TORRES v. Rushmore Service Center, LLC
Filing
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OPINION. Signed by Judge Susan D. Wigenton on 10/31/2018. (dam, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
DANIEL TORRES, individually and on
behalf of all those similarly situated,
Civil Action No. 18-9236 (SDW) (LDW)
Plaintiffs,
OPINION
v.
RUSHMORE SERVICE CENTER, LLC,
October 31, 2018
Defendant.
WIGENTON, District Judge.
Before this Court is Defendant Rushmore Service Center, LLC’s (“Defendant”) Motion
to Compel Arbitration and Stay Proceedings pursuant to the Federal Arbitration Act (“FAA”), 9
U.S.C. § 1 et seq. This Court has jurisdiction pursuant to 15 U.S.C. § 1692k(d) and 28 U.S.C. §
1331. Venue is proper pursuant to 28 U.S.C. § 1391(b). This Court, having considered the
parties’ submissions, decides this matter without oral argument pursuant to Federal Rule of Civil
Procedure (“Rule”) 78. For the reasons stated below, Defendant’s Motion to Compel Arbitration
and Stay Proceedings is DENIED without prejudice, and the parties are ordered to conduct
limited discovery on the issue of arbitrability.
I.
BACKGROUND AND PROCEDURAL HISTORY
Plaintiff Daniel Torres (“Plaintiff”), a consumer, allegedly incurred a debt that was
subsequently “assigned or otherwise transferred to Defendant[,]” a debt collector. (Compl. ¶¶ 6,
9, 12-13, ECF No. 1.) In a letter to Plaintiff dated December 8, 2017 (the “Letter”), Defendant
advised that it had been retained by PREMIER Bankcard, LLC to collect on Plaintiff’s overdue
account. (Letter, ECF No. 1-1.) The Letter further stated: “Unless you notify this office within
30 days after receiving this notice that you dispute the validity of this debt or any portion thereof,
this office will assume this debt is valid.” (Id.; see also Compl. ¶¶ 14, 21.)
On May 15, 2018, Plaintiff filed a putative class action alleging that Defendant violated
the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. (See generally id.)
The Complaint alleges, inter alia, that because the Letter provided both a telephone number and
mailing address, Plaintiff was not properly notified that “to effectively dispute the alleged debt,
such dispute must be in writing.” (Id. ¶¶ 25, 29, 46.) On August 1, 2018, Defendant filed the
instant Motion to Compel Arbitration and Stay Proceedings, attaching an exemplar of First
Premier Bank’s Credit Card Contract and Account Opening Disclosures (the “Card Agreement”),
which includes an arbitration provision and class-action waiver. (ECF No. 7.) Plaintiff opposed
the motion on August 21, 2018, and Defendant replied on August 28, 2018. (ECF Nos. 8-9.)
II.
LEGAL STANDARD
“The FAA federalizes arbitration law and ‘creates a body of federal substantive law
establishing and regulating the duty to honor an agreement to arbitrate . . . .’” John Hancock
Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 136 (3d Cir. 1998) (quoting Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983)). Courts are authorized to compel
arbitration “upon being satisfied that the making of the agreement for arbitration or the failure to
comply therewith is not in issue.” 9 U.S.C. § 4. Additionally, under § 3 of the FAA, parties may
“apply to a federal court for a stay of the trial of an action ‘upon any issue referable to arbitration
under an agreement in writing for such arbitration.’” Rent-A-Center, W., Inc. v. Jackson, 561
U.S. 63, 68 (2010) (quoting 9 U.S.C. § 3).
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When deciding a motion to compel arbitration, a court must ascertain whether “(1) a
valid agreement to arbitrate exists, and (2) the particular dispute falls within the scope of that
agreement.” Aetrex Worldwide, Inc. v. Sourcing for You Ltd., 555 F. App’x 153, 154 (3d Cir.
2014) (quoting Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 160 (3d Cir. 2009)).
To conduct this inquiry, the court shall apply “ordinary state-law principles that govern the
formation of contracts.” Kirleis, 560 F.3d at 160 (quoting First Options of Chi., Inc. v. Kaplan,
514 U.S. 938, 944 (1995)).
III.
DISCUSSION
In determining whether a valid arbitration agreement exists, a court must first decide
whether to use the Rule 12(b)(6) or Rule 56 standard of review. See Sanford v. Bracewell &
Guiliani, LLP, 618 F. App’x 114, 117 (3d Cir. 2015). The Rule 12(b)(6) standard applies when
arbitrability is “apparent, based on the face of a complaint, and documents relied upon in the
complaint[.]” Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 776 (3d Cir.
2013) (internal quotation marks omitted). However,
[w]here the complaint does not establish with clarity that the
parties have agreed to arbitrate, or when the party opposing
arbitration has come forward with reliable evidence that it did not
intend to be bound by an arbitration agreement, a Rule 12(b)(6)
standard is not appropriate because the motion cannot be resolved
without consideration of evidence outside the pleadings, and, if
necessary, further development of the factual record.
Noonan v. Comcast Corp, No. 16-458, 2017 WL 4799795, at *4 (D.N.J. Oct. 24, 2017) (citations
omitted). In such circumstances, “the non-movant must be given a limited opportunity to
conduct discovery on the narrow issue of whether an arbitration agreement exists.” Ross v.
CACH, LLC, No. 14-6321, 2015 WL 1499282, at *2 (D.N.J. Apr. 1, 2015). Afterwards, “the
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court may entertain a renewed motion to compel arbitration, this time judging the motion under a
[Rule 56,] summary judgment standard.” Guidotti, 716 F.3d at 776.
Here, the existence of the Card Agreement and its arbitration provision and class-action
waiver is not referenced in the Complaint but is raised for the first time in Defendant’s motion.
Because the question of arbitrability cannot be resolved without considering evidence extraneous
to the pleadings, it would be inappropriate to apply a Rule 12(b)(6) standard in deciding the
instant motion. See id. at 774. As the Third Circuit instructed in Guidotti, in this type of
scenario, “the motion to compel arbitration must be denied pending further development of the
factual record.” Id; see, e.g., Sauberman v. Avis Rent a Car Sys., L.L.C., No. 17-756, 2017 WL
2312359, at *2 (D.N.J. May 26, 2017) (denying a motion to compel arbitration and ordering
limited discovery where the complaint did not establish on its face that the parties agreed to
arbitrate); Laudano v. Credit One Bank, No. 15-7668, 2016 WL 3450817, at *5 (D.N.J. June 22,
2016) (same); Ross, 2015 WL 1499282, at *3 (same); Hughes v. Kolaras, No. 13-0057, 2013
WL 5797735, at *7 (D.N.J. Oct. 28, 2013) (denying a motion to dismiss without prejudice in part
because arbitrability was not apparent on the face of the complaint). Thus, this Court will deny
Defendant’s motion without prejudice, and order the parties to conduct limited discovery on the
issue of arbitrability. Afterwards, Defendant may file a renewed motion to compel arbitration,
which this Court will review under a Rule 56 standard.
IV.
CONCLUSION
For the reasons set forth above, Defendant’s Motion to Compel Arbitration and Stay
Proceedings is DENIED without prejudice, and the parties are ordered to conduct limited
discovery on the issue of arbitrability. An appropriate order follows.
/s/ Susan D. Wigenton
SUSAN D. WIGENTON, U.S.D.J.
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cc:
Clerk
Parties
Magistrate Judge Wettre
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