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Schardan v. Allied Interstate, LLC

United States District Court, E.D. Missouri, Eastern Division

February 8, 2017

KAREN SCHARDAN, Plaintiff,
v.
ALLIED INTERSTATE, LLC, Defendant.

          OPINION, MEMORANDUM AND ORDER

          HENRY EDWARD AUTREY UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendant's Motion to Compel Arbitration and Stay Proceedings Pending the Completion of Arbitration [Doc 19], Plaintiff's Motion for Partial Summary Judgment, [Doc. No. 21], and Defendant's Motion to Stay Proceedings regarding Plaintiff's Motion for Summary Judgment, [Doc. No. 29]. For the reasons set forth below, the Motion to Compel Arbitration is granted.

         Background

         Plaintiff (Schardan) filed this action against Defendant (Allied) for violations of the Telephone Consumer Protection Act of 1991 (TCPA), 47 U.S.C. 227 et seq.; the Fair Debt Collections Practices Act (FDCPA), 15 U.S.C. 1692 et seq.; and invasion of privacy. Plaintiff opened a J.C. Penny credit card on August 29, 2010 (the “J.C. Penny Account”) and a Walmart credit card (the “Walmart Account”) on June 8, 2014 (together the “Accounts). Both cards were issued by GE Capital Retail Bank, now Synchrony Bank, which is headquartered in Utah. The agreements of the Accounts (the “Agreements”) are identical, except for the names of each retail store.

         Defendant asserts it contacted Plaintiff only after being contracted by Synchrony Bank to collect an outstanding debt Plaintiff owed for defaulting on her credit cards. Defendant asserts that the contract signed between Plaintiff and Synchrony provides that all disputes arising from the contract must be settled through arbitration. On May 23, 2017, Defendant filed a Motion to Compel Arbitration and Stay Proceedings Pending the Completion of Arbitration. In response, Plaintiff argues that the Agreements are not arbitrable and, in the alternative, that Defendant has waived the right to arbitration through its participation in litigation.

         Considerations to Compel Arbitration

         Before compelling arbitration, a district court must determine (1) whether there is a valid arbitration agreement and (2) whether the particular dispute falls within the terms of that agreement. Robinson v. EOR-ARK, LLC, 841 F.3d 781, 783 (8th Cir. 2016). Any doubts raised in construing contract language on arbitrability should be resolved in favor of arbitration. CD Partners, LLC v. Grizzle, 424 F.3d 795, 795 (8th Cir. 2005).

         Under Section 2 of the Federal Arbitration Act (FAA), “written arbitration agreements [are] valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of a contract.” Anderson v. Carlisle, 129 S.Ct. 1896, 1901 (2009). Section 2 “creates substantive federal law regarding the enforceability of arbitration agreements, requiring courts to place such agreements upon the same footing as other contracts.” Id. (quotations omitted). “Section 3, in turn, allows litigants already in federal court to invoke agreements made enforceable by Section 2.” Id. “That provision requires the court, on application of one of the parties, to stay the action if it involves an issue referable to arbitration under an agreement in writing.” Id.

         A. A valid arbitration agreement between Plaintiff and Synchrony Bank exists.

         State contract law governs whether the parties have entered into a valid arbitration agreement. Robinson, 841 F.3d at 784. Relevant to the Court's determination as to whether a valid agreement exists are the actual terms of the agreement. Id. The Agreements between Plaintiff and Synchrony state:

This Agreement. This is an Agreement between you and GE Capital Bank, 170 Election Road, Suite 125, Draper, UT 84020, for your credit card account shown above. By opening or using this account, you agree to the terms of the entire Agreement. The entire Agreement includes the four sections of this document, the application you submitted in connection with the account. These documents replace any other agreements relating to your account that you or we made earlier or at the same time.” Further, “Governing Law: Except as provided in the Resolving a Dispute with Arbitration section, this Agreement and your account are governed by federal law, and to the extent state law applies, the laws of Utah without regard to its conflicts of laws principles. This agreement has been accepted by us in Utah.” “Resolving a Dispute with Arbitration: Please read this section carefully. If you do not reject it, this section will apply to your account, and most disputes between you and us will be subject to individual arbitration. . . .” “What Claims are Subject to Arbitration:
1. If either you or we made a demand for arbitration, you and we must arbitrate any dispute or claim between you or any other user of your account, and us, our affiliates, agents and/or (Wal-Mart Stores Inc./ J.C. Penny) if it relates to your account as noted below.
2. We will not require you to arbitrate: (1) any individual case in small claims court or your state's equivalent, so long as it remains an individual case in that court; or (2) a case we file to collect money you owe us. However, if you respond to the collection lawsuit by claiming any wrongdoing, we may require you to arbitrate.”
“Governing Law for Arbitration: This Arbitration section of your agreement is governed by the Federal Arbitration Act (FAA). Utah law shall apply to the extent state law is relevant under the FAA. The arbitrator's decision will be final and binding, except for any appeal right under the FAA. Any court ...

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