Mitchell v. Sajed et al

Filing 24

MEMORANDUM OPINION. Signed by District Judge James R. Spencer on 7/22/13. Copy sent: Yes(tdai, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
RICHMOND DIVISION

BERNARD MITCHELL,

Plaintiff,
Civil Action No. 3:i3-CV-3i2
v.

AMERSAJED,eta/.,
Defendants.
MEMORANDUM OPINION

THIS MATTER is before the Court on Defendants' Motion to Compel Arbitration and

Stay Proceedings, or in the Alternative, Motion for a More Definite Statement, or in the Other
Alternative, Motion to Dismiss ("Initial Motion to Compel") (ECF No. 4), and Defendants'
Renewed Motion to Compel Arbitration and Stay Proceedings, or in the Alternative, Motion to
Dismiss Plaintiffs Amended Complaint ("Renewed Motion to Compel") (ECF No. 16).1 This

federal question case arises out of a Juniper Bank Platinum MasterCard (the "Credit Card")
issued to pro se Plaintiff Bernard Mitchell by Barclays Bank Delaware ("Barclays"). Plaintiff filed
suit against Amer Sajed, CEO of Barclays, and Barclays (collectively "Defendants"), alleging
violations of the Fair Credit Reporting Act ("FCRA"), the Fair Debt Collection Practices Act
("FDCPA"), and the Fair and Accurate Credit Transactions Act ("FACTA"). Defendants

collectively move the Court to compel arbitration, pursuant to the arbitration clause in the

cardmember agreement, or in the alternative dismiss Plaintiffs Amended Complaint. On July
19, 2013, the Court held a hearing on Defendants' Motions. For the reasons stated below,

GRANTS IN PART Defendants' Renewed Motion to Compel Arbitration and DISMISSES
WITHOUT PREJUDICE Plaintiffs Complaint.

1 The Renewed Motion to Compel incorporated the Initial Motion to Compel. The Court therefore
DENIES AS MOOT the Initial Motion to Compel.

BACKGROUND

In September of 2006, Plaintiff obtained a credit card from Juniper Bank, which is
owned by Barclays PLC. Amended Compl. H 1, ECF No. 9 [hereinafter Compl.].2 Barclays
submitted the Cardmember Agreement ("2006 Agreement") that was in place at the time

Plaintiff was issued the Credit Card. Initial Motion to Compel, Ex. A, Roark Aff. f 4, May 23,

2013, ECF No. 4-1 [hereinafter Roark Aff.]. Barclays asserts that, as part of its customary

business practices, an employee of Barclays made a note that Barclays mailed Plaintiff his Credit
Card and the 2006 Agreement on or about October 1, 2006. Roark Aff. UK 5-6. The 2006

Agreement states, "By signing, keeping or using your Card or Account, you agree to the terms
and conditions of this Agreement." Roark Aff. Ex, 1, at 1, ECF No. 4-2 [hereinafter 2006

Agreement]. The 2006 Agreement also includes an arbitration clause, stating:
Any claim, dispute or controversy ("Claim") by either you or us against the other,
or against the employees, agents or assigns of the other, arising from or relating
in any way to this Agreement or your Account, or any transaction on your
Account including (without limitation) Claims based on contract, tort (including
intentional torts), fraud, agency, negligence, statutory or regulatory provisions or
any other source of law and Claims regarding the applicability of this arbitration
clause or the validity of the entire Agreement, shall be resolved exclusively and
finally by binding arbitration under the rules and procedures of the arbitration
Administrator selected at the time the Claim is filed. The Administrator selection

process is set forth below. For purposes of this provision, "you" includes any
authorized user on the Account, agents, beneficiaries or assigns of you; and "we"
or "us" includes our employees, parents, subsidiaries, affiliates, beneficiaries,
agents and assigns. Claims made and remedies sought as part of a class action,
private attorney general or other representative action are subject to arbitration
on an individual basis, not on a class representative basis.
As an exception to arbitration you and we may pursue a Claim within the
jurisdiction of the Justice of the Peace Court in Delaware, or the equivalent court
in your home jurisdiction (each a "Small Claims Court"), provided that the action
remains in that court, is made on behalf of you and/or your authorized user only
and is not made part of a class action, private attorney general action or other
representative or collective action. Further, you and we agree not to seek to
enforce this arbitration provision, or otherwise commence arbitration based on
2 In response to the Defendants' Initial Motion to Compel, Plaintiff filed a document entitled "Plaintiffs
Complaints, and Response & Objections to Defendant's [Initial Motion to Compel]" (ECF No. 9). A
portion of the document responds to the Defendants' arbitration clause arguments; however, a majority of
the document contains what appears to be an amended complaint in response to the Defendants'
alternative arguments moving for a more definite statement or to dismiss. The Defendants construe this
document as an amended complaint and the Court does the same.

the same claims in any action brought before the Small Claims Court.
2006 Agreement 4.

Plaintiff used the Credit Card and paid as required until October 2007, when the account

became delinquent. Compl. 11. After extended negotiations between the parties, Barclays closed
Plaintiffs account in October of 2007 and charged off the account in January of 2008 in the
amount of $922. Compl. U1. Barclays continued to attempt to collect the amount of the charge

off, directly seeking reimbursement and by using a third party collection company called West
Asset Management. Compl. 1ffl 2-5. The parties eventually settled the charge off at an amount of
$461.32. Compl. Uf 2-5. As a result of the settlement, Barclays was to provide an update to the
three major credit reporting agencies that the account was "settled and closed." Compl. ^ 5.

Plaintiff made payment according to the settlement and, on December 15, 2009, received a letter
that stated, "per our settlement agreement, this account is now closed, and that Plaintiff had no
further obligation to Barclays." Compl. H5. In September of 2012, Plaintiff obtained his annual
credit reports from all three credit reporting agencies and learned that Barclays did not report a
"date closed" status. Compl. U 6. Plaintiff also logged onto his Juniper/Barclays online credit
card account on March 4, 2013 to find that the online account stated the current balance due

was $461.31. Compl. U7. Plaintiff then sent dispute letters to Barclays and attempted to resolve
the issues on his credit reports. Compl. Iffl 8-15.

After being unable to resolve the dispute, Plaintiff filed this suit on April 12, 2013 in the

Dinwiddie County General District Court. Defendants then properly removed the case to this
Court on May 16, 2013.3 Defendants now move to compel arbitration of this dispute, pursuant to

3 On May 30, 2013, the Court received a copy of a filing Plaintiff made in the Dinwiddie General District

Court, entitled "Responseto 'Notice of Removal' for Warrant in Debt" (ECFNo. 8). This notice apparently
challenged the Defendants' removal of the case with the Dinwiddie General District Court, but reserved
Plaintiffs right to challenge removal by filing a motion to remand in this court pursuant to 28 U.S.C. §
1447(c). Defendants' responded, arguing removal was proper (ECF No. 14). Plaintiff replied to
Defendants' response and stated he "respectfully acknowledges now that the Federal Courts have subject
matter jurisdiction over Plaintiffs claims, and so Plaintiff accepts this fact." Accordingly, any challenges
Plaintiff raised to removal are moot.

the arbitration clause in the 2006 Agreement, or in the alternative move to dismiss the amended

complaint for failure to state a claim.
DISCUSSION

a.

Legal Standard

The Federal Arbitration Act ("FAA") provides that a written arbitration "provision in... a
contract evidencing a transaction involving commerce . . . 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. This provision is "a congressional declaration of a liberal federal policy
favoring arbitration agreements." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24 (1983). Section 4 of the FAA "provides a remedy for a party seeking to compel

compliance with an arbitration agreement." Prima Paint Corp. v. Flood & ConklinMfg. Co., 388
U.S. 395, 403 (1967). Pursuant to section 4, "upon being satisfied that the making of the

agreement for arbitration or the failure to comply therewith is not in issue, the court shall make
an order directing the parties to proceed to arbitration in accordance with the terms of the
agreement." 9 U.S.C. § 4.

Under the FAA, "any doubts concerning the scope of arbitrable issues should be resolved
in favor of arbitration." Moses H. Cone Mem'l Hosp., 460 U.S. at 24-25. A narrow exception to
the general favor shown to arbitration agreements provides that "[t]he question whether the

parties have submitted a particular dispute to arbitration, i.e., the question ofarbitrability, is an
issue for judicial determination unless the parties clearly and unmistakably provided otherwise."

Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002). Questions of arbitrability,
however, are limited to:

the kind of narrow circumstances where contracting parties would likely have
expected a court to have decided the gateway matter, where they are not likely to
have thought that they had agreed that an arbiter would do so, and, consequently,
where reference of the gateway dispute to the courts avoids the risk of forcing
parties to arbitrate a matter that they may well not have agreed to arbitrate.

Id. at 83-84; Cent. W. Va. Energy, Inc. v. Bayer Cropscience LP, 645 F.3d 267, 273 (4th Cir.

20ii). Prior to compelling arbitration, therefore, a court must conclude "the parties have agreed
to arbitrate their disputes and the scope of the parties' agreement permits resolution of the
issue." Muriithi v. Shuttle Exp., Inc., 712 F.3d 173, 179 (4th Cir. 2013). "Whether a party has

agreed to arbitrate an issue is a matter of contract interpretation: '[A] party cannot be required
to submit to arbitration any dispute which he has not agreed so to submit.'" Levin v. Alms &
Associates, Inc., 634 F.3d 260, 266 (4th Cir. 2011) (quoting Am. Recovery Corp. v.

Computerized Thermal Imaging, 96 F.3d 88, 91 (4th Cir. 1996)).
b. Analysis

The Court finds the arbitration clause in this case was entered into by the parties and

encompasses the claims raised by Plaintiff. An initial question, however, that must be
considered is which of the three submitted arbitration clauses apply to this case—the 2006

Agreement Barclays asserts it sent along with the Credit Card to Plaintiff on October 1, 2006, the
cardmember agreement Plaintiff asserts he obtained from the Barclays website sometime in

2013 ("2013 Barclays Agreement"), or the Juniper Bank Delaware Online Arbitration Clause
Plaintiff obtained on the Juniper Bank website sometime in 2013 ("Juniper Arbitration Clause").

The Court finds the 2006 Agreement applies to Plaintiffs dispute because it was sent by

Barclays along with the Credit Card. See Roark Aff. U4. The later obtained agreements could not
apply to Plaintiffs account because his account was closed in 2008 and the agreements he
submitted are those in effect in 2013. Further, the 2013 Barclays Cardmember Agreement

applies to credit cards issued with Farm Bureau Bank, not Juniper Bank. Accordingly, the 2006
Agreement applies to this action.
A review of the Complaint and the 2006 Agreement reveals Plaintiff entered into the
2006 Agreement, including the arbitration clause. Barclays sent the 2006 Agreement along with

the Credit Card upon approval of Plaintiffs application for the Credit Card. The 2006
Agreement states: "By signing, keeping or using your Card or Account, you agree to the terms
and conditions of this Agreement." 2006 Agreement 1. The agreement included the arbitration

clause Defendants now seek to enforce. Plaintiff admits in his Complaint that he received the
Credit Card in 2006, used it, and paid the debts on the Credit Card until October of 2007.
Plaintiff thereby accepted the terms of the 2006 Agreement, including the arbitration clause.
Acceptance of the agreement by use of the Credit Card, rather than by signing the agreement, is

valid under the law. The FAA does not require an arbitration agreement be signed by the parties
entering into the agreement. See 9 U.S.C. § 2; Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d
967, 978 (6th Cir. 2007); Caley v. Gulfstream Areospace Corp., 428 F.3d 1359,1369 (11th Cir.

2005). Additionally, whether applying Delaware law, as provided in the 2006 Agreement, or

Virginia law, Barclays as offeror of the contract for the Credit Card was able to dictate that
Plaintiff accepted the offered terms of the 2006 Agreement by use of the Credit Card. See Grasso
v. First USA Bank, 713 A.2d 304, 308-09 (Del Super. Ct. 1998); RES Constr. Co., Inc. v. R.D.G.
Builders, No. 98846,1992 WL 884588, at *2 (Mar. 19,1992 Va. Cir. Ct.) (citing Va. Hardwood

Lumber Co. v. Hughes, 140 Va. 249, 257 (1924)). It is therefore clear that when Plaintiff

received the 2006 Agreement and used the Credit Card, he agreed to the terms of the arbitration
clause.

The disputes raised by Plaintiff fall within the scope of the arbitration clause agreed to by

the parties. Plaintiffs complaint alleges violations of the FCRA, 15 U.S.C. § 1681 et seq., the
FDCPA, 15 U.S.C. § 1692, et seq., and the FACTA, Pub. L. No. 108-159, 117 Stat. 1952 (Dec. 4,
2003).4 Compl. 116. His allegations arise from the closing, charging off, collection, and credit
reporting of his Credit Card account with Barclays. See generally, Compl. The arbitration clause

in the 2006 Agreement provides:
Any claim, dispute or controversy ("Claim") by either you or us against the other,
or against the employees, agents or assigns of the other, arising from or relating
in any way to this Agreement or your Account, or any transaction on your
Account indicating (without limitation) Claims based on contract, tort (including
intentional torts), fraud, agency, negligence, statutory or regulatory provisions or
any other source of law and Claims regarding the applicability of this arbitration
4 This Court has previously noted that the FACTA merely amends the FCRA. Barnette u. Brook Road, Inc.,
429 F. Supp. 2d 741,745 (E.D. Va. 2006).

clause or the validity of the entire Agreement, shall be resolved exclusively and
finally by binding arbitration.
2006 Agreement 4.

Plaintiffs claims are all "arising from or relating in [some] way to . . . [Plaintiffs]
Account" with Barclays and are based on "statutory or regulatory provisions." Id. Accordingly,
under the plain language of the arbitration clause, Plaintiffs claims "shall be resolved

exclusively and finally by binding arbitration." Id. Plaintiffs argument that his claims do not fall
within the scope of the arbitration clause because it does not explicitly reference the FCRA,
FDCPA, or FACTA is unpersuasive because the arbitration clause is broadly written to include

"any claim, dispute or controversy" arising in relation to the Credit Card account. Plaintiffs

statutory claims all arise from Barclays' handling of his Credit Card account and therefore fall
within the scope of the arbitration agreement.
The Court further does not find the terms of the arbitration agreement unconscionable.

Finding that Plaintiff entered into an arbitration agreement covering the claims raised in the

Complaint, the Court will compel arbitration of Plaintiffs claims. Upon compelling arbitration,
the Court further exercises its discretion to DISMISS this action without prejudice on the basis

of improper venue. SeeAggarao v. MOL Ship Mgmt. Co., Ltd., 675 F.3d 355, 366 n.9 (4th Cir.
2012) (recognizing the characterization of "an arbitration clause as 'a specialized kind of forumselection clause" and explaining that "a motion to dismiss based on a forum-selection clause

should be properly treated under Rule 12(b)(3) as a motion to dismiss on the basis of improper
venue.") (quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974); Sucampo Pharm., Inc.
v. Astellas Pharma, Inc., 471 F.3d 544, 550 (4th Cir. 2006)). Dismissal of this action renders
Defendants' alternative motion to dismiss for failure to state a claim moot and the Court need

not address Defendants' arguments.

CONCLUSION

For the reasons stated above, the Court DENIES AS MOOT the Initial Motion to Compel
and GRANTS IN PART the Renewed Motion to Compel. Plaintiffs Complaint is therefore
DISMISSED WITHOUT PREJUDICE.

Let the Clerk send a copy of this Memorandum Opinion to Plaintiff and all counsel of
record.

An appropriate order shall issue.

/S/

James R. Spencer

United States District Judge

/

ENTERED this

a? .day of July 2013.