Nelson v. Synchrony Bank
Filing
31
OPINION AND ORDER denying 22 Motion to compel arbitration, for dismissal, or in the alternative to stay. Signed by Judge John E. Steele on 10/20/2017. (RKR)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
BENJAMIN NELSON,
Plaintiff,
v.
Case No:
2:16-cv-703-FtM-99MRM
SYNCHRONY BANK,
Defendant.
OPINION AND ORDER
This matter comes before the Court on defendant’s Motion to
Compel Arbitration and for Dismissal, or in the Alternative Stay
(Doc. #22) filed on September 14, 2017.
Plaintiff filed a Response
in Opposition (Doc. #25) on October 9, 2017.
For the reasons set
forth below, the Motion is denied.
I.
On September 16, 2016, plaintiff Benjamin Nelson (plaintiff
or Nelson) filed a two-count Complaint (Doc. #1) against defendant
Synchrony Bank 1 (defendant or Synchrony), alleging claims and
seeking
damages
(TCPA),
47
under
U.S.C.
§
the
227
Telephone
et
seq.,
Consumer
and
the
Protection
Florida
Act
Consumer
Collection Practices Act (FCCPA), Fla. Stat. § 559.55 et seq.
The
Complaint alleges that from November 2015 through February 2016,
1
Synchrony Bank is a federal savings association that, among
other things, issues credit card accounts to consumers.
(Doc.
#22-2, ¶ 2.)
Synchrony called plaintiff’s cellphone an average of three times
a day in an effort to collect unpaid credit card debt.
¶¶ 19-20.)
(Doc. #1,
Defendant used an automatic telephone dialing system
(ATDS) or an artificial or prerecorded voice to make some or all
of the calls.
(Id. ¶ 21.)
In November 2015, plaintiff received
one of these calls from defendant, held on the line to speak with
a live/agent or representative, and informed them that the calls
were harassing, to immediately cease the phone calls, and that he
was revoking any “previously perceived express consent” to receive
calls from the auto-dialer.
(Id. ¶¶ 25-26.)
Each phone call
received after this conversation was placed without plaintiff’s
express
consent.
(Id.
¶¶
27-28.)
This
conduct,
plaintiff
asserts, violates the TCPA’s prohibition on placing non-emergency
telephone calls using an ATDS or a prerecorded or artificial voice
without
having
the
express
consent
of
the
party
called,
and
constitutes harassing behavior in violation of Section 559.72(7)
of the FCCPA.
Defendant
(Id. ¶¶ 52, 55.)
now
seeks
to
enforce
an
arbitration
provision
governed by the Federal Arbitration Act (FAA) contained within the
credit card agreements and dismiss the Complaint, or to stay the
case and compel arbitration.
In response, plaintiff does not
dispute the substance of the arbitration provision, assert defects
in its formation, or challenge its validity; nor does plaintiff
challenge that his claims would fall within the agreement to
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arbitrate.
Instead, plaintiff argues that the arbitration demand
is untimely and challenges defendant’s right to arbitration based
upon waiver, stating that defendant has engaged in motion practice,
litigation, and discovery.
II.
Under
the
FAA,
arbitration
agreements
are
“valid,
irrevocable, and enforceable, save upon such grounds as exist at
law or in equity for the revocation of the contract.”
Caley v.
Gulfstream Aerospace Corp., 428 F.3d 1359, 1367 (11th Cir. 2005).
As a consequence, the FAA “requires courts to enforce privately
negotiated
agreements
to
arbitrate,
accordance with their terms.”
like
other
contracts,
in
Volt Info. Scis., Inc. v. Bd. of
Trs., 489 U.S. 468, 478 (1989).
Despite the strong policy in
favor of arbitration, a party may, but its conduct, waive its right
to arbitration.
S & H Contractors, Inc. v. A.J. Taft Coal Co.,
906 F.2d 1507, 1514 (11th Cir. 1990).
To determine whether a
party has waived its right to arbitrate, this Court applies a twopart
test:
“First,
circumstances,
arbitration
the
right,”
we
decide
party
such
if,
has
as
by
under
acted
the
totality
of
the
with
the
invok[ing]
the
inconsistently
“substantially
litigation machinery prior to demanding arbitration.”
Garcia v.
Wachovia Corp., 699 F.3d 1273, 1277 (11th Cir. 2012) (citations
omitted).
Second, the Court examines whether those inconsistent
actions by the movant have “in some way prejudiced the other
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party,” based on such factors as “the length of delay in demanding
arbitration
and
participating
in
the
the
expense
incurred
litigation
by
process.”
that
party
Id.
from
(citations
omitted).
As to the first part of the waiver test, a party acts
“inconsistently with its right to arbitrate where its conduct including participation in litigation - manifests an intent to
avoid or to waive arbitration.”
Citibank, N.A. v. Stok & Assocs.,
P.A., 387 F. App’x 921, 924 (11th Cir. 2010) (citation omitted).
“Waiver of arbitration is not to be lightly inferred.”
Wilson v.
Par Builders II, 879 F. Supp. 1187, 1189 (M.D. Fla. 1995) (citation
omitted).
Therefore,
participation
in
litigation
must
be
substantial in order for it to constitute a waiver of the right to
arbitrate.
Citibank, N.A., 387 F. App’x at 924; see also Morewitz
v. W. of Eng. Ship Owners Mut. Prot. & Indem. Ass’n, 62 F.3d 1356,
1366 (11th Cir. 1995).
As to the second part of the waiver test, the Court determines
prejudice
by
considering
“the
length
of
delay
in
demanding
arbitration and the expense incurred by [the opposing] party from
participating in the litigation process.”
S & H Contractors, 906
F.2d at 1514 (citation omitted).
Finally, “[t]he burden of proving waiver rests with the party
seeking to prove waiver.”
Info. & Display Sys., L.L.C. v. Auto–
Ref, Inc., No. 3:05–cv–1135–J–33TEM, 2006 WL 2850109 (M.D. Fla.
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Oct. 3, 2006) (citation omitted).
Because federal law favors
arbitration, this burden is a heavy one.
Citibank, N.A., 387 F.
App’x at 923.
III.
With regard to the first part of the test, plaintiff asserts
that the defendant acted inconsistently with its arbitration right
by
answering
plaintiff’s
Complaint,
participating
in
a
case
management meeting in late 2016, moving for a stay of the case
pending an appellate ruling, and engaging in merits discovery –
all before filing its Motion to Compel Arbitration.
Indeed, a
Case Management and Scheduling Order was entered in this case on
March 8, 2017, with an October 19, 2017 discovery deadline (Doc.
#21).
Although
Synchrony’s
Motion
states
that
it
has
only
provided responses to discovery requests and that it has not
propounded any discovery on plaintiff (Doc. #22, pp. 22-23),
plaintiff’s Response points out that contemporaneous with the
filing of the Motion to Compel Arbitration, Synchrony propounded
written
interrogatories,
production,
and
(Doc. #25, p. 3.)
requests
subsequently
for
noticed
admission,
plaintiff’s
requests
for
deposition.
And the parties filed a Joint Motion to Amend
the Scheduling Order on October 18, 2017, which states: “the
parties have been engaged in discovery and exchanged documents and
information in a good faith efforts to reach a resolution of this
matter.”
(Doc. #26, ¶ 5.)
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The Court agrees with plaintiff that under the totality of
the circumstances Synchrony has acted inconsistently with its
arbitration right.
Synchrony waited one year from the filing of
this action to move to compel arbitration, participating in a case
management conference during which the prospect of arbitration was
never raised, according to plaintiff.
to
plaintiff’s
discovery
requests
Defendant also responded
and
propounded
its
own.
Synchrony’s statement that it has only acted to comply with the
Court-ordered deadlines in hopes of resolving this matter quickly
does not compel a different result.
(Doc. #22, p. 2.)
If
Synchrony wanted to act consistently with its arbitration right it
could
have
sought
plaintiff’s
a
discovery
arbitration.
stay
long
Instead,
of
its
ago
obligation
while
defendant
it
to
respond
moved
responded
to
to
to
compel
plaintiff’s
discovery requests and represented to the Court that it has engaged
in
discovery.
(Doc.
#26,
¶
5.)
Moreover,
and
further
inconsistent with its arbitration right, on January 11, 2017,
defendant attempted to stay these proceedings, not to assert its
arbitration
right,
but
because
a
final
Communications Commission was on appeal. 2
order
of
the
Federal
(Doc. #19.)
The Court notes that defendant filed an Answer and Affirmative
Defenses
and
included
a
reservation
2
of
the
right
to
compel
The Court denied the Motion to Stay pending the FCC’s
ruling. (Doc. #20.)
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arbitration pursuant to the terms and conditions of the account
agreements.
(Doc. #8, p. 8, ¶ 4.)
But this is only one factor
the Court considers in examining the totality of the circumstances
to determine whether waiver occurred.
the
other
circumstances
of
this
This fact does not outweigh
case
that
support
waiver
as
outlined above.
With
regard
to
the
second
factor,
the
Court
finds
that
plaintiff would suffer substantial prejudice if arbitration was
compelled at this point in the case.
This case was filed a year
ago, discovery closes this week and plaintiff has been engaging in
discovery, unaware as to whether defendant would seek to compel
arbitration.
“Prejudice has been found in situations where the
party seeking arbitration allows the opposing party to undergo the
types of litigation expenses that arbitration was designed to
alleviate.”
Morewitz, 62 F.3d at 1366.
Plaintiff has undoubtedly
expended sums of money to litigate this case.
Furthermore, while
it is unclear if plaintiff has responded to Synchrony’s discovery
requests
served
contemporaneously
with
the
instant
Motion,
Synchrony is seeking to benefit from conducting discovery, further
inconsistent with its arbitration right, with prejudice inuring to
the plaintiff. 3
3
The Court has reviewed the entirety of two of the credit
card agreements, and it is worth noting that the terms of the
agreements do not include any language to the effect that a party
who participates in litigation would not waive a right to demand
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Accordingly, it is hereby
ORDERED AND ADJUDGED:
Defendant’s Motion to Compel Arbitration and for Dismissal,
or in the Alternative Stay (Doc. #22) is DENIED.
DONE and ORDERED at Fort Myers, Florida, this
20th
day
of October, 2017.
Copies:
Counsel of Record
arbitration.
(Doc. #22-4, p. 2; Doc. #22-12, p. 4.)
The
agreements merely state that notice can be given after the
beginning of a lawsuit or in the papers filed in the lawsuit, but
otherwise include no language as to how late in the litigation
this may occur. (Id.) See Cat Charter, LLC v. Schurtenberger,
646 F.3d 836, 843 (11th Cir. 2011) (“The FAA requires courts to
enforce privately negotiated agreements to arbitrate, like other
contracts, in accordance with their terms.”).
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