Wilson v. Cash America International Inc et al

Filing 26

Memorandum Opinion and Order...If plaintiff wishes to pursue further her claims against defendants she do so thru arbitration outlined in the agreements she made when services were provided to her by CashNet TX...all claims by pltf against defendants are dismissed; The request of defendants for a stay of this action denied as moot. (Ordered by Judge John McBryde on 2/1/2012) (wrb)

US DISTRICT COURT
NORTHERN DISTRICT OF TEXAS

FILED
IN THE UNITED STATES DISTRICT
NORTHERN DISTRICT OF TEXA
FORT WORTH DIVISION

FES - I 20\2
.. CLERK, U.S. DISTRICT COURT
by_-"""n':=:::;::-;---Deputy

KRYSTLE WILSON,

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Plaintiff,

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VS.

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NO. 4:11-CV-421-A

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CASH AMERICA INTERNATIONAL,
INC., ET AL.,

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Defendants.

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MEMORANDUM OPINION
and
ORDER
Before the court for consideration and decision is the
motion of defendants, Cash America International, Inc., Cash
America Net Holdings, LLC, Cash America Net of Texas, LLC
(IICashNet TX") , Cash America Net of Illinois, LLC, and Enova
Financial Holdings, Inc., to stay and compel arbitration.

After

having considered such motion, the response of plaintiff, Crystal
Wilson, thereto, defendant's reply, the record of this action,
and legal authorities, the court has concluded that such motion
should be granted to the extent provided in this memorandum
opinion and order.

I.

Background
This action was initiated on December 4, 2009, in the
District Court of Tarrant County, Texas, 236th Judicial District,
when plaintiff filed a seven-page pleading complaining that Cash
America Net of Illinois, d/b/a CashNet USA, in its dealings with
plaintiff violated provisions of the Texas Debt Collection
Practices Act and the Texas Deceptive Trade Practices Act and
committed a common-law invasion of privacy by intrusion.

In the

three-count pleading, plaintiff sought a declaratory judgment
that the defendants' conduct violated the Texas Deceptive Trade
Practices Act and an award of damages.
On April 19, 2011, plaintiff filed an amended pleading in
this action, titled "Plaintiff's First Amended Class Action
Petition.

The amended pleading added four defendants, was

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seventy-one pages long (with hundreds of pages of exhibits), and
alleged fifteen counts--six based on what plaintiff referred to
as the Texas Credit Services Organization Act ("TCSOA"), Tex.
Fin. Code

§§

393.001, et seg.i three based on what plaintiff

referred to as the Texas Debt Collection Act ("TDCA"), Tex. Fin.
Code

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392.001, et seg.i and six based on what plaintiff

referred to as the federal Fair Debt Collection Practices Act

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("FDCPA"), 15 U.S.C.

§§

1692, et seg. 1

Plaintiff purported in

her amended pleading to bring the action individually and on
behalf of all others similarly situated in the state of Texas.
On June 22, 2011, defendants filed their notice of removal,
causing this action to be removed from state court to this court.
The notice of removal contains sufficient allegations to support
subject matter jurisdiction of this court over all claims
asserted in the amended pleading.
II.

Defendants' Motion
On June 29, 2011, defendants filed their motion to stay and
compel arbitration.

Defendants alleged and provided proof that:

Plaintiff's relationship with the defendants had to do with
services provided to her by CashNet TX, acting as a credit
services organization, when she obtained fourteen short-term
loans in 2009.

In connection with each of the fourteen loan

transactions, plaintiff and CashNet TX executed documents that
contained provisions mandating that all disputes involving
plaintiff were to be determined by arbitration.

Typical of the

definition of the scope of the mandated arbitration is the

IPor convenience, the court refers in this memorandum opinion to the statutes relied on by
plaintiff by the shorthand references TCSOA, TDCA, and PDCPA.
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following language contained in an instrument signed by plaintiff
and CashNet TX, through a representative, in June 2009:
Scope. For purposes of this Arbitration Provision the
words "dispute" and "disputes" are given the broadest
possible meaning and include, without limitation
(b) all federal or state law claims, disputes or
controversies, arising from or relating directly or
indirectly to this Agreement (including the Arbitration
Provision) ,
(d) all common law claims, based upon
contract, tort, fraud, or other intentional torts; (e)
all claims based upon a violation of any state or
federal constitution, statute or regulation; .... (g)
all claims asserted by you individually against us
and/or any of our employees, agents, directors,
officers, shareholders, governors, managers, members,
parent company or affiliated entities (hereinafter
collectively referred to as "related third parties"),
including claims for money damages and/or equitable or
injunctive relief; (h) all claims asserted on your
behalf by another person; (i) all claims asserted by
you as a private attorney general, as a representative
and member of a class of persons, or in any other
representative capacity, against us and/or related
third parties (hereinafter referred to as
"Representative Claims"); .... 2
Mot., App. at 017.
The five defendants named in the action are either a parent
company or affiliates of each other, with Cash America
International, Inc., at the top.

Enova Financial Holdings, LLC,

and Cash America Net Holdings, LLC, each has a sole member, which
is a non-party by the name of Cash America Online Services, Inc.,
that, in turn, is a wholly owned subsidiary of Cash America

2The "us" and "our" in the quoted language refer to CashNet TX, and the "you" and "your" refer
to plaintiff. Mot., App. at 013.
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International, Inc.

CashNet TX and Cash America Net of Illinois,

LLC, each has a sole member, which is Cash America Net Holdings,
LLC.
CashNet TX has not received a written notice from plaintiff
electing to opt out of any of the arbitration provisions in any
of the fourteen sets of documents related to plaintiff's loan
transactions.

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The evidentiary support for each of the allegations in
defendants' motion was provided through a declaration of Keith
Weinberger, who identified himself as an employee of Enova
Financial Holdings, LLC, and the General Manager of the
lending business of Cash American Net Holdings, LLC.

u.s.

Id. at 1-2.

III.
Analysis
In response to defendants' motion, plaintiff urged the
following theories:
(1)

Inasmuch as CashNet TX is the only defendant who

is a party to the arbitration agreements, the other
defendants cannot invoke the arbitration provisions.
(2)

The text of the federal Credit Repair

Organizations Act (JICROAJI) makes clear that Congress
contemplated a judicial forum for the resolution of CROA
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claims; likewise, the text of the TCSOA makes clear that the
Texas Legislature intended for TCSOA claims to be resolved
in a judicial forum, a right that cannot be waived, with the
consequence that the arbitration agreements are void and
unenforceable.
(3)

The arbitration agreements are unenforceable

because the text of the FDCPA establishes that Congress also
contemplated a judicial forum for the resolution of FDCPA
claims; and, because of the similarities between the federal
and state unfair debt collection statutes, the same argument
extends to the TDCA claims.
(4)

In any event, plaintiff's unfair debt collection

practices claims do not fall within the scope of the
arbitration agreements.
The court has concluded that, for the reasons stated below,
none of plaintiff's theories has merit.
A.

All Defendants Are Entitled to the Benefit of the
Arbitration Agreement
The record shows without dispute that one of the defendants

is a "parent company" and that all defendants are "affiliated
entities" and "related third parties," as those words are used in
the arbitration agreement.

The agreement unambiguously states

that it applies to "all claims asserted by [plaintiff]

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individually against [CashNet TX] and/or any of [its]
parent company or affiliated entities (hereinafter collectively
referred to as 'related third parties')."

Mot/ App. at 017.

Moreover, the arbitration provisions specifically state under the
heading "Binding Effect" that they "benefit []
and related third parties."

Id. at 019.

[CashNet TX]

Under the clear terms

of the agreements, all defendants/ as "related third parties/"
are beneficiaries of the arbitration provisions.
A non-party who is a third-party beneficiary of an
arbitration agreement has standing to compel arbitration.
~/

See,

MS Dealer Servo Corp. v. Franklin/ 177 F.3d 943/ 947 (11th

Cir. 1999) i Spear Leeds & Kellogg v. Cent. Life Assurance Co./ 85
F.3d 21/ 27 (2nd Cir. 1996) i see also Todd v. S.S. Mut.
Underwriting Ass'n (Berm. Ltd.) / 601 F. 3d 329/ 333-34 (5th Cir.
2010) i Bridas S.A.P.I.C. v. Gov't of Turkmenistan, 345 F.3d 347/

355-56 (5th Cir. 2003)
1281 (6th Cir. 1990).

i

Arnold v. Arnold Corp./ 920 F.2d 1269,
Moreover/ there is authority suggesting

that a non-signatory may compel arbitration where, as in the
instant action/ the complaining party alleges that the signatory
and non-signatory engaged in interdependent and concerted
misconduct related to the contract.

See, e.g., Brantley v.

Republic Mortg. Ins. Co., 424 F.3d 392/ 395-96 (4th Cir. 2005) i

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Grigson v. creative Arts Agency, LLC, 210 F.3d 524, 527-28 (5th
cir. 2000); MS Dealer Servo Corp., 177 F.3d at 947.
The court is satisfied that the non-signatory defendants in
this action have standing to move to compel arbitration of
plaintiff's claims.
B.

None of the statutes on Which Plaintiff Relies Prohibit
Arbitration
Plaintiff's theories (2) and (3), supra at 5-6, are each

predicated on the holdings and reasoning of two courts that held
that the CROA, 15 U.S.C.

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1679, et seq., provided a non-waivable

right to sue, with the consequence that an arbitration clause in
a consumer's agreement with a credit repair organization was
void.

The court decisions on which plaintiff relied were

Greenwood v. CompuCredit Corp., 615 F.3d 1204 (9th Cir. 2010),
rev'd and remanded, CompuCredit Corp. V. Greenwood, No. 10-948,
2012 WL 43514

(U.S. Jan. 10, 2012), and Alexander V. U.s. Credit

Management, Inc., 384 F. Supp.2d 1003 (N.D. Tex. 2005).
Plaintiff reasoned that the wording and structure of the statutes
on which she bases her claims are so similar to the wording and
structure of the CROA that the Greenwood V. CompuCredit and
Alexander holdings should be given effect as to each of the
statutes on which she relies.

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When plaintiff prepared her response to defendants' motion,
her argument was plausible.

However, her argument has been

undercut by the January 10, 2012 decision of the Supreme Court in
CompuCredit Corp. v. Greenwood.

Essentially, the holding of the

Supreme Court was that because the CROA is silent on whether
claims under it can proceed in an arbitrable forum, the Federal
Arbitration Act ("FAA") requires the arbitration agreement
between the credit repair organization and the consumer to be
enforced according to its terms.
The court agrees with plaintiff that the similarities
between the CROA and the statutes on which she relies are such
that a court decision concerning the effect, if any, of the
wording and structure of CROA on an arbitration agreement would
be persuasive in deciding enforceability of an arbitration
agreements affecting her claims.

The Supreme Court's holding in

CompuCredit v. Greenwood appears to invalidate plaintiff's
theories (2) and

(3).3

The court concludes that the FAA requires

the arbitration agreements in question to be enforced according
to their terms.

3To whatever extent plaintiff is contending that the class action provisions of the arbitration
agreements cannot be enforced, the court notes that the contention would be at odds with the decision of
the Supreme Court in AT&T Mobilitv LLC v. Concepcion, --- U.S.---, 131 S. Ct. 1740 (2011). In
Concepcion, the Supreme Court held that the FAA preempted a California judicial rule regarding the
unconscionability of class arbitration waivers in consumer contracts.
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C.

Plaintiff's Unfair Debt Collection Practices Claims Are
Within the Scope of the Arbitration Agreement
The arbitration provisions in question are broad.

They

cover, inter alia, "all federal or state law claims, disputes, or
controversies arising from or relating directly or indirectly to
this Agreement . . .

[and] all claims based upon a violation of

any state or federal

statute . . . . "

Mot, App. at 017.

Emphasizing the broadness of the arbitration provisions, they
further state that the terms are to be "given the broadest
possible meaning."

Id.

Also, each of the arbitration provisions
performance of any

expressly provides that it "survives .

transaction between [plaintiff] and [CashNet TX]."

Id. at 019.

The court concludes that the arbitration provisions are broad
enough to cover plaintiff's unfair debt collection practices
claims, particularly bearing in mind the liberal federal policy
favoring arbitration agreements.

Moses Cone Mem'l Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 24 (1983).

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Having concluded that none of plaintiff's theories as to why
she should not be required to submit her claims against
defendants to arbitration are valid, the court is ordering that
plaintiff, if she wishes to further pursue her claims, submit her
claims against defendants to arbitration pursuant to the

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arbitration provisions of the agreements she made when she
obtained the short-term loans in 2009.

Rather than to grant a

stay of this action, the court knows of no reason why this action
should not be dismissed on the assumption that plaintiff will
comply with the court's ruling and that defendants will honor
whatever obligations they have under the arbitration provisions
in question.
IV.

Order
Therefore,
The court ORDERS that if plaintiff wishes to pursue further
her claims against defendants she do so through the arbitration
procedures outlined in the agreements she made when services were
provided to her by CashNet TX in connection with the short-term
loans she obtained in 2009, and that if plaintiff initiates any
such arbitration proceeding defendants comply with whatever
obligations they have under such agreements relative to such
proceeding or proceedings.
The court further ORDERS that all claims asserted by
plaintiff against defendants in this action be, and are hereby,
dismissed.

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The court further ORDERS that the request of defendants for
a stay of this action be, and is hereby, denied as moot.
SIGNED February I, 2012.

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