CRUMPLER v. MIDLAND CREDIT MANAGEMENT, INC. et al

Filing 40

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE CYNTHIA M. RUFE ON 12/13/2013. 12/13/2013 ENTERED AND COPIES E-MAILED.(kp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ANTHONY CRUMPLER, ON BEHALF
OF HIMSELF AND ALL OTHERS
SIMILARLY SITUATED,
Plaintiff,

v.

CIVIL ACTION

FILED

NO. 13-1953

MIDLAND CREDIT MANAGEMNT,
INC. and MIDLAND FUNDING, LLC,
Defendants.

DEC 18 2013

'~HAa E. KUNZ, Ci::.-.·,,
-----Dep. C;';:;;,

MEMORANDUM OPINION
RUFE,J.

DECEMBER 13, 2013

Before the Court is Defendants' (collectively "Midland") Motion to Compel Arbitration
and Plaintiffs response thereto. For the reasons stated below the Motion will be denied without
prejudice.
I.

Background

Anthony Crumpler had a series of cell phones with service provided by T-Mobile. 1 In
2012, T-Mobile determined that he was in arrears in his payments by $835.12. T-Mobile
assigned this debt to Midland, a collection agency, which sent Crumpler a notice demanding
payment. This notice stated that if Crumpler made a payment to Midland, Midland would cease
to charge interest on Crumpler's debt. According to Crumpler, he was not being charged interest
in the first place, so Midland made a false statement in violation of the Fair Debt Collection

1

Crumpler makes certain arguments related to T-Mobile's corporate structure. Except where it is relevant
to discuss Crumpler's arguments, this Opinion will refer to entities doing business as T-Mobile collectively or
individually as "T-Mobile."

2

Practices Act. Crumpler is the lead plaintiff in a putative class action challenging Midland's
alleged practice of making fraudulent statements of this sort to debtors.
Midland responded to Crumpler's complaint by moving to compel arbitration. Midland
alleges that at all times relevant to Crumpler's complaint, Crumpler's relationship with T-Mobile
was governed by Terms and Conditions that contained an arbitration provision and a class action
waiver that Crumpler could have but did not opt out of. Midland further argues that when TMobile assigned Crumpler' s debt to Midland, it also assigned its right to enforce the arbitration
provision and class action waiver and that these terms are enforceable.
The parties conducted discovery related to this motion. Crumpler took the deposition of
Christopher Muzio, a T-Mobile custodian ofrecords. Through Muzio, Midland has produced
documents, declarations, and testimony that tend to show that when a phone is sent to a
customer, as it was in Crumpler's case, T-Mobile's business practice is to include Terms and
Conditions in the box. Additionally, Midland, through Muzio, produced an internal T-Mobile
memorandum that states that when Crumpler signed up for I-Mobile service over the phone, he
orally agreed to the Terms and Conditions. In response, Crumpler requests that the Court strike
Muzio's declaration, and he has submitted his own declaration to the effect that he never
received the Terms and Conditions in any form. He further states that he never had any
communication regarding Terms and Conditions with any T-Mobile employee. Midland requests
that this Court strike Crumpler's declaration as self-serving, conclusory, and incredible.

II.

Discussion
In order to resolve Midland's motion to compel arbitration, the Court must first

determine the scope of the parties' assertions by resolving their competing requests to strike.

2

15 u.s.c. § 1692.

2

A.

Crumpler 's Request to Strike the Muzio Declarations and Their Exhibits

The crucial issue in this motion is whether Crumpler was put on notice that he was
subject to Terms and Conditions containing an arbitration clause and a class action waiver.
Crumpler asks this Court to strike Muzio's two declarations from July 2013 (Doc. No. 17-2) and
August 2013 (Doc. No. 25-1) and the documents attached to them. If the Court struck Muzio's
declarations and the attached documents, Midland would have produced no evidence in support
of its motion to compel arbitration. Crumpler argues that the documents are all hearsay and that
Muzio did not testify in his declarations on the basis of personal knowledge.
Crumpler's argument fails. The relevant facts that Muzio sponsors are: 1) T-Mobile
regularly packages Terms and Conditions with its phones; and 2) a T-Mobile memo states that
Crumpler accepted the Terms and Conditions over the phone. Crumpler attacks Muzio's personal
knowledge of Crumpler's relationship with T-Mobile, but Midland does not need to show that
Muzio was familiar with Crumpler before the litigation. Midland needs to show first that Muzio
had personal knowledge of T-Mobile' s regular practice of packaging Terms and Conditions, and
second that he had personal knowledge ofT-Mobile's practice of keeping memoranda.
"Personal knowledge" for purposes of Federal Rule of Evidence 602 "may consist of
what the witness thinks he knows from personal perception," and only requires that the witness
"who testifies to a fact ... actually observed the fact." 3 Muzio reviewed business records before
his deposition from which he learned ofT-Mobile's business practice to put Terms and
Conditions in boxes with phones. This allows him to testify to the business practice, which
would be sufficient for a factfinder to infer that T-Mobile acted in conformity with the business
practice. Crumpler would have this Court hold that Muzio needed specific personal knowledge

3

Fed. R. Evid. 602 Advisory Committee Note (1972).

3

of all the details of Crumpler's account history that he acquired independently of his review of
business records. The rules of evidence do not require this degree of proximity to the facts that a
witness sponsors, especially in the context of business practices and records. The independent
recollection that Crumpler's attorney distinguished from "knowledge that you obtain as a result
of having access to business records" 4 is not required to admit Muzio's testimony.
Pursuant to Federal Rule of Evidence 406, evidence of "an organization's routine practice
may be admitted to prove that on a particular occasion the ... organization acted in accordance
with the ... routine practice." Muzio is a Custodian of Records at T-Mobile and has worked
there for more than four years. 5 His employment allows him to testify that "The T-Mobile
standard operating procedure [is] to include the terms and conditions in the box with the phone."
Next, Muzio's testimony that Crumpler accepted the Terms and Conditions by phone
does contain one level of hearsay: Midland wants to admit for truth of the matter asserted that a
customer account representative said in a memo that Crumpler accepted the Terms and
Conditions. Crumpler's own alleged statement that he accepted the Terms and Conditions is not
hearsay because it is a manifestation of assent not an assertion of a fact. The memo's declaration
that Crumpler accepted is a factual assertion and therefore hearsay, and it is inadmissible unless
it is subject to the business records exception. The memo meets the exception's requirements. It
7

was "made at or near the time [the statement was made] ... by someone with knowledge"; it

4

Doc. No. 34-7 at47:4-8.

5

Id. at 12:22.

6

Id. at 34:21-23.

7

Fed. R. Evid. 803(6)(A). The Memo date was January 18, 2006, on or about the same date that Crumpler
acquired his T-Mobile phone. Doc. No. 34-8 at 21; Doc. No. 34-12 at ~4.

4

6

was "kept in the course of a regularly conducted activity of a business"; 8 "making the record was
a regular practice of that activity"; 9 and "all these conditions are shown by the testimony of the
custodian.'' 10
The last requirement of Rule 803(6) is that "neither the source of information nor the
method or circumstances of preparation indicate a lack oftrustworthiness." 11 Despite Crumpler's
heroic efforts to discredit Muzio, the Court holds that he is competent to testify about T-Mobile's
business records. Crumpler argues that there are many contradictions between Muzio's July
declaration and his deposition. But a close examination of the alleged contradictions shows that
his declaration and deposition were not contrary to one another in any material way. Crumpler' s
arguments range from silly quibbles 12 to downright mischaracterizations ofMuzio's
statements, 13 and they fail to persuade the Court that the circumstances surrounding T-Mobile's
business records indicate a lack of trustworthiness. T-Mobile's business records are admissible
8

Fed. R. Evid. 803(6)(B). The Memo was made when T-Mobile sold Crumpler a phone; it cannot be
seriously argued that selling phones is not a regular part ofT-Mobile's business.
9

Fed. R. Evid. 803(6)(C). Muzio's testimony makes it clear that these Memos were a regularly generated
by Customer Care representatives. Doc. No. 34-7 at 56:15-60:11.

°Fed. R. Evid. 803(6)(D). There is no dispute that Muzio is a Custodian of Records at T-Mobile.

1

11

Fed. R. Evid. 803(6)(E).

12

Crumpler argues, "Paragraph 2 states that Muzio is employed by 'T-Mobile PCS Holdings LLC;'
however Muzio testified that he is employed by T-Mobile USA, Inc.'-an entity that no longer exists." Doc. No. 341at15. Muzio is not a high-ranking T-Mobile official. His lack of intimate knowledge with T-Mobile's corporate
structure is unremarkable. And T-Mobile USA, Inc. does exist. See, e.g., Form 8-K for T-Mobile US, Inc. (Nov. 22,
2013) ("T-Mobile USA, Inc. ('T-Mobile USA') [is] a direct, wholly-owned subsidiary ofT-Mobile US, Inc."). If
Crumpler's own lawyers are not able to figure out which entities doing business as T-Mobile exist, it is hardly
surprising that Muzio may have misstated the name of his direct employer, and in any event the discrepancy (if any)
is not material.
13

Crumpler states that "Paragraphs 9 through 14 are based on the 2008 Terms & Conditions, which Muzio
testified were never provided to Plaintiff." This is untrue. Muzio never stated that Crumpler was not provided with
the 2008 Terms and Conditions; rather, Muzio testified at his deposition that he was mistaken about company policy
when he made his August Declaration that the 2008 Terms and Conditions would have been sent to Crumpler by
United States Mail and in his monthly billing statement. He did not categorically state that Crumpler was not
provided with the Terms and Conditions.

5

through Muzio. Therefore, Crumpler's request to strike the declarations and documents attached
thereto will be denied.

B.

Midland's Request to Strike the Crumpler Declaration

Crumpler's declaration states in relevant part that T-Mobile failed to package the Terms
and Conditions in the box with his phone and that he never accepted the Terms and Conditions
over the phone. Midland objects that the declaration is self-serving, not credible, and conclusory,
and Midland requests the Court to strike it. The Court declines the invitation. Of course the
declaration is self-serving: any step any party takes in litigation will be self-serving. And it is
only conclusory because Crumpler is trying to prove the absence of a fact; it is hard to know
what more he could do than state that he never received the Terms and Conditions. And whether
it is credible that T-Mobile did not send him the Terms and Conditions in the box with his phone
despite its ordinary business practice or that the acceptance of the Terms and Conditions by
phone never took place despite the memo that noted his acceptance is a classic question for a
finder of fact. Accordingly, the Court will not strike Crumpler's declaration.

C. The Motion to Compel
1. Standard of Review
"[W]here the affirmative defense of arbitrability of claims is apparent on the face of a
complaint," a court must review the motion under the standard applied in reviewing motions to
dismiss pursuant to Rule 12(b)(6)." 14 If "the opposing party has come forth with reliable
evidence that is more than a naked assertion that it did not intend to be bound by the arbitration
agreement," 15 courts allow limited discovery on the question of whether there is an agreement to

14

Somerset Consulting, LLC v. United Capital Lenders, LLC, 832 F. Supp. 2d 474, 481 (E.D. Pa. 2011).

15

Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 774 (3d Cir. 2013).

6

arbitrate and apply the summary judgment standard. If the motion cannot be resolved on
summary judgment, the factual question of whether there is an agreement to arbitrate is
determined by the court after a hearing or by a jury if a party requests one. 16
Here, Crumpler, the party opposing arbitration, has come forward with a declaration
(neither signed nor sworn, but the Court assumes it is actually Crumpler's sworn statement for
the purpose of this Opinion) that he never received T-Mobile's Terms and Conditions. This is
close to a "naked assertion" that he did not intend to be bound by an arbitration agreement, but it
is more than that. Crumpler asserts that T-Mobile failed to send him the Terms and Conditions in
the box that contained his phone and that he "never had a discussion over the telephone with any
representative at T-Mobile regarding any Terms & Conditions." 17 These are the two ways that
Midland alleges Crumpler received notice that he was bound by the Terms and Conditions.
Because Crumpler has come forward with evidence, i.e., more than a naked assertion that
he never agreed to arbitrate, the Court must resolve this motion to compel arbitration according
to the summary judgment standard and grant Midland's motion only ifthere is "no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law." 18
2.

The Motion is Denied Without Prejudice

A fact is "material" if resolving the dispute over the fact "might affect the outcome of the
suit under the governing [substantive] law," here the law of contracts. 19 A dispute is "genuine" if
"the evidence is such that a reasonable jury could return a verdict for the nonmoving party."20

16

Id. at 780.

17

Doc. No. 34-12 at iJ7.

18

Fed. R. Civ. P. 56(a).

19

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

20

Id.

7

The fact in dispute here is whether Crumpler had actual or constructive notice of the
Terms and Conditions. Under Pennsylvania's law of contracts, an agreement to arbitrate will be
upheld where the offeror has "adequately communicate[d] the essential terms of the arbitration
agreement." 21 Crumpler had a contract with T-Mobile that was formed by promise to pay for a
phone and a service plan in exchange for T-Mobile's promise to supply him with the phone and
provide cellular service. For Crumpler to be bound by the Terms and Conditions, T-Mobile must
have provided adequate notice of them. 22 Therefore, the disputed fact whether Crumpler was or
should have been on notice of the Terms and Conditions is material.
The dispute is also genuine. The only ways Midland alleges Crumpler should have
known about the Terms and Conditions were his receipt of them in the box with his phone and
his communication over the phone about them. Crumpler alleges neither of these events took
place. Crumpler's declaration, if credited, would be sufficient evidence for a factfinder to
conclude that T-Mobile had not communicated its Terms and Conditions to him. The Court may
not weigh credibility at this stage and therefore must conclude that the dispute is genuine.
Because there is a genuine dispute about a material fact, the Court may not grant the
Motion to Compel Arbitration at this time. However, a hearing or trial may not be necessary if
Midland can produce documentation related to Crumpler' s actual or constructive knowledge that
he was bound by the Terms and Conditions. Midland does not allege, for example, that Crumpler
was sent an email notifying him of the Terms and Conditions or that Crumpler's monthly
statements from T-Mobile contained a statement that Crumpler was bound by the Terms and
Conditions. These documents or others like them should likely be obtainable, if they exist, from

21

Hudyka v. Sunoco, Inc., 474 F. Supp. 2d 712, 716 (E.D. Pa. 2007).

22

Id. ("Without knowing the terms of the contract, one cannot accept them.").

8

T-Mobile. Therefore the Court will deny the Motion without prejudice and will allow additional
limited discovery on the issue of whether T-Mobile provided any information to Crumpler that
reasonably communicated the existence of the Terms and Conditions to which Midland argues
he was bound.

III.

Conclusion
For the reasons detailed above, Crumpler's request that the Court strike Muzio's

declarations is denied; Midland's request to strike Crumpler's declaration is denied; and
Midland's Motion to Compel Arbitration is denied without prejudice. An appropriate Order
follows.

9