MYERS v. TRANS UNION, LLC et al

Filing 68

MEMORANDUM OPINION. SIGNED BY HONORABLE JEFFREY L. SCHMEHL ON 8/29/17. 8/29/17 ENTERED AND COPIES E-MAILED.(mas, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
LISA MYERS,

CIVIL ACTION
Plaintiff,

NO. 16-5214

v.
CREDIT ONE BANK, N.A.,
Defendant.

MEMORANDUM OPINION

Schmehl, J. /s/ JLS

August 29, 2017

Before the Court is the motion of defendant, Credit One Bank, N.A., (“Credit
One”) to dismiss and compel arbitration. Plaintiff, Lisa Myers (“Myers”) has opposed the
motion and Defendant has filed a reply. Having read the parties’ briefs and reviewing all
exhibits, I will grant Defendant’s motion to dismiss and compel this matter to
arbitration. 1
I.

BACKGROUND
Plaintiff applied for and was issued a credit card by Credit One. The credit card

agreement contained an arbitration provision in which Myers and Credit One agreed to
resolve any disputes between them through arbitration. Plaintiff filed claims against
Credit One that arose out of her failure to pay her credit card account. Defendant filed the
instant motion seeking to uphold the arbitration clause in question and compel Myers to
arbitrate her claims against it.

1

Plaintiff in this matter initially sued Credit One and six other defendants. All defendants with the
exception of Credit One have settled Plaintiff’s claims against them and been dismissed from the case.

II.

STATEMENT OF FACTS
On October 18, 2011, Credit One mailed Myers a written solicitation for a pre-

approved credit card. (Docket No. 31, Ex. A.) Myers thereafter applied for a Credit One
credit card account, and Credit One issued her a Visa credit card. (Docket No. 31, Ex. A.,
¶¶ 8-9.) In the same envelope as the credit card, Myers received a copy of the
Visa/MasterCard Cardholder Agreement, Disclosure Statement and Arbitration
Agreement (“the Agreement”). (Docket No. 31, Ex. A-3.) The Agreement contains an
arbitration provision that provides, in relevant part:
Agreement to Arbitrate:
You and we agree that either you or we may, without the other’s consent,
require that any controversy or dispute between you and us (all of which
are called “Claims”), be submitted to mandatory, binding arbitration. This
arbitration provision is made pursuant to a transaction involving interstate
commerce, and shall be governed by, and enforceable under, the Federal
Arbitration Act (the “FAA”), 9 U.S.C. § 1 et seq., and (to the extent State
law is applicable), the State law governing this Agreement.
Claims Covered:
• Claims subject to arbitration include, but are not limited to, disputes
relating to the establishment, terms, treatment, operation, handling,
limitations on or termination of your account, any disclosures or other
documents or communications relating to your account, whether
authorized or not, billing errors, credit reporting, the posting of
transactions, payments or credits, or collections matters relating to
your account. . . the application, enforceability or interpretation of this
Agreement, including this arbitration provision, and any other matters
relating to your account, a prior related account or the resulting
relationships between you and us. Any questions about what Claims
are subject to arbitration shall be resolved by interpreting this
arbitration provision in the broadest way the law will allow it to be
enforced.
...
• If you or we require arbitration of a particular Claim, neither you, we,
nor any other person may pursue the Claim in any litigation. . .

(Docket No. 31, Ex. A-3 at p. 5.)

2

Charges and payments were made on the credit card for months, then payments to
Credit One stopped. 2 (Docket No. 31, Ex. A-4.) Thereafter, Myers commenced the
instant litigation against Credit One and numerous other defendants. Myers’ Amended
Complaint alleges that Credit One violated the Fair Credit Reporting Act, 15 U.S.C. §
1681 et seq. (Amended Complaint, ¶ 49.) Plaintiff has alleged improper credit reporting
on the part of Credit One and inaccuracies of her Credit One tradeline on her consumer
report. (Id., ¶¶ 20-23, 25-28.)
III

STANDARD OF REVIEW

The Federal Arbitration Act (“FAA”), which applies to any dispute in state or federal
court concerning contracts affecting interstate commerce, strongly favors resolving
disputes through arbitration. Hopkins v. New Day Fin., 643 F.Supp.2d 704, 713 (E.D. Pa.
2009). The FAA states that “A written provision in. . . a contract evidencing a
transaction involving commerce to settle by arbitration . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of any
contract. 9 U.S.C. § 2. It is undisputed that there is a “liberal federal policy favoring
arbitration agreements.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24-26
(1991). The FAA “establishes a strong policy in favor of compelling arbitration over
litigation,” Sandvik AB v. Advent Int’l Corp., 220 F.3d 99, 104 (3d Cir. 2000), and
arbitration agreements falling within the scope of the FAA “must be rigorously
enforce[d].” Perry v. Thomas, 482 U.S. 483, 490 (1987).

2

Plaintiff does not concede that she had an account with Credit One, and claims that she does not recall the
account and does not recall opening the account. (Amended Compl. ¶ 19.)

3

III.

DISCUSSION

In opposing Defendant’s motion, Plaintiff argues that the Agreement is unenforceable
on three grounds: 1) she did not enter into the Agreement with Credit One; 2) the
Agreement is substantively unconscionable; and 3) Credit One’s alleged delay in seeking
to compel arbitration constitutes a waiver.
First, I will briefly address Myers’ argument that she “does not recall” opening
the Credit One account in question. As stated by Defendant, there is a rebuttable
presumption that an item properly mailed is received by the addressee. See Krutchik v.
Chase Bank USA, N.A., 531 F.Supp.2d 1359 (S.D. Fla. 2008). To rebut such a
presumption, the recipient must unequivocally deny the receipt of the item and provide
some substantiating evidence that the item was not received. Id. at 1365.
In this case, the evidence shows that Credit One sent a credit application directly
to Plaintiff’s address, which is the same address that is listed on her credit report. (Docket
No. 42, Ex. B.) Plaintiff returned the application with her signature, social security
number, birthdate, phone number and email. (Docket No. 31, Ex. A-2.) Myers used and
made payments on the credit card in question. (Docket No. 31, Ex. A-4.) Lastly, Myers
did not unequivocally deny that she opened the account; she merely claims that she “does
not recall” opening it. Therefore, due to Plaintiff’s failure to unequivocally deny that she
received the credit application and the lack of evidence substantiating that she did not
receive it, she cannot rebut the presumption that she received the credit application and
opened the account in question.
“Under Pennsylvania law, the test for unconscionability is whether one of the
parties lacked a meaningful choice about whether to accept the provision in question and

4

the challenged provision or contract unreasonably favors the other party to the contract.”
Grant v. The Philadelphia Eagles, LLC, 2009 WL 1845231, at *6 (E.D.Pa. June 24,
2009). Unconscionability has both procedural and substantive elements. Harris v. Green
Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir.1999). Under Pennsylvania law, there must be
both procedural and substantive unconscionability in order to void an arbitration
provision. See id. at 181.
In the instant matter, Plaintiff argues that the Agreement is substantively
unconscionable, as it proposes to limit the amount of discovery available to her at
arbitration, requires her to pay the initial filing fee if she files for arbitration, and requires
each party to bear their own costs, regardless of who prevails. Myers argues that this
language in the Agreement would require a substantial outlay of costs in order for her to
proceed with her claim against Credit One, and would therefore effectively end that
claim.
However, I do not need to determine whether the Agreement is unconscionable or
not, as that is an issue to be decided by the arbitrator. The Agreement clearly states that
all claims should be heard by an arbitrator, including claims regarding the “application,
enforceability or interpretation of this Agreement, including this arbitration provision.”
(Docket No. 31, Ex. A, p. 5.) This is called a delegation clause, and it generally requires
that all “questions of arbitrability must go to an arbitrator.” Quillion v. Tenet
HealthSystem Philadelphia, Inc., 673 F.3d 221, 229 ( 3d Circ. 2012.) The United States
Supreme Court has held that when a party challenges an arbitration agreement as a
whole, rather than specifically contests the delegation of authority to the arbitrator, the
enforceability and applicability of the arbitration clause is to be decided by the arbitrator.

5

Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010). The Rent-A-Center case was
interpreted by the Third Circuit in both Quillion and South Jersey Sanitation Co., Inc. v.
Applied Underwriters Captive Risk Assurance Co., Inc., 840 F.3d 138 (3d Cir. 2016). In
Quillion, the Third Circuit found that the arbitration agreement in question was an
agreement to “arbitrate employment issues generally,” but did not include a specific
provision delegating the issue of arbitrability to the arbitrator. Quillion, 673 F.3d at 229.
This was different from Rent-A-Center, where there was an additional agreement to
arbitrate threshold issues of arbitrability. Therefore, the Quillion court concluded that it
was proper for the court to decide the issue of arbitrability, not an arbitrator. Id.
Four years later, the Third Circuit decided South Jersey Sanitation, and held that
the plaintiff was challenging the arbitration agreement as a whole, not the agreement to
arbitrate specifically, and therefore, the gateway issue of arbitrability was for the
arbitrator to decide, as provided by the agreement entered into by the parties. South
Jersey Sanitation, 840 F.3d at 144. Further, one of my colleagues, the Honorable Michael
M. Baylson, recently found in two separate cases that a party challenging an arbitration
provision as unconscionable must specifically argue the unconscionability of the
delegation clause to avoid the issue of arbitrability being decided by an arbitrator instead
of the court. See Pocalyko v. Baker Tilly Virchow Crouse, LLP, 2016 WL 6962875, at *4
(E.D. Pa. Nov. 29, 2016); see also Davis v. Uber Technologies, Inc., 2017 WL 3167807
(E.D. Pa. July 25, 2017).
In this case, the language of the Agreement plainly grants authority over the gateway
issue of arbitrability to the arbitrator. Therefore, as Plaintiff’s argument in opposition to
the Agreement focus on not the delegation clause, but the conscionability of the

6

Agreement as a whole, any arguments as to the arbitrability of the Agreement are for an
arbitrator to decide, not the court.
Lastly, as to the claim that Credit One’s delay in filing its motion to dismiss acts as a
waiver, I find Plaintiff’s argument to be unpersuasive. The dockets in this matter reflect
that Plaintiff had issues serving Credit One, as it was not properly served until January 5,
2017. Credit One’s motion to dismiss was then filed on January 12, 2017. Clearly, this
motion was timely and there was no delay. Accordingly, Defendant’s Motion to Dismiss
is granted and this matter shall be compelled to arbitration.
IV.

CONCLUSION
For the foregoing reasons, Defendant’s Motion to Dismiss and to Compel

Arbitration is granted. This matter shall proceed to arbitration as contained in the
arbitration agreement, and this matter shall be dismissed.

7