot enforce the Arbitration Provision as a non-

7 signatory to the Card Agreement, Plaintiff argues that the Court should not enforce the
8
6

9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Defendant preemptively addresses the issue of whether Encore, as a non-signatory
to the Card Agreement, can enforce the Arbitration Provision as the parent company of
Midland Funding, who is the assignee of Citibank’s rights under the Card Agreement. Mot.
at 8:17-21, 18:6-22:2. Notably, Plaintiff fails to address this argument in his Opposition,
and as such, apparently, does not dispute (or at least has waived any argument to the
contrary) that Encore can enforce Citibank’s rights under the Card Agreement. Compare
Oppo. (failing to address the assignment issue) with Franchise Tax Bd. of California v.
Hyatt, ––– U.S. ––––, 139 S. Ct. 1485, 1491, n. 1 (2019) (deeming an argument waived
where the defendant failed to raise an issue in the opposition brief); see also S.D. Cal. Civ.
R. 7.1. Encore’s ability to enforce Citibank’s rights to arbitration under the Card
Agreement is confirmed by both the facts and the law. The Card Agreement itself expressly
provides that Citibank “may assign any or all of our rights and obligations under this
Agreement to a third party.” Card Agreement Guide at 23. It also states that claims subject
to arbitration include “Claims made . . . against anyone connected with us . . . such as . . .
an affiliated/parent/subsidiary company.” Id. Further, other cases addressing motions to
compel arbitration brought by Midland Funding or MCM following an assignment of rights
by Citibank under the same Citibank Card Agreement have held that “the cases support its
decision that assignees have a right to compel arbitration where there is a valid
assignment.” In re Midland Credit Mgmt., Inc. Tel. Consumer Prot. Litig. (In re MCM III),
No. 11MD2286-MMA (MDD), 2019 WL 1676015, at *3 (S.D. Cal. Apr. 17, 2019)
(applying South Dakota law). In fact, “[t]he United States Supreme Court has held that a
litigant who is not a party to an arbitration agreement may invoke arbitration under the
FAA if the relevant state contract law allows the litigant to enforce the agreement.” Kramer
v. Toyota Motor Corp., 705 F.3d 1122, 1128 (9th Cir. 2013) (citing Arthur Andersen LLP
v. Carlisle, 556 U.S. 624, 632 (2009). Defendant points out that “[t]o hold otherwise would
allow plaintiffs to circumvent arbitration agreements simply by suing a parent company in
addition to or instead of, the signatory.” Mot. at 9:1-3. Given the Court finds the evidence
establishes the calls at issue were made by MCM, rather than Encore, but Plaintiff,
nonetheless, sued Encore, the Court questions whether naming Encore represented an
attempt to circumvent the Arbitration Provision.
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1 Arbitration Provision because Plaintiff himself never signed it, and the Card Agreement is
2 unconscionable. Oppo. at 6:3-12. He also argues that (1) Defendant waived its right to
3 arbitration; (2) the Court should deny the Motion to Strike the Class Allegations because it
4 should either grant leave to amend those allegations, or if it finds arbitration appropriate,
5 allow the arbitrator to determine whether the Arbitration Provision permits such claims;
6 and (3) the Court should stay, rather than dismiss, this case. Id. at 6:3-12, 20:17-21:11.
7

In reply, Defendant points out that Plaintiff “does not dispute that the arbitration

8 provision in his Citibank cardholder agreement covers both causes of action alleged in his
9 complaint” or “was properly assigned to Midland Funding,” allowing Encore to enforce
10 the Arbitration Provision as Midland Funding’s parent corporation. Reply at 2:2-6.
11 Defendant also argues that Plaintiff’s remaining arguments for why the Court should reject
12 the arbitration agreement lack merit. Id. at 2:6-3:7.
13

As analyzed below, the Arbitration Provision between Plaintiff and Defendant is part

14 of the Card Agreement, which Plaintiff accepted once he used his Costco Anywhere Visa
15 Card. SAC at 4, ¶ 14. The Arbitration Provision states that it covers “any claim, dispute
16 or controversy between you and us arising out of or related to your Account, a previous
17 related Account, or our relationship,” including but not limited to those “based on . . .
18 statutory or regulatory provisions, or any other sources of law.” Card Agreement at 22.
19 Plaintiff’s dispute with Defendant arises out of statutes (the TCPA and FDCPA), exists
20 between himself and the parent company of the original lender’s assignee, Defendant, and
21 relates to the resulting creditor-debtor relationship arising out of the Card Agreement.
22 Thus, as outlined below, the Court finds the Arbitration Provision in the Card Agreement
23 at issue constitutes a valid agreement to arbitrate and is unpersuaded by Plaintiff’s
24 arguments that the Arbitration Provision is unconscionable.

The Court also finds

25 Defendant’s Motion to Strike the Class Allegations moot given Plaintiff failed to file a
26 Motion for Class Certification by the deadline imposed in the Court’s Scheduling Order.
27 Finally, the Court concludes that a dismissal of the case, rather than a stay, is appropriate
28 under the circumstances.
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1

A.

Jurisdiction

2

The FAA allows a party aggrieved by another party’s failure to arbitrate pursuant to

3 a valid arbitration agreement to bring either an original petition to arbitrate, or where an
4 action has already been filed, a motion to compel arbitration “in any United States district
5 court which, save for such agreement, would have jurisdiction under title 28, in a civil
6 action . . . of the subject matter arising out of the controversy between the parties.” 9 U.S.C.
7 § 4. Under 28 U.S.C. § 1331, “[t]he district courts . . . have original jurisdiction of all civil
8 actions arising under the Constitution, laws, or treaties of the United States.”
9

Plaintiff filed suit under two federal laws, the TCPA and FDCPA. However, the

10 SAC alleges that “[t]his Court has subject matter jurisdiction over this action pursuant to
11 28 U.S.C. § 1331 because it arises under the laws of the United States and pursuant to 28
12 U.S.C. § 1332(d) because: (i) there are 100 or more class members; (ii) there is an aggregate
13 amount in controversy exceeding $5,000,000.00 exclusive of interest and costs; and (iii) .
14 . . at least one plaintiff and defendant are citizens of different states.” SAC at 3, ¶ 4. In
15 other words, Plaintiff bases this Court’s jurisdiction on diversity jurisdiction and the federal
16 statute vesting district courts with “original jurisdiction of any civil [class] action in which
17 the matter in controversy exceeds the sum or value of $5,000,000.” 28 U.S.C. § 1332(d)(2).
18 However, Plaintiff never moved for class certification. Thus, the Court’s jurisdiction based
19 on this matter being a class action no longer exists given Plaintiff never moved to certify
20 the class, and the deadline to do so passed before the Court stayed this case. That being
21 said, the Court must examine subject-matter jurisdiction sua sponte, if necessary, D’Lil v.
22 Best W. Encina Lodge & Suites, 538 F.3d 1031, 1035 (9th Cir. 2008), and upon doing so,
23 finds it has subject-matter jurisdiction to determine this Motion.
24

The TCPA provides that “[a] person who has received more than one telephone call

25 within any 12-month period by or on behalf of the same entity in violation of the regulations
26 prescribed under this subsection may, if otherwise permitted by the laws or rules of court
27
28
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1 of a State bring in an appropriate court of that State.”7 47 U.S.C. § 227(e)(5). The FDCPA,
2 in turn, provides that “[a]n action to enforce any liability created by this subchapter may
3 be brought in any appropriate United States district court without regard to the amount in
4 controversy, or in any other court of competent jurisdiction.” 15 U.S.C. § 1692k(d). Thus,
5 this Court, as the court possessing jurisdiction over the underlying controversy, has
6 jurisdiction to determine this Motion.
7

B.

Federal Arbitration Act

8

The FAA provides that once a defendant files a motion to compel arbitration, a

9 district court must “hear the parties, and upon being satisfied that the making of the
10 agreement for arbitration or the failure to comply therewith is not” at issue, must “make an
11 order directing the parties to proceed to arbitration in accordance with the terms of the
12 agreement.” 9 U.S.C. § 4. It “reflects both a ‘liberal federal policy favoring arbitration’ .
13 . . and the ‘fundamental principle that arbitration is a matter of contract.’” Kramer v.
14 Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013) (quoting AT&T Mobility LLC v.
15 Concepcion, 563 U.S. 333, 339 (2011)). The district court’s role in ruling on a motion to
16 compel arbitration is “limited to determining (1) whether a valid agreement to arbitrate
17 exists[,] and if it does, (2) whether the agreement encompasses the dispute at issue.”
18 Revitch v. DIRECTV, LLC, 977 F.3d 713, 716 (9th Cir. 2020). Only if the court answers
19 both questions in the affirmative will the FAA require the Court “to enforce the terms of
20 the arbitration agreement in accordance with its terms.” Id. The Supreme Court has
21 reminded that “courts should order arbitration of a dispute only where the court is satisfied
22 that neither [1] the formation of the parties’ arbitration agreement nor [2] (absent a valid
23 provision specifically committing such disputes to an arbitrator) its enforceability or
24
Although the TCPA refers to “an appropriate court of that State” without reference
to the federal courts, in Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368, 376 (2012), the
26 Supreme Court held that “Congress did not deprive federal courts of federal-question
27 jurisdiction over private TCPA suits.” It reasoned that “[b]ecause federal law creates the
right of action and provides the rules of decision, [the plaintiff’s] TCPA claim, in 28 U.S.C.
28 § 1331’s words, plainly ‘arises under’ the ‘laws . . . of the United States.’” Id. at 377, 387.
25

7

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1 applicability to the dispute is in issue.” Granite Rock Co. v. Int’l Bhd. of Teamsters, 561
2 U.S. 287, 299 (2010) (emphasis in original).
3

In this case, Defendant argues that the Court should grant its Motion because (1)

4 Plaintiff agreed to arbitrate; (2) Plaintiff’s claims fall within the scope of the arbitration
5 provision; (3) Defendant has standing to enforce the arbitration provision; and (4)
6 Plaintiff’s claims can only be arbitrated on an individual basis. Mot. at 15:2, 17:5, 18:6,
7 22:3. Plaintiff opposes the Motion by arguing that (1) the parties never entered into a
8 binding arbitration agreement because Plaintiff never agreed to arbitrate his claims and (2)
9 even if an enforceable contract existed, (a) Defendant waived its right to compel arbitration
10 by waiting eighteen (18) months and engaging in litigation before asserting its alleged
11 arbitration rights, (b) Plaintiff has grounds to revoke the agreement, and (c) the agreement
12 requires the arbitrator to determine whether the class claims should be dismissed, not the
13 Court. Oppo. at 6:3-12. In reply, Defendant argues that Plaintiff’s arguments for why the
14 Court should reject the arbitration agreement lack merit: First, Defendant notes that
15 Plaintiff’s claims he is not bound by the Card Agreement because he does not recall
16 receiving it in the mail or making purchases on the card, but “the law is clear that a plaintiff
17 cannot rebut evidence of a binding arbitration agreement simply by claiming he does not
18 remember whether he entered it or not.” Reply at 2:6-17. Second, Defendant asserts that
19 Plaintiff’s claim that arbitration is optional rather than mandatory misconstrues the plain
20 language of the Card Agreement. Id. at 2:18-21. Third, Defendant argues that Plaintiff’s
21 contention that the Arbitration Provision is unconscionable plainly fails given the very
22 same agreement has been enforced by numerous courts throughout the country. Id. at 2:2223 25. Finally, Defendant contends that Plaintiff fails to establish the heavy burden of
24 showing Defendant waived its right to arbitration. Id. at 3:1-7.
25

As discussed below, the Court finds the Card Agreement requires the parties to

26 arbitrate the instant dispute.
27
28

1.

Governing Law

As a preliminary matter, federal substantive law governs the scope of an arbitration
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1 agreement. Kramer, 705 F.3d at 1126. “[A]s a matter of federal law, any doubts
2 concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether
3 the problem at hand is the construction of the contract language itself or an allegation of
4 waiver, delay, or a like defense to arbitrability.” Chiron Corp. v. Ortho Diagnostic Sys.,
5 Inc., 207 F.3d 1126, 1131 (9th Cir. 2000). State contract law, on the other hand, governs
6 issues pertaining to the validity, revocability, and enforceability of an agreement to
7 arbitrate. See Revitch, 977 F.3d at 716-17.
8

Defendant contends the validity of the Arbitration Provision is governed by South

9 Dakota law because every single Card Agreement includes a choice of law provision
10 specifying the application of South Dakota law. Mot. at 15:15; Reply at 2:25. Plaintiff’s
11 Opposition does not dispute the application of South Dakota law, see Oppo. at 12:13-15,
12 but nonetheless, relies on Ninth Circuit and California case law throughout most of the
13 brief without specifying whether any of those cases applied South Dakota or California
14 law, see id. at 13-21.
15

The Court finds application of South Dakota contract law appropriate in this case for

16 three reasons: First, where a non-moving party fails to address an argument raised by the
17 moving party in the opposition brief, the Court may consider any arguments unaddressed
18 by the non-moving party as waived. See, e.g., Pac. Dawn LLC v. Pritzker, 831 F.3d 1166,
19 1178 n.7 (9th Cir. 2016) (noting that “the plaintiffs did not raise that argument to the
20 district court in their . . . opposition to the defendants’ motion for summary judgment, so
21 the argument was waived.”); see also S.D. Cal. Civ. R. 7.1. Here, Plaintiff failed to
22 advance any argument against the application of South Dakota law, and as such, waived
23 any argument to the contrary. Second, the Card Agreement provides that “[f]ederal law
24 and the law of South Dakota govern the terms and enforcement of this Agreement.” Card
25 Agreement at 23. Third, other courts ruling on motions to compel arbitration of the very
26 same Citibank Card Agreement have also held South Dakota law applies to the
27 determination of the validity of the Arbitration Provision. See, e.g., Izett, 2019 WL
28 4845575 at *9 (holding that “South Dakota law governs the enforceability of the
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1 agreement” where “[t]he Citibank accounts at issue in this case extended from South
2 Dakota, and Plaintiff does not contest that the application of South Dakota law is contrary
3 to California policy”); Garcia v. Citibank, N.A., No. CV 18-9413 PSG (SKX), 2019 WL
4 2902499, at *3 (C.D. Cal. Feb. 13, 2019) (granting the motion to compel arbitration while
5 applying South Dakota law to the Citibank Card Agreement “for the purposes of
6 determining the validity of the new arbitration agreement” where the plaintiff never
7 expressly disputed application of South Dakota law “but relie[d] on California authority
8 throughout his opposition”); see also In re Midland Credit Mgmt., Inc. Tel. Consumer Prot.
9 Litig. (In re MCM II), No. 11-MD-2286-MMA-MDD, 2019 WL 398169, at *4 (S.D. Cal.
10 Jan. 31, 2019), reconsideration denied, No. 11MD2286-MMA (MDD), 2019 WL 1676015
11 (S.D. Cal. Apr. 17, 2019) (Anello, J.) (finding “South Dakota has a substantial relationship
12 to this dispute and application of South Dakota law would not be contrary to any
13 fundamental policy of California” where the Citibank “credit card agreements contain
14 governing law provisions stating that ‘[f]ederal law and the law of South Dakota . . .
15 govern”). Although the Ninth Circuit has held that district courts cannot rely exclusively
16 on cases concluding that South Dakota law applies where those cases do not proceed
17 through California’s choice of law rules articulated in the Restatement (Second) of Conflict
18 of Laws, § 187 and Nedlloyd Lines B.V. v. Super. Crt., 3 Cal.4th 459 (1992), Izett and In
19 re MCM II both proceeded through the requisite analysis and likewise still found
20 application of South Dakota law appropriate. See, e.g., Izett, 2019 WL 4845575 at *9
21 (applying the Restatement (Second) of Conflict of Laws, § 187 to determine “application
22 of South Dakota law would not be contrary to any fundamental policy of California”); In
23 re MCM II, 2019 WL 398169 at *4 (same).
24

Thus, the Court applies federal substantive law to the scope of the Arbitration

25 Agreement, and South Dakota contract law to the enforceability of the agreement itself.
26
27
28

2.

Plaintiff’s Evidentiary Objections Lack Merit, and the Card
Agreement is Admissible.

A district court ruling on a motion to compel arbitration must apply a “standard
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1 similar to the summary judgment standard of Federal Rule of Civil Procedure 56.” Lopez
2 v. Terra’s Kitchen, LLC, 331 F. Supp. 3d 1092, 1097 (S.D. Cal. 2018) (Anello, J.) (quoting
3 Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796, 804 (N.D. Cal. 2004)); Three Valleys
4 Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1141 (9th Cir. 1991). In that vein,
5 “[a] party may object that the material cited to support or dispute a fact cannot be presented
6 in a form that would be admissible in evidence.” FED. R. CIV. P. 56(c)(2). However, the
7 Court will consider the substance of evidence that would be admissible at trial even if the
8 form of the evidence is improper so long as that same evidence may be admissible in
9 another form. See, e.g., Dinkins v. Schinzel, 362 F. Supp. 3d 916, 922-23 (D. Nev. 2019)
10 (noting that “the 2010 amendments to Federal Rule of Civil Procedure 56 ‘eliminate[d]
11 th[is] unequivocal requirement’ and mandate only that the substance of the proffered
12 evidence would be admissible at trial”; declining to “disregard all exhibits for lack of
13 proper authentication because their substance could be admissible at trial”). Before

an

14 item of evidence may be considered, Federal Rule of Evidence 901(a) requires a proper
15 foundation be laid to authenticate the item by “evidence sufficient to support a finding that
16 the item is what the proponent claims it is.” See Canada v. Blain’s Helicopters, Inc., 831
17 F.2d 920, 925 (9th Cir. 1987). Such a foundation may be laid by testimony of a witness
18 who has personal knowledge. FED. R. EVID. 901(b)(1).
19

Defendants rely on declarations from Mr. Peck, the custodian of records for

20 Citibank, to authenticate the Card Agreements. In order for Mr. Peck to authenticate such
21 documents, he must be a “witness with knowledge . . . that [each Card Agreement] is what
22 it is claimed to be.” FED. R. EVID. § 901(b)(1). Plaintiff objects to Paragraphs 5, 6, 7, 8,
23 9, 10, 12, and 13 of the Peck Declaration as lacking foundation under Rule 602 of the
24 Federal Rules of Evidence and improperly authenticated under Rule 901 of the Federal
25 Rules of Evidence. See ECF No. 30-3. The Court finds Plaintiff’s Evidentiary Objections
26 unavailing.

Plaintiff argues that “[t]his information lacks foundation because the

27 declaration does not properly lay foundation for how he has knowledge of the quality
28 assurance controls and whether they were strictly adhered to in the normal course of
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1 business.” Id. at 2. However, Mr. Peck’s declaration, which is more detailed than most
2 declarations frequently submitted to this Court, declares that (1) he is the Document
3 Control Officer for Citibank, where he has been employed since August 27, 2007; (2) “[a]s
4 a custodian of records, [he has] knowledge of, and access to, account information and
5 records concerning the Citibank account of Sean Hatranft [sic]”; and (3) he has “personal
6 knowledge of Citibank’s regular business practices and procedures.” ECF No. 28-2 at 2,
7 ¶¶ 3-4. He also declares that “[t]he exhibits to this Declaration are true and correct business
8 records created and maintained by Citibank or its affiliates, in the course of regularly
9 conducted business activity.” Id. Upon review, Mr. Peck’s declaration, establishing his
10 familiarity with Citibank’s credit card records, demonstrate he is a qualified “witness with
11 knowledge,” who is familiar with Citibank’s recordkeeping practices as they pertain to
12 sending Card Agreements to customers. See Peck Decl. ¶¶ 2-6; see also Izett, 2019 WL
13 4845575 at *3-5, 11 (accepting the same declaration from Mr. Peck as properly
14 authenticating the Card Agreement while noting that a “qualified witness need only be
15 familiar with the company’s recordkeeping practices”).
16

As Defendant points out, in Izett, the court disagreed with objections identical to the

17 ones Plaintiff proffers in this case, finding, inter alia, that (1) Mr. Peck’s nearly identical
18 declaration properly authenticated the Card Agreement; (2) the Card Agreement was
19 admissible and not hearsay; (3) even if the Card Agreement was not admissible as hearsay,
20 it met the requirements for the business records exception to the hearsay rule; and (4) the
21 plaintiff’s statements in his declaration that he never saw the Card Agreement, received the
22 Card Agreement, or agreed to be bound by its terms “failed to rebut the presumption that
23 Citibank mailed him the Card Agreements” under the mailbox rule. 2019 WL 4845575 at
24 *3-5, 11.
25

Thus, Plaintiff’s Evidentiary Objections are OVERRULED. See also In re MCM

26 II, 2019 WL 398169 at *5 (finding “Citibank’s custodian of records authenticated the credit
27 card agreements); Jallo v. Midland Funding, LLC, No. 14-CV-352-BEN NLS, 2014 WL
28 5810203, at *2-3 (S.D. Cal. Nov. 6, 2014) (Benitez, J.) (holding that the Citibank
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1 Cardholder Account and Security Agreement for the plaintiff’s account, which Citibank
2 had provided to the defendant, was “sufficiently authenticated pursuant to Rule 901, and
3 [was] therefore admissible”). Mr. Peck’s declaration sufficiently authenticates and lays the
4 foundation for the Card Agreement.
5

3.

6

Plaintiff Signed a Valid Agreement to Arbitrate

Section 2 of the FAA governs the enforcement of agreements to arbitrate and

7 provides that a provision to settle by arbitration a controversy arising out of a contract
8 covering a transaction involving interstate commerce “shall be valid, irrevocable, and
9 enforceable, save upon such grounds as exist at law or in equity for the revocation of any
10 contract.” 9 U.S.C. § 2; see also 9 U.S.C. § 1 (defining “commerce” as “commerce among
11 the several States”). The FAA’s “savings clause” allows a party to challenge an arbitration
12 agreement based on any state law contract defenses, such as fraud, mistake, duress, or
13 unconscionability. Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 686-87 (1996).
Identical to California law,8 under South Dakota law, the “[e]lements essential to

14

15 existence of a contract are: (1) [p]arties capable of contracting; (2) [t]heir consent; (3) [a]
16 lawful object; and (4) [s]ufficient cause or consideration.” Compare McNamara v. Yellow
17 Transp., Inc., 570 F.3d 950, 956 (8th Cir. 2009) (citing S.D. Codified Laws § 53-118 2; Mueller v. Cedar Shore Resort, Inc., 643 N.W.2d 56, 70 (S.D. 2002)) (applying South
19 Dakota law) with Grimes v. New Century Mortg. Corp., 340 F.3d 1007, 1011 (9th Cir.
20 2003) (McKeown, J., dissenting) (citing CAL. CIV. CODE § 1550) (applying California law);
21 see also Mot. at 15:15-19. Defendant argues that Plaintiff “cannot credibly claim that he
22 was not capable of contracting, that the credit agreement was unlawful, or that the credit
23 extended was insufficient consideration.” Mot. at 15:19-21. Thus, he could only dispute
24 consent. Indeed, Plaintiff’s Opposition makes a point to note that he “never signed an
25
26
8

Although South Dakota law applies, the Court compares California law throughout
this order, given Plaintiff relied almost exclusively on California law in his Opposition, to
28 show that even if California law applied, it would not change the outcome of this ruling.
27

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1 updated cardholder agreement.”9 Oppo. at 8:10 (citing Hartranft Decl. at ¶¶ 1-8). He also
2 argues the Arbitration Provision is unconscionable. Oppo. at 13:20. The Courts addresses
3 both arguments in turn but finds neither carries the day.
a.
The Arbitration Provision Is Not Unconscionable
4
Plaintiff argues that “the arbitration agreement is both procedurally and

5

6 substantively unconscionable and does not meet the standard set out in Armendariz v.
7 Foundation Health Psycare Services, Inc., 24 Cal. 4th 83, 113-14 (2000) like Defendant
8 claims.” Oppo. at 14:24-27. First, he contends that the Card Agreement is procedurally
9 unconscionable because it is a contract of adhesion, and Plaintiff was never provided with
10 any of the relevant arbitration rules by which the parties would be bound to abide. Id. at
11 16:6-17:16; but see Garcia, 2019 WL 2902499 at *4 (noting that the plaintiff, like Plaintiff
12 here, failed to cite any South Dakota law supporting the notion that an arbitration
13 agreement is procedurally unconscionable because the arbitration rules were only
14 referenced but not attached to the contract, and “even under California law, which Plaintiff
15 relies on, his argument fails”). Second, he asserts that it is substantively unconscionable
16 because it (1) has “no express provision for discovery,” (2) has “a unilateral provision
17 granting Defendant the unilateral choice to change the terms of the agreement at any time,”
18
19
20
21
22
23
24
25
26
27
28

9

A court may take judicial notice of the fact that a contract was signed. Lee v. City
of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (holding that a district court could
take judicial notice of “the fact that [a document] was signed”), overruled on other
grounds by Galbraith v. Cty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002); see also Wilbur
v. Locke, 423 F.3d 1101, 1112 (9th Cir. 2005), abrogated on other grounds by Levin v.
Commerce Energy, Inc., 560 U.S. 413 (2010) (taking judicial notice of a consummated
agreement in the form of an executed compact). Here, without taking judicial notice of the
validity of the Card Agreement, the Court takes judicial notice of the fact that the agreement
is not a fully executed a contract as it is not signed by any of the parties but does explicitly
provide that the “Agreement takes effect once you use your card” or “within 30 days after
we sent you this agreement.” Card Agreement at 16. It also contained a provision
expressly allowing Plaintiff to reject the arbitration provision by sending a written rejection
notice to the address provided in the agreement. Id. at 23. Here, Plaintiff used the credit
card and never states that he sent a written notice of rejection to Citibank, Midland Funding,
MCM, or Encore. See generally Hartranft Decl.
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1 (3) “the filing costs effectively make it impossible to pursue individual claims,” (4) “caps
2 the amount of damages a Plaintiff may recover before incurring exorbitant costs,” and (5)
3 contains so many unconscionable provisions that severance cannot save the Card
4 Agreement.

Oppo. at 17:17-20:15.

Defendant replies that “[m]ultiple courts have

5 compelled arbitration under Citibank cardholder agreements that are identical or similar to
6 Hartranft’s, and in doing so[,] these courts have expressly rejected arguments that the
7 cardholder agreements are unconscionable.” Reply at 5:19-6:7 (citing cases). Defendant
8 also points out that with respect to the costs, “the consumer is only required to pay a filing
9 fee of $200—half of the Court’s filling fee.” Id. at 9:17-21.
10

Under both South Dakota and California law, a court may refuse to enforce a

11 provision of a contract if it finds the provision at issue “unconscionable at the time it was
12 made.” S.D. Codified Laws § 57A-2-302(1); CAL. CIV. CODE § 1670.5(a). Courts may
13 find a contract as a whole “or any clause of the contract” to be unconscionable. S.D.
14 Codified Laws § 57A-2-302(1); CAL. CIV. CODE § 1670.5(a). Unconscionability represents
15 an issue of law appropriate for determination by the court. Dakota Style Foods, Inc. v.
16 SunOpta Grains & Foods, Inc., 329 F. Supp. 3d 794, 810 (D.S.D. 2018) (citing S.D.
17 Codified Laws § 57A-2-302(1); Johnson v. John Deere, 306 N.W.2d 231, 236 (S.D.
18 1981)).
19

California and “South Dakota law require[ ] a showing of both procedural and

20 substantive unconscionability to invalidate a contract.” Compare Garcia, 2019 WL
21 2902499 at *3 (citing Nygaard v. Sioux Valley Hosp. & Health Sys., 731 N.W.2d 184, 19422 95 (S.D. 2007)) with Tompkins v. 23andMe, Inc., 840 F.3d 1016, 1023-28 (9th Cir. 2016)
23 (noting that California law also requires both procedural and substantive unconscionability
24 for a clause to be unenforceable although both elements “need not be present to the same
25 degree”). Procedural unconscionability focuses on whether the contracting parties had a
26 meaningful choice, Johnson, 306 N.W.2d at 237, or were the victims “of oppression or
27 surprise due to unequal bargaining power,” Tompkins, 840 F.3d at 1023-28. Substantive
28 unconscionability focuses “on overly harsh or one-sided terms.” Johnson, 306 N.W.2d
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1 237; Tompkins, 840 F.3d at 1023-28.
2

In the present case, Plaintiff argues that the Arbitration Provision is unconscionable.

3 Although both parties spill significant ink over whether the Card Agreement is
4 unconscionable, see Oppo. at 13-20; Reply at 5-9, the Card Agreement is not unique and
5 has been subject to scrutiny from courts throughout the country. See, e.g., Ranginwala v.
6 Citibank, N.A., No. 18-CV-14896, 2020 WL 6817508, at *6 (D.N.J. Nov. 19, 2020) (noting
7 that “several other courts have upheld and enforced arbitration provisions containing
8 similar or identical language to the Arbitration Agreement currently before the Court”);
9 see also Ahmetasevic v. Citibank, N.A., No. CV 19-5707, 2020 WL 5146124, at *3 n.3, 7
10 (E.D. Pa. Aug. 31, 2020) (granting a defendant’s motion to compel arbitration and stay
11 claims while noting that Citibank had asserted “that ‘numerous courts have enforced
12 Citibank’s arbitration provision containing similar (if not identical) language to the
13 provision currently before the Court’”) (citing cases); Cunningham v. Citigroup, Inc., No.
14 CIV. 05-3476 (SRC), 2005 WL 3454312, at *1-2 (D.N.J. Dec. 16, 2005) (“Since the
15 Agreement is a standard form that is widely used by Citi Defendants in their business
16 dealings, this is not the first time the terms of the Agreement have been the subject of
17 litigation,” and “[a]rbitration agreements by Citi Defendants similar to the one at issue here
18 have been upheld and enforced by numerous other courts”). Accordingly, the Court sees
19 no need to address Plaintiff’s various arguments one by one as to why or how the
20 Arbitration Agreement is unconscionable given the very same Arbitration Provision in the
21 Citibank Card Agreement has been upheld by many courts in the face of similar arguments
22 of unconscionability. See, e.g., Lebovits v. Cavalry Portfolio Servs., LLC, No. 20-CV23 01116 (KMK), 2021 WL 1198967, at *1, 8 (S.D.N.Y. Mar. 29, 2021) (granting the
24 defendants’ motion to compel arbitration where “[o]n September 8, 2016, Plaintiff was sent
25 a credit card agreement . . . by Citibank,” which was “governed by federal and South
26 Dakota law” and contained the same arbitration provision); Ranginwala, 2020 WL
27 6817508 at *1-2, 6-7 (granting the defendant’s motion to compel arbitration in a case
28 involving an arbitration provision in a Citibank Card Agreement with identical language
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1 while noting that the “[p]laintiff ha[d] not demonstrated that the arbitration provision [was]
2 unconscionable under South Dakota law”); Garcia, 2019 WL 2902499 at *5-6 (granting
3 the motion to compel as “Plaintiff has failed to establish that the new arbitration agreement
4 is either procedurally or substantively unconscionable,” and thus, the arbitration agreement
5 was enforceable considering the plaintiff never disputed his claims were covered by the
6 agreement); Samenow v. Citicorp Credit Servs., Inc., 253 F. Supp. 3d 197, 209 (D.D.C.
7 2017) (granting the defendant’s motion to compel arbitration under Citibank’s Card
8 Agreement and because none of the “well-settled principles of unconscionability”
9 warranted “a finding of substantive or procedural unconscionability with respect to the
10 Arbitration Agreements embodied in the Card Agreements”); Ackerberg v. Citicorp USA,
11 Inc., 898 F. Supp. 2d 1176-77 (N.D. Cal. 2012) (granting the defendants’ motion to compel
12 arbitration where the plaintiff argued that a 2010 Citibank card agreement’s arbitration
13 clause was procedurally and substantively unconscionable under California law, but
14 “South Dakota and federal law govern[ed] the parties’ agreements”).
15
16

Thus, the Court finds the Arbitration Provision is plainly not unconscionable.
b.
The Parties Mutually Consented to Arbitration

17

Defendant argues that “[u]nder South Dakota law, a signature is not required” for

18 the Court to enforce the Card Agreement. Mot. at 15:23-24. “Instead, the consumer
19 accepts the credit card agreement by using the card.” Id. at 15:24-25. Here, Plaintiff “was
20 notified that using the card would bind him to the agreement,” but nonetheless, “[h]e used
21 the card between August 10 and September 9, 2016.” Id. at 16:17-20. Plaintiff opposes
22 by arguing that he never agreed to send his claims to arbitration. Oppo. at 9:14. Defendant
23 replies that “it is well settled that a plaintiff cannot avoid arbitration simply by claiming he
24 does not remember receiving or accepting the arbitration agreement.” Reply at 4:11-12.
25

“To form a contract, there must be a meeting of the minds or mutual assent on all

26 essential terms.” Am. Prairie Constr. Co. v. Hoich, 594 F.3d 1015, 1023 (8th Cir. 2010)
27 (quoting Jacobson v. Gulbransen, 623 N.W.2d 84, 90 (S.D. 2001)). “Consent of the parties
28 to a contract must be: (1) [f]ree; (2) [m]utual; and (3) [c]ommunicated by each to the other.”
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1 S.D. Codified Laws § 53-3-1; see also CAL. CIV. CODE § 156. “The existence of
2 mutual consent is determined by considering the parties’ words and actions.” Am. Prairie,
3 594 F.3d at 1034 (citing Vander Heide v. Boke Ranch, Inc., 736 N.W.2d 824, 832 (S.D.
4 2007)). The FAA “leaves no place for the exercise of discretion by a district court, but
5 instead mandates that district courts shall direct the parties to arbitration on issues as to
6 which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470
7 U.S. 213, 218 (1985). However, “[w]hile the FAA ‘requires a writing, it does not require
8 that the writing be signed by the parties.’” Nghiem v. NEC Elec., Inc., 25 F.3d 1437, 14399 40 (9th Cir. 1994).
10

South Dakota contract law provides that “[a] voluntary acceptance of the benefit of

11 a transaction is equivalent to a consent to all the obligations arising from it so far as the
12 facts are known or ought to be known to the person accepting.” S.D. Codified Laws § 5313 3-5; see also S.D. Codified Laws § 53-7-4 (“Consent can be communicated with effect
14 only by some act or omission of the party contracting, . . . which necessarily tends to such
15 communication.”); S.D. Codified Laws § 53-7-7 (providing that “acceptance of the
16 consideration offered with a proposal is an acceptance of the proposal”). In fact, the South
17 Dakota Codified Laws contain a specific provision governing acceptance of credit card
18 agreements, which provides: “The use of an accepted credit card or the issuance of a credit
19 card agreement and the expiration of thirty days from the date of issuance without written
20 notice from a card holder to cancel the account creates a binding contract between the card
21 holder and the card issuer with reference to any accepted credit card.” S.D. Codified Laws
22 § 54-11-9; see also CAL. CODE. CIV. PROC. § 1747.02(b) (defining an “accepted credit card”
23 as “any credit card that the cardholder has requested or applied for and received or . . . has
24 used . . . for the purpose of obtaining money, property, labor, or services on credit”).
25

In Quiroz v. Cavalry SPV I, LLC, 217 F. Supp. 3d 1130, 1135-36 (C.D. Cal. 2016),

26 the plaintiff, like Plaintiff here, argued that he “[did] not think” that he signed an
27 application and “did not receive the Card Agreement.” Id. at 1135. The court found these
28 contentions “insufficient to refute the undisputed evidence before the Court.” Id. Such
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1 “undisputed evidence establishe[d] that Quiroz entered into an enforceable agreement to
2 arbitrate” where his card agreement expressly provided that the plaintiff would agree to the
3 agreement’s terms when he started using the account. 217 F. Supp. 3d at 1135. There was
4 “no dispute that Quiroz opened the account, used it to finance dental work for his wife, was
5 mailed the Card Agreement, received billing statements, and made payments on the
6 account in response to those billing statements.” Id. Thus, because his “signature was not
7 required for him to accept the Card Agreement” through Synchrony Bank, he agreed to
8 arbitrate his claims. Id. at 1135-36.
9

Like the Quiroz plaintiff, Plaintiff does not dispute receiving the Card Agreement

10 but claims he does not recall receiving it, agreeing to arbitration, or using the card.
11 Hartranft Decl. at 2, ¶ 7. However, this Court, like the Quiroz court, finds that Plaintiff
12 agreed to arbitrate by failing to rebut the evidence that he (1) received the Card Agreement
13 and (2) used his card following receipt of the new terms. Compare generally Hartranft
14 Decl. (failing to state that he never received the Card Agreement or Card or that he never
15 used the card) with Izett, 2019 WL 4845575 at *6 (rejecting a plaintiff’s similar arguments
16 that he did not recall receiving the same Card Agreement Guide from Citibank because Mr.
17 Peck’s nearly identical declaration provided credible evidence that the document had been
18 mailed, and therefore, received).
19

Although Quiroz involved a different bank’s card agreement, numerous courts

20 facing the same Citibank Card Agreement have enforced it despite the fact that the plaintiff
21 and party objecting to arbitration never signed the agreement. See, e.g., In re MCM II,
22 2019 WL 398169 at *5 (noting that the “[p]laintiffs concede[d] that they entered into valid
23 agreements to arbitrate with Citibank by using their credit card accounts,” and as a result,
24 “valid agreements to arbitrate exist[ed] between Plaintiffs and Citibank because
25 Defendants provided account statements for both Plaintiffs, evincing their use of their
26 credit card accounts”) (citing S.D. Codified Laws § 54-11-19 (1983)); Cayanan v. Citi
27 Holdings, Inc., 928 F. Supp. 2d 1182, 1198–99 (S.D. Cal. 2013) (Anello, J.) (finding that
28 the plaintiff “ostensibly agreed to arbitrate claims associated with her accounts when she
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1 continued to use each credit account after receiving cardmember agreements” while noting
2 that “under South Dakota law, such continued use of a credit card account may constitute
3 assent to arbitration”) (citing S.D. Codified Laws § 54-11-10); Guerrero v. Equifax Credit
4 Info. Servs., Inc., No. CV 11-6555 PSG PLAX, 2012 WL 7683512, at *6 (C.D. Cal. Feb.
5 24, 2012) (“Applying South Dakota law, the Court finds that Plaintiff entered into the
6 arbitration agreement when he was mailed the 2001 Change-in-Terms, failed to take
7 advantage of the optout provision, and continued to use the card.”) (citing S.D. Codified
8 Laws § 54-11-10).
9

In this case, as part of his argument that there is no valid agreement to arbitrate,

10 Plaintiff advances three arguments: First, Plaintiff argues that “the language in the
11 arbitration is not unequivocal as it states that claims ‘may’ be sent to arbitration.” Oppo.
12 at 10:8-9. He contends that “[t]his illusory language, given its plain meaning, would not
13 lead a reasonable person to believe they were agreeing to arbitrate their claims and waive
14 the right to a jury and to pursue their class claims.” Id. at 10:9-11. The Court finds this
15 argument unavailing.

The sentence of the Arbitration Provision defining “Covered

16 claims,” provides: “You or we may arbitrate any claim, dispute or controversy between
17 you and us arising out of or related to your Account, a previous related Account, or our
18 relationship (called ‘Claims’).” Card Agreement at 22 (emphasis added). However, the
19 very next sentence states, “If arbitration is chosen by any party, neither you nor we will
20 have the right to litigate that Claim in court or have a jury trial on that Claim.” Id. Thus,
21 while either party has the option of electing arbitration, once any party does so, the other
22 party loses “the right to litigate.” See id.
23

Second, Plaintiff argues that he “never legally consented or agreed to the revised

24 cardholder agreement with Citibank which included the arbitration clause,” and thus, “there
25 is no agreement, or meeting of minds.” Oppo. at 10:14-18. He contends that even though
26 “Defendant claims to have unilaterally notified Plaintiff by sending an updated cardholder
27 agreement with the new Citibank Costco Anywhere card,” Defendant “cannot establish
28 Plaintiff received, read and understood the agreement and all of its terms.” Oppo. at 10:19-303:18-cv-01187-BEN-RBB

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1 21. However, neither South Dakota nor California law requires proof that a party read or
2 understood an agreement the party accepted in order for the agreement to bind that party.
3 See, e.g., Schwalm v. TCF Nat’l Bank, 226 F. Supp. 3d 937, 942 (D.S.D. 2016) (“In South
4 Dakota, there is a presumption that a party to an agreement reads and understands the
5 contents of what she signs.”) (citing Farlow v. Chambers, 21 S.D. 128, 110 N.W. 94
6 (1907)); Conyer v. Hula Media Servs., LLC, 53 Cal. App. 5th 1189, 1197 (2020), review
7 filed (Oct. 5, 2020) (noting that “[i]t has long been the rule in California that a party is
8 bound by a contract even if he did not read the contract before signing it”). Plaintiff also
9 cites to Schnabel v. Trilegiant Corp., 697 F.3d 110, 126-129 (2d. Cir. 2012) to argue that
10 even if Defendant established that it had sent the Card Agreement, “this does not establish
11 an unequivocal agreement by the parties of the arbitration provision.” Oppo. at 10:22-28.
12 However, not only is Schnabel not binding on this Court, but given it is a Second Circuit
13 case applying the law of either Connecticut or California when this case involves the
14 application of South Dakota law, it is also inapposite. Further, Schnabel involved an
15 arbitration provision that “was both temporally and spatially decoupled from the plaintiffs’
16 enrollment in and use of” an online service given it was “delivered after initial enrollment”
17 so that “the plaintiffs would not be forced to confront the terms while enrolling in or using
18 the service.” Id. at 126. Here, on the other hand, Citibank sent Plaintiff the Arbitration
19 Provision before he ever used the card; cautioned him that he would be accepting the Card
20 Agreement, including the Arbitration Provision, by using the card; and even gave him the
21 opportunity to opt out of the Arbitration Provision, which he never did. See Exhibit “2” to
22 Peck Decl. at 10, 16, and 22.
23

Third, Plaintiff argues that “Defendant cannot establish that Mr. Hartranft indeed

24 made the purchases, which Defendant’s claim bound him to the new agreement with the
25 arbitration clause.” Oppo. at 11:3-4. He states that “[i]t could have been the result of
26 another person using the card and it is Defendant’s burden to prove before this Court.” Id.
27 at 11:5-6. Defendant replies that Plaintiff’s “suggestion that he may not have made the
28 purchases reflected on his September 2016 Citibank account statement is implausible”
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1 given “[m]ost of the charges were in Tustin, California, where he lives.” Reply at 5:1-3
2 (citing Exhibit “3” to Peck Decl. at 24-25). Defendant also points out that “[t]here is no
3 evidence that Hartranft disputed the charges, reported identity theft, or took any of the
4 actions one would take after receiving a bill with unexpected charges.” Id. at 5:4-5. The
5 Court agrees that while Plaintiff’s counsel makes the attorney argument that the charges
6 could have resulted from theft, if that were the case, Plaintiff would have mentioned the
7 theft of his card in his declaration but never did. See generally Hartranft Decl.
8

Given no other elements essential to contract formation were raised by Plaintiff and

9 the Court finds mutual consent existed, the Card Agreement and Arbitration Provision
10 contained within it are both valid, enforceable contracts.
4.
The Arbitration Provision Covers the TCPA and FDCPA Claims
11
12

Defendant argues that Plaintiff’s “claims that Encore violated the TCPA and FDCPA

13 when collecting his account after he defaulted fall squarely within the arbitration
14 provision.” Mot. at 17:13-14. Plaintiff’s Opposition does not dispute this. See generally
15 Oppo. Indeed, the Arbitration Provision provides that it covers “any claim, dispute or
16 controversy between you and us arising out of or related to your Account, a previous related
17 Account, or our relationship.” Card Agreement at 22. It elaborates on its broad application:
18
19
20
21
22

Except as stated below, all Claims are subject to arbitration, no matter
what legal theory they’re based on or what remedy (damages, or
injunctive or declaratory relief) they seek, including Claims based on
contract, tort (including intentional tort), fraud, agency, your or our
negligence, statutory or regulatory provisions, or any other sources of
law; . . . Claims made regarding past, present, or future conduct; and
Claims made independently or with other claims.

23 Card Agreement at 22.
24

Thus, the Arbitration Provision covers Plaintiff’s TCPA and FDCPA claims at issue

25 in this case. See, e.g., Cayanan, 928 F. Supp. 2d at 1208 (granting the defendants’ motion
26 to compel arbitration of the plaintiffs’ TCPA claims because the “[d]efendants’ alleged
27 conduct in this case is directly related to Plaintiffs' accounts and the contracts that govern
28 them”); see also Thomas v. Wells Fargo Dealer Servs., No. CV135168RGKPJWX, 2013
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1 WL 12114768, at *1-2 (C.D. Cal. Oct. 1, 2013) (granting the defendant’s motion to compel
2 arbitration by finding that the “[p]laintiff's claims [alleging violations of the TCPA and
3 FDCPA] fall within the scope of the Arbitration Clause” given they “arise under two
4 federal statutes and at tort,” all of which “fall within the scope of the Arbitration Clause”).
5
6

a.

Plaintiff’s Claim Involves Interstate Commerce

Finally, for the Court to compel arbitration under the FAA, Plaintiff’s TCPA and

7 FDCPA claims must pertain to interstate commerce.

Subject to certain exceptions

8 inapplicable here, the FAA “governs arbitration agreements in contracts involving
9 interstate commerce.” Shivkov v. Artex Risk Sols., Inc., 974 F.3d 1051, 1058-60 (9th Cir.
10 2020) (applying Arizona contract law). Section 1 of the FAA defines “commerce” as
11 “commerce among the several States.” 9 U.S.C. § 1.
12

Other courts have found that claims involving the TCPA and FDCPA involve

13 interstate commerce. See, e.g., Rockridge Tr. v. Wells Fargo, N.A., 985 F. Supp. 2d 1110,
14 1136 (N.D. Cal. 2013) (noting that “[t]he FDCPA defines the term ‘debt collector’ to
15 include: (1) ‘any person who uses any instrumentality of interstate commerce or the mails
16 in any business the principal purpose of which is the collection of any debts,’ and (2) any
17 person ‘who regularly collects or attempts to collect, directly or indirectly, debts owed or
18 due or asserted to be owed or due to another’”) (citing 15 U.S.C. § 1692a(6)); Colletti v.
19 Monitronics Int’l, Inc., No. 0:15-4838-TLW, 2016 WL 11563370, at *3 (D.S.C. Aug. 4,
20 2016) (“In the instant case, the parties agree that . . . the TCPA claim in this case touches
21 interstate commerce”). For example, in Hamby v. Power Toyota Irvine, No. 11CV054422 BTM (BGS), 2012 WL 13036860, *1-2 (S.D. Cal. Mar. 22, 2012) (Moskowitz, J.), another
23 court in this district held that a retail sales contract for the purchase and financing of an
24 automobile affected interstate commerce and granted the defendant’s motion to compel
25 arbitration. The Hamby plaintiff filed suit, alleging violations of, inter alia, the FDCPA,
26 arising out of the extension of credit from a car dealership in connection with the sale of a
27 vehicle. Id. at *1. Like Plaintiff here, the plaintiff alleged that “one or more adverse actions
28 were taken regarding his credit application.” Id. Like Defendant, the defendant moved to
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1 compel arbitration. Id. at *1-2. The court cited to the Supreme Court case of Citizens Bank
2 v. Alafabco, Inc., 539 U.S. 52, 58 (2003), which made clear that “[n]o elaborate explanation
3 is needed to make evident the broad impact of commercial lending on the national economy
4 or Congress’ power to regulate that activity pursuant to the Commerce Clause.” Hamby,
5 2012 WL 13036860, at *6. The Hamby court reasoned that because commercial lending
6 necessarily included automobile lending, the agreement at issue in that case involved
7 interstate commerce. Id.
8

Just as the Hamby court determined that commercial lending involved interstate

9 commerce and encompassed the plaintiff’s claims, 2012 WL 13036860, *1-2, this Court
10 likewise concludes that this case involves interstate commerce, such that the Court must
11 enforce the Card Agreement’s Arbitration Provision.
12
13

5.

Waiver

The Arbitration Provision provides that “[n]either you nor we waive the right to

14 arbitrate by filing or serving a complaint, answer, counterclaim, motion, or discovery in a
15 court lawsuit.” Card Agreement at 22. Nonetheless, Plaintiff argues that “[e]ven if a
16 contract was formed, Defendant has prejudicially delayed the bringing of this motion to
17 compel arbitration, after a year and a half of litigation, and should be equitably barred from
18 compelling arbitration.” Oppo. at 11:10-12. Plaintiff contends that Defendant “fully
19 invoked litigation machinery going to the merits of the claims by filing a motion to dismiss
20 or stay before notifying counsel of the existence of an alleged enforceable arbitration
21 clause.” Id. at 12:26-28. He elaborates that “Defendant waited 18 months from the filing
22 of the initial complaint to move the court to compel arbitration and took intervening steps
23 by entering into a protective order and filing the Rule 26(f) initial disclosures.” Id. at 13:124 3.

Defendant replies that “[e]ven a cursory examination of the record shows that

25 [Plaintiff’s] contention to be flat-out wrong.” Reply at 10:2-3. Defendant argues that
26 “[t]he only motion Encore filed was a motion to stay or dismiss Hartranft’s case because it
27 was duplicative of another putative class action pending before Judge Anello,” which “did
28 not raise any merits issues.” Id. at 10:4-6. Defendant points out that “[f]iling a motion to
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1 dismiss that does not address the merits does not waive arbitration.” Id. at 10:6-7 (citing
2 cases). Defendant also responds that Plaintiff has not shown any prejudice resulting from
3 the timing of Defendant’s Motion, and even though Encore provided initial disclosures and
4 signed a protective order, “that type of minimal participation does not waive arbitration.”
5 Reply at 10:25-11:6 (citing Armstrong, 2018 WL 6505997 at *13 (“Courts have
6 consistently held that minimal discovery—like the three interrogatories and 28 pages of
7 produced documents here—does not constitute prejudice”)).
8

A party seeking to compel arbitration may waive that right, although such waivers

9 are rarely found in light of judicial policy favoring arbitration. Tjeerdsma v. Global Steel
10 Buildings, Inc., 466 N.W.2d 643, 645 (S.D. 1991); see also Izett, 2019 WL 4845575 at
11 *10-11 (citing Tjeerdsma); United States v. Park Place Assocs., 563 F.3d 907, 921 (9th
12 Cir. 2009). “A party may be found to have waived its right to arbitration if it: (1) knew of
13 an existing right to arbitration; (2) acted inconsistently with that right; and (3) prejudiced
14 the other party by these inconsistent acts.” Lewallen v. Green Tree Servicing, L.L.C., 487
15 F.3d 1085, 1090 (8th Cir. 2007) (internal quotation marks omitted); see also United States
16 v. Park Place Assocs., 563 F.3d 907, 921 (9th Cir. 2009). As to the first factor, neither
17 party disputes that Defendant knew of its right to arbitrate. See generally Mot.; Oppo.
18 Thus, the Court examines the remaining two factors of inconsistent acts and prejudice.
19

With respect to the second factor, “[a] party acts inconsistently with its right to

20 arbitrate if the party substantially invokes the litigation machinery before asserting its
21 arbitration right.” Donelson v. Ameriprise Fin. Servs., Inc., No. 19-3691, 2021 WL
22 2231396, at *3 (8th Cir. Jun. 3, 2021) (quoting Lewallen v. Green Tree Servicing, L.L.C.,
23 487 F.3d 1085, 1090 (8th Cir. 2007)); see also Izett, 2019 WL 4845575 at *10-11. “A
24 party substantially invokes the litigation machinery when, for example, it files a lawsuit on
25 arbitrable claims, engages in extensive discovery, or fails to move to compel arbitration
26 and stay litigation in a timely manner.” Donelson, 2021 WL 2231396 at *3 (holding that
27 filing a motion to strike class allegations filed at the same time the defendant moved to
28 compel arbitration did not qualify as substantially invoking the litigation machinery). As
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1 another example, asking a court to dispose of a case on the merits before reaching
2 arbitration qualifies as inconsistent with arbitration and “substantially invoking the
3 litigation machinery.” Id. For example, in Lewallen, the Eighth Circuit found that the
4 defendants had acted inconsistently with their arbitration right by serving “extensive”
5 discovery requests, filing “substantive motions in the case,” and participating in hearings
6 on its proof of claim prior to seeking arbitration. 487 F.3d at 1090. In Izett, 2019 WL
7 4845575 at *10-11, however, the court determined that the defendants had not waived their
8 right to arbitrate by litigating in the state court for recovery of a debt involved in a separate
9 and distinct lawsuit brought by the plaintiff under the FDCPA. The court also determined
10 that such actions in no way prejudiced the plaintiff. Id.
11

In this case, Defendant has filed only one other motion, and as of December 11,

12 2019, when it filed this motion, “[n]o discovery ha[d] taken place.” Mot. at 13:2. The
13 other motion Defendant filed was filed on October 11, 2018, and sought a dismissal or stay
14 of the case on the basis that it was duplicative of the MDL case, rather than asserting any
15 merits reasons for dismissal. See ECF No. 13 at 2. On July 19, 2019, the Court denied this
16 motion as moot due to the filing of the SAC given the motion had been targeted at the
17 previous complaint. ECF No. 24. The only other motion filed by Defendant was the instant
18 Motion, seeking to compel arbitration and simultaneously asking the Court to strike the
19 class allegations, on December 11, 2019. ECF No. 28. From July 30, 2020 to the present,
20 the case has been stayed, at Plaintiff’s request. ECF No. 46. Thus, unlike Lewallen, there
21 has not been extensive discovery, filing of substantive motions, or participation in merits
22 hearings. 487 F.3d at 1090. Rather, the Court finds Defendant has not acted inconsistently
23 with its right to arbitration by “substantially invoking the litigation machinery.”
24

As to the third factor pertaining to prejudice, “[p]rejudice may also result from lost

25 evidence, duplication of efforts, or the use of discovery methods unavailable in arbitration.”
26 Midwest AG Enterprises v. Poet Invs., No. CIV 08-4091, 2010 WL 2332717, at *16-17
27 (D.S.D. June 9, 2010) (applying South Dakota law). For example, in Midwest, the Court
28 held that the defendants had waived the right to arbitration, and the plaintiff would be
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1 prejudiced where the defendants never alleged the existence of an arbitration clause in their
2 reply brief and “did not raise their arbitration claim” until filing a motion for summary
3 judgment. Id. at *17. The court also noted that the parties had completed extensive
4 discovery, allowing arbitration would require duplication of discovery that had already
5 been completed, and the case had been set for trial. Id.
6

Unlike in Midwest, in this case, as of December 11, 2019, no discovery had taken

7 place in this case, and no trial date has been set. See Mot. at 13:2-3. Further, no other
8 major motions have been filed. Thus, the Court finds that Plaintiff will suffer no prejudice
9 if the Court grants the instant Motion and compels arbitration.
10

In sum, Defendant has not waived its right to arbitrate Plaintiff’s claims.

11

C.

12

The Arbitration Provision expressly provides that “[c]laims brought as part of a class

Defendant’s Motion to Strike the Classwide Allegations

13 action, private attorney general or other representative action can be arbitrated only on an
14 individual basis.” Card Agreement at 22. It elaborates that “[i]f arbitration is chosen by
15 any party, neither you nor we may pursue a Claim as part of a class action or other
16 representative action.” Id.
17

Defendant argues that “[b]y using his account and accepting the cardholder

18 agreement, Hartranft also waived his right to proceed as a class representative or class
19 member.” Mot. at 22:4-5 (citing Peck Decl. at 19). Defendant also points out that “because
20 Hartranft failed to file a class certification motion by the deadline set by the Court, he
21 cannot represent a class even if he is allowed to litigate his claims in this Court.” Id. at
22 23:8-10 (internal citations omitted). Thus, Defendant contends that “[b]ecause Hartranft
23 waived his right to proceed on a class-wide basis, both by accepting the arbitration
24 agreement and by failing to move for class certification by the deadline, the Court should,
25 in addition to compelling arbitration of Hartranft’s individual claim, also strike the
26 allegations regarding the putative class.” Id. at 23:11-14. Plaintiff responds that the Court
27 should deny Defendant’s Motion to Strike the Classwide Allegations because “it is for the
28 arbitrator, not the court, to determine whether the arbitration clause permits or prohibits
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1 consolidation.” Oppo. at 20:23-24. Thus, he contends that “even if the Court grants the
2 motion, the Court must defer the gateway issue of class arbitration to the arbitrator.” Id. at
3 20:27-21:1. Defendant replies that the Court should reject Plaintiff’s argument that the
4 arbitrator should determine whether the case can proceed as a class action because the Card
5 Agreement expressly prohibits class arbitration. Reply at 11:12-15. In fact, it even states
6 that “[t]he arbitrator has no authority to arbitrate any claim on a class or representative
7 basis and may award relief only on an individual basis.” Id. at 11:17-19; see also Card
8 Agreement at 22. Defendant also states that “[t]he cases Hartranft cites are inapposite
9 because they are cases where the arbitration provision was silent as to the availability of
10 class arbitration.” Reply at 11:19-21.
11

Although this case was filed as a putative class action, Plaintiff did not seek class

12 certification, and as such, the Court did not certify the class. Therefore, with no certified
13 class claims having come into existence, any dismissal would not affect putative class
14 members’ claims. See Richey v. GetWellNetwork, Inc., No. 320CV02205BENBLM, 2021
15 WL 424281, at *3 (S.D. Cal. Feb. 8, 2021); see also Lee v. CVS Pharmacy, Inc., No.
16 320CV01923BENDEB, 2021 WL 308283, at *2-3 (S.D. Cal. Jan. 28, 2021) (denying a
17 Joint Motion to dismiss putative class claims because “[a]lthough this case was filed as a
18 putative class action, Plaintiff did not seek class certification, and as such, the Court did
19 not certify the class,” meaning that “with no certified class claims having come into
20 existence, any dismissal will not affect putative class members’ claims”). “Generally,
21 courts review class allegations through a motion for class certification.” In re Wal-Mart
22 Stores, Inc. Wage & Hour Litig., 505 F. Supp. 2d 609, 614 (N.D. Cal. 2007); see also Ernst
23 v. Bank of Am. Corp., No. 12CV1255 JM(BGS), 2012 WL 5682052, at *6 (S.D. Cal. Oct.
24 30, 2012) (Miller, J.) (denying a motion to strike or dismiss the class allegations as moot
25 while instructing the plaintiff to move for class certification within ninety days of the
26 order’s entry); Kas v. Mercedes-Benz USA, LLC, No. CV 11-1032-GHK PJWX, 2011 WL
27 5248299, at *3 (C.D. Cal. Oct. 31, 2011) (“While class allegations can be stricken at the
28 pleadings stage, it is ‘rare to do so’ before a motion for class certification has been filed.”).
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1 Consequently, courts disfavor motions to strike classwide allegations filed at the pleading
2 stage or before the plaintiff has had the opportunity to file a motion for class certification.
3 See, e.g., Wal-Mart, 505 F. Supp. 2d at 615 (noting that “the granting of motions to dismiss
4 class allegations before discovery has commenced is rare,” as “the better course is to deny
5 such a motion because ‘the shape and form of a class action evolves only through the
6 process of discovery’”). In this case, however, the Court’s September 20, 2018 Scheduling
7 Order set the deadline to file a motion for class certification as April 22, 2019, which was
8 well before the Court stayed the case on January 7, 2020. ECF No. 12 at 4, ¶ 9. Thus,
9 Plaintiff had the opportunity to file a motion for class certification but never did.
10

Numerous cases have either granted motions to strike class allegations or denied

11 such motions as moot where the Court has granted a motion to compel arbitration. See,
12 e.g., Donelson, 2021 WL 2231396 at *1 (reversing and remanding to the district for entry
13 of an order striking the class-action allegations and compelling arbitration); Kaltwasser v.
14 AT & T Mobility LLC, 812 F. Supp. 2d 1042, 1051-52 (N.D. Cal. 2011) (granting the
15 defendant’s motion to compel arbitration while terminating the defendant’s motion to strike
16 class allegations as moot); Sanford v. MemberWorks, Inc., 483 F.3d 956, 963-64 n.10 (9th
17 Cir. 2007) (compelling arbitration of the plaintiff’s individual claims while dismissing the
18 plaintiff’s class allegations as moot). Other courts have compelled arbitration where a case
19 had been filed as a putative class action, but the plaintiff never moved for class certification,
20 and the Citibank Card Agreement prohibited arbitration of class claims, without explicitly
21 addressing the putative class claims that never came into existence. See, e.g., Cayanan,
22 928 F. Supp. 2d at 1208 (compelling arbitration of a plaintiffs’ claims where they brought
23 a putative class action for TCPA violations against, inter alia, Citibank, but the agreement
24 between the parties, like the Card Agreement in this case, contained a prohibition against
25 arbitrating class actions).
26

Although this case was filed as a putative class action, Plaintiff did not seek class

27 certification, and as such, the Court did not certify the class. Therefore, with no certified
28 class claims having come into existence, any dismissal would not affect putative class
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1 members’ claims. See Richey, 2021 WL 424281 at *3. The only claims currently alive in
2 this case are Plaintiff’s individual claims. See id. Thus, the Court DENIES Defendant’s
3 Motion to Strike the Class Allegations as moot.
Defendant’s Motion to Dismiss, or in the Alternative, Stay the Case

4

D.

5

Defendant argues that “[b]ecause Hartranft’s claim is within the arbitration

6 provision’s scope, proceedings on his complaint should be dismissed or stayed pending the
7 arbitration’s conclusion.” Mot. at 23:25-28 (citing 28 U.S.C. § 3). That being said,
8 Defendant contends that “[t]he Ninth Circuit has explained that a stay is preferable to a
9 dismissal, because the latter is immediately appealable and could therefore undermine the
10 efficiency arbitration is meant to provide.” Id. at 24:5-9 (citing Bushley v. Credit Suisse
11 First Bos., 360 F.3d 1149, 1153 n.1 (9th Cir. 2004) (noting that “[c]ourts should be aware
12 that a dismissal renders an order appealable under § 16(a)(3), while the granting of a stay
13 is an unappealable interlocutory order under 16(b) . . . . Unnecessary delay of the arbitral
14 process through appellate review is disfavored”).
15

“[N]otwithstanding the language of § 3, a district court may either stay the action or

16 dismiss it outright when . . . the court determines that all of the claims raised in the action
17 are subject to arbitration.” Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072, 107318 74 (9th Cir. 2014); see also Sparling v. Hoffman Constr. Co., 864 F.2d 635, 638, 641
19 (9th Cir. 1988) (affirming the district court’s dismissal of one the plaintiff’s claims because
20 the parties agreed to submit those claims to arbitration, and no nonarbitrable claims
21 remained in the case); Gadomski, 281 F. Supp. 3d at 1020-21 (holding that “because both
22 claims are to be arbitrated, the Court dismisses Plaintiff’s claims in favor of arbitration”).
23 “[I]n deciding whether the parties have agreed to submit a particular grievance to
24 arbitration, a court is not to rule on the potential merits of the underlying claims.” AT & T
25 Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986). However, in
26 determining this motion to compel arbitration, the Court also faces a co-pending motion to
27 dismiss, and courts may examine merits on a motion to dismiss.
28

Where a defendant moving to compel arbitration also seeks dismissal of the case
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1 pursuant to Rule 12(b)(1), the “jurisdictional attack may be facial or factual.” Safe Air for
2 Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a facial attack, the moving
3 party “asserts that the allegations contained in a complaint are insufficient on their face to
4 invoke federal jurisdiction.” Id. In a factual attack, the moving party “disputes the truth
5 of the allegations that, by themselves, would otherwise invoke federal jurisdiction.” Id.
6 Further, in a motion to dismiss, the Court must construe all reasonable inferences in favor
7 of the nonmoving party, Manzarek, 519 F.3d at 1031, but has no obligation to draw
8 unreasonable inferences when determining whether the pleading under attack states a
9 plausible claim, see, e.g., Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295-96 (9th
10 Cir. 1998) (“[W]e are not required to accept as true conclusory allegations which are
11 contradicted by documents referred to in the complaint.”); Cisco Sys., Inc. v. Capella
12 Photonics, Inc., No. 20-CV-01858-EMC, 2020 WL 4923697, at *3 (N.D. Cal. Aug. 21,
13 2020), motion to certify appeal denied, No. 20-CV-01858-EMC, 2020 WL 7227153 (N.D.
14 Cal. Dec. 8, 2020) (“When a written instrument contradicts allegations in a complaint to
15 which it is attached, the exhibit trumps the allegations.”). If a defendant advances “a
16 factual attack on subject matter jurisdiction, the defendant may introduce testimony,
17 affidavits, or other evidence to dispute the truth of the allegations that, by themselves,
18 would otherwise invoke federal jurisdiction.” Terenkian v. Republic of Iraq, 694 F.3d
19 1122, 1131 (9th Cir. 2012) (internal quotations omitted). “Under these circumstances, ‘no
20 presumptive truthfulness attaches to plaintiff’s allegations.’” Id. “Once the moving party
21 has converted the motion to dismiss into a factual motion by presenting affidavits or other
22 evidence properly brought before the court, the party opposing the motion must furnish
23 affidavits or other evidence necessary to satisfy its burden of establishing subject matter
24 jurisdiction.” Safe Air, 373 F.3d at 1039.
25

The Court construes Defendant’s request for a dismissal as a factual attack. Plaintiff

26 asserts TCPA violations against Encore for unwanted calls received from the numbers
27 [phone] and [phone], see SAC at 4, ¶ 16, but Encore has submitted evidence
28 that it does not collect debts, see Swaninger Decl. at 2, ¶ 4, and other cases alleging TCPA
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1 violations related to calls from the number [phone] show that the number belongs
2 to MCM, see Franklin v. Atlantic Credit & Finance, Inc., et al., No.
3 119CV03696LMMAJB, 2020 WL 10046092, at *2 (N.D. Ga. Apr. 20, 2020) (“This letter
4 is to inform you that Midland Funding, LLC is considering forwarding this account to an
5 attorney in your state for possible litigation. Upon receipt of this notice, please call 8006 888-9419.”); Cooper v. Atl. Credit & Fin. Inc., No. 2:18-CV-01254-JHE, 2019 WL
7 2076397, at *3 (N.D. Ala. May 10, 2019), vacated and remanded on other grounds sub
8 nom. Cooper v. Atl. Credit & Fin. Inc, 822 F. App’x 951 (11th Cir. 2020) (same). Further,
9 the Card Agreement had a section entitled “COMMUNICATIONS,” which stated, “You
10 agree that we (and/or our service providers or anyone we authorize) may contact you at
11 any phone number, email address, or mailing address you provide or we obtain in other
12 ways,” which “includes communications to mobile, cellular/wireless, or similar devices . .
13 . by live operator, auto-dialer, recorded or artificial voice, text, or email.” Card Agreement
14 at 22. The TCPA’s definition for violations falling within its scope, however, expressly
15 exclude claims for calls “made with the prior express consent of the called party.” See,
16 e.g., 47 U.S.C. § 227(b)(1)(A) (making it “unlawful for any person within the United
17 States, or any person outside the United States if the recipient is within the United States .
18 . . . to make any call (other than a call . . . made with the prior express consent of the
19 called party) using any automatic telephone dialing system or an artificial or prerecorded
20 voice”) (emphasis added). By using the Costco Card, Plaintiff consented to the terms of
21 the Card Agreement, including that Citibank, its assignees, or those assignees’ subsidiaries
22 or parent companies, like Defendant, could call him. This flies in the face of Plaintiff’s
23 allegation that he “did not provide Defendant with a ‘prior express consent’ nor written
24 consent to receive calls to his cellular telephone.” SAC at 4, ¶ 15. Thus, the Court may
25 disbelieve that allegation. Cisco, 2020 WL 4923697 at *3.
26

As to the FDCPA violations, Plaintiff claims that Defendant “failed to provide

27 Plaintiff the required notice pursuant to 15 U.S.C. § 1692g(a).” SAC at 10, ¶ 47. The
28 FDCPA requires that “[w]ithin five days after the initial communication with a consumer
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1 in connection with the collection of any debt, a debt collector shall, unless the . . .
2 information is contained in the initial communication or the consumer has paid the debt,
3 send the consumer a written notice containing” various information outlined in the statute.
4 15 U.S.C. § 1692g(a). However, Plaintiff does not allege any facts indicating that
5 Defendant failed to send him written notice. See generally SAC. As a result, the Court
6 finds that under the facts pled, as well as the documents upon which Plaintiff’s TCPA and
7 FDCPA claims are based, which are incorporated by reference, not only are Plaintiff’s
8 claims implausible under the law, but they are also appropriate for dismissal in light of the
9 Court’s decision to grant Defendant’s Motion to Compel Arbitration. As a matter of law,
10 the Complaint, when considered along with the Card Agreement and briefs submitted
11 herewith, fails to state a plausible claim for relief. The Card Agreement allowed Defendant
12 to pursue Plaintiff after he failed to pay amounts owed. See generally Card Agreement.
13 The Court disregards as unreasonable and implausible Plaintiff’s allegation that any calls
14 he received related to amounts unpaid arising out of his Costco card were unlawful in light
15 of the Card Agreement, which expressly authorized Citibank or its assignees to call
16 Plaintiff once Plaintiff accepted the Card Agreement by using the card. Id. When
17 disregarding this allegation, the remaining facts show that Plaintiff (1) used a credit card
18 from Citibank, which later assigned its rights to Defendant’s subsidiary; (2) failed to pay
19 balances owed on the card; and (3) was called regarding amounts he owed, as authorized
20 by the Card Agreement. As a matter of law, this made Defendant Plaintiff’s creditor, and
21 as a creditor, Defendant had every right to call him so long as the calls were consistent with
22 the FDCPA. Plaintiff’s complaint does not plead sufficient facts to show the calls made
23 were inconsistent with the FDCPA as it contains nothing more than one conclusory
24 allegation that Defendant violated the FDCPA bereft of any supporting facts.

See

25 Twombly, 550 U.S. at 570.
26

Having decided that all of Plaintiff’s claims are subject to arbitration, the Court is

27 within its discretion to dismiss the complaint under Rule 12 of the Federal Rules of Civil
28 Procedure. See Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1060
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1 (9th Cir. 2004). Consequently, because both claims are to be arbitrated, the Court
2 dismisses Plaintiff’s claims in favor of arbitration. See Delgado v. Ally Fin., Inc., No.
3 317CV02189BENJMA, 2018 WL 2128661, at *6 (S.D. Cal. May 8, 2018) (Benitez, J.)
4 (dismissing claims with prejudice after granting a motion to compel arbitration). In the
5 absence of a plausible claim under the TCPA and FDCPA, Plaintiff’s factual allegations
6 against Defendant lack a federal authorizing statute sufficient to invoke federal jurisdiction
7 of her claim. See, e.g., Terenkian, 694 F.3d at 1139 (dismissing the case for lack of federal
8 subject matter jurisdiction after a factual attack on the truth of the allegations creating the
9 basis for federal jurisdiction). Although absent an arbitrable issue, the Court would have
10 discretion to grant leave to amend, the Court finds leave to amend would be improper here
11 because (1) the Court simultaneously concludes that the arbitrator can determine the
12 remaining issues and (2) permitting leave to amend would prove to be an exercise in
13 futility. See, e.g., Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th Cir.
14 1987) (“Denial of leave to amend is not an abuse of discretion where the pleadings before
15 the court demonstrate that further amendment would be futile.”).
16

Although Defendant indicates in its Motion it would prefer a stay over a dismissal,

17 the Court notes that Plaintiff filed this case on June 6, 2018, and as such, it has been pending
18 for three years. Further, the case has been stayed since July 30, 2020, ECF No. 46, or
19 almost an entire year. However, a mere four months after a stay was granted, the Ninth
20 Circuit issued its decision on November 19, 2020, meaning that “by its terms, the stay
21 issued . . . expired on that date.” See ECF No. 49 at 1:26-28. “[N]evertheless, Plaintiff’s
22 counsel failed to notify the Court within seven days of a decision on the appeal as required
23 by [the] . . . order,” resulting in the stay remaining in place for an additional seven (7)
24 months. Id. at 1:27-28. While normally the Court might consider granting a stay while
25 ordering the parties to provide status reports on the progress of arbitration, the Court has
26 concerns that Plaintiff’s counsel cannot be relied upon to provide such status reports,
27 particularly in light of his recent failure to appear at the two previous hearings, one of
28 which included an OSC regarding his first failure to appear. See ECF Nos. 49-54.
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1 Regardless, because all claims in the case are appropriate for arbitration, and therefore,
2 subject to dismissal, Defendant’s request for a stay is denied as moot. See, e.g., Tur v.
3 YouTube, Inc., 562 F.3d 1212, 1214 (9th Cir. 2009) (finding “an issue is moot when
4 deciding it would have no effect within the confines of the case itself”).
5 V.

CONCLUSION

6

For the above reasons, the Court rules as follows:

7

1.

The previous stay in place in this matter is VACATED.

8

2.

Defendant’s Motion to Compel Arbitration is GRANTED.

9

3.

Defendant’s Motion to Dismiss is GRANTED WITH PREJUDICE.

10

4.

Defendant’s Motion to Strike is DENIED AS MOOT.

11

5.

Defendant’s Motion to Stay is DENIED AS MOOT.

12

6.

Plaintiff’s Evidentiary Objections are OVERRULED.

13

7.

The Clerk of the Court is directed to close the case.

14

IT IS SO ORDERED.

15

DATED:

June 16, 2021
HON. ROGER T. BENITEZ
United States District Judge

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