Allen v. Equifax Info. Servs., LLC

• Decision Date: 28 November 2017
• Docket Number: Civil Action No. 3:17-cv-211-DJH-CHL
• Parties: RONALD CHAD ALLEN, Plaintiff, v. EQUIFAX INFORMATION SERVICES, LLC, et al., Defendants.
• Court: U.S. District Court — Western District of Kentucky

RONALD CHAD ALLEN, Plaintiff, v. EQUIFAX INFORMATION SERVICES, LLC, et al., Defendants.

Civil Action No. 3:17-cv-211-DJH-CHL

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY LOUISVILLE DIVISION

November 28, 2017

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MEMORANDUM OPINION AND ORDER

Plaintiff Ronald Chad Allen alleges various violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. The claims arise from Allen's discovery that several debts that had been discharged in his Chapter 7 bankruptcy were still appearing on his consumer credit reports. (Docket No. 1, PageID # 3) Defendant Credit One Bank, N.A. moves to partially stay this action and compel arbitration pursuant to an alleged arbitration agreement between Allen and Credit One. (D.N. 21) For the reasons set forth below, the Court will grant Credit One's motion and stay this action as to Allen's claims against Credit One.

I. Background

In May 2016, Allen completed an application for a credit card on Credit One's website, which stated the terms and conditions applicable to the credit card. (D.N. 21-2, PageID # 73) Thereafter, Credit One mailed Allen the credit card, along with the Cardholder Agreement, Disclosure Statement and Arbitration Agreement. (Id., PageID # 74) Allen eventually activated his card and began making charges to it. (Id., PageID # 76)

In October 2016, Allen filed for Chapter 7 bankruptcy. (D.N. 1, PageID # 3) As a result of the bankruptcy proceedings, several of Allen's debts were discharged, including a debt he owed to Credit One stemming from his use of its credit card. (Id., PageID # 3-4) Thereafter, Allen began regularly monitoring his consumer credit reports. (Id., PageID # 3) In doing so, he discovered several debts on his credit reports that had been included and discharged in his Chapter 7 bankruptcy. (Id.) One such debt was the balance he previously owed to Credit One. (Id., PageID # 3-4)

Allen asked credit-reporting agency Equifax Information Services, LLC to investigate the inaccuracies. (Id., PageID # 4) In the present lawsuit, Allen claims that upon receiving notice from Equifax of Allen's dispute, the defendants failed to conduct a reasonable investigation concerning the misreported debts, in violation of various provisions of the FCRA and FDCPA. (Id., PageID # 4-9) Originally named as defendants were Equifax Information Services; Credit Bureau Systems, Inc.; Credit One Bank, N.A.; Fort Knox Federal Credit Union; and Hillcrest Credit Agency. (Id.) Allen has since voluntarily dismissed his claims against Hillcrest Credit Agency (D.N. 22; D.N. 24) and settled his claims against Equifax Information Services. (D.N. 26) Credit One moves to partially stay the action and compel arbitration in accordance with an arbitration agreement that Allen allegedly entered into when he began using the credit card at issue. (D.N. 21-2, PageID # 72) In his response to Credit One's motion, Allen does not argue that the agreement is generally unenforceable or that his claims fall outside its scope. (See D.N. 23) Instead, Allen argues that the discharge of the debt at issue in Allen's Chapter 7 bankruptcy renders the arbitration agreement unenforceable. (Id., PageID # 131-33)

II. Discussion

Although Allen does not challenge the general enforceability of the arbitration agreement, precedent mandates that the Court conduct such an inquiry. The Sixth Circuit has instructed that "[b]efore compelling an unwilling party to arbitrate, the court must engage in alimited review to determine whether the dispute is arbitrable." Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 627 (6th Cir. 2004) (quoting Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003)). Specifically, the Court considers four factors when evaluating a motion to compel arbitration under the Federal Arbitration Act:

[F]irst, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration.

Glazer v. Lehman Bros., Inc., 394 F.3d 444, 451 (6th Cir. 2005) (quoting Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000)). "It is well-established that any doubts regarding arbitrability should be resolved in favor of arbitration." Id. (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)).

A. Agreement to Arbitrate

The Court must first determine whether Allen and Credit One entered into an agreement to arbitrate. "State contract law . . . governs in determining whether the arbitration clause itself was validly obtained, provided the contract law applied is general and not specific to arbitration clauses." Fazio v. Lehman Bros., Inc., 340 F.3d 386, 393 (6th Cir. 2003) (citations omitted). Under Kentucky law,

[w]hile there is no question "that the party seeking to enforce an agreement has the burden of establishing its existence, . . . once prima facie evidence of the agreement has been presented, the burden shifts to the party seeking to avoid the agreement." A party "me[ets] the prima facie burden by providing copies of [a] written and signed agreement[ ] to arbitrate."

MHC Kenworth-Knoxville/Nashville v. M & H Trucking, LLC, 392 S.W.3d 903, 906 (Ky. 2013) (alterations and omission in original) (internal citation omitted) (quoting Louisville Peterbilt, Inc.v. Cox, 132 S.W.3d 850, 857 (Ky. 2004)). The party seeking to avoid arbitration bears "a heavy burden" "to prove there is no agreement." Id. (quoting Louisville Peterbilt, 132 S.W.3d at 857).

Allen fails to meet that burden here. Credit One offers ample evidence showing that Allen entered into an arbitration agreement when he began using the credit card at issue. First, when Allen completed his application for the credit card, he was presented with the terms and conditions applicable to the credit card. Credit One has attached a sample copy of the application that Allen viewed on its website, which states:

ARBITRATION: You agree that either you or we may, without the other's consent, require that any dispute between you and us be submitted to mandatory, binding arbitration. Complete details will be in the Agreement sent with your card.

(D.N. 21-4, PageID # 91) The application further states:

If I am approved, my card(s) will be issued and I agree to pay all charges incurred in accordance with the terms and conditions of the Cardholder Agreement, Disclosure Statement and Arbitration Agreement ("Agreement"), which will be sent with my card. I understand that my Account will be subject to the terms and conditions of the Agreement.

(Id., PageID # 90-91 (emphasis added)) After Allen completed the application, Credit One mailed him a credit card, alongside the Cardholder Agreement, Disclosure Agreement and Arbitration Agreement. (D.N. 21-2, PageID # 74) The Cardholder Agreement provides:

ARBITRATION AGREEMENT: The Arbitration Agreement provided by you with this Agreement governs the enforcement by you and us of your and our legal rights under this Agreement.

(D.N. 21-6, PageID # 102) The Arbitration Agreement provides:

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.

(Id., PageID # 103) The Arbitration Agreement explicitly provides that claims related to "credit reporting" qualify as claims subject to arbitration. (Id.)

After receiving the credit card and Agreements, Allen began making charges to the credit card and payments on the account. (See D.N. 21-7) Credit One accordingly argues that "[p]ursuant to the Cardholder Agreement, [Allen] agreed to the credit card account terms and conditions, including arbitration, by requesting and receiving, signing, [and] using his credit card." (D.N. 21-2, PageID # 78) The Court agrees. "Under Kentucky law, parties can be bound to contracts, even absent a signature, when their actions indicate acceptance of the contract's terms." Polly v. Affiliated Computer Servs., No. 10-135-ART, 2011 WL 93715, at *4 (E.D. Ky. Jan. 11, 2011) (citing Sweeney v. Theobald, 128 S.W.3d 498, 501 (Ky. Ct. App. 2004)). In Kentucky, acceptance is a "manifestation of assent to the terms [of an offer] made by the offeree in a manner invited or required by the offer." Ky. Emps. Ret. Sys. v. Seven Ctys. Servs. Inc., 550 B.R. 741, 761 (W.D. Ky. 2016).

Here, the first paragraph to the Cardholder Agreement, Disclosure Statement and Arbitration Agreement clearly states that "[b]y requesting and receiving, signing or using your Card, you agree [to the following terms]." (D.N. 21-6, PageID # 99) When presented with identical language, the Court has held that under Kentucky law, a cardholder's use of a card is a manifestation of assent to the terms of the agreement. See Holland v. Lvnv Funding, LLC, No. 5:16-CV-00069, 2016 WL 6156187, at *10 (W.D. Ky. Oct. 21, 2016) (finding that the plaintiff was bound by an arbitration provision where the cardholder agreement provided that by using his credit card, the plaintiff accepted the agreement's terms). Moreover, as the party resisting arbitration, Allen bears the burden of showing a genuine dispute of material fact regarding the enforceability of the Arbitration Agreement. See Great Earth Cos., Inc. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002). Allen presents no arguments to rebut Credit One's prima facie showing that Allen accepted the terms and conditions of the credit card. (See D.N. 23) Accordingly, theCourt finds that by signing up for and using a Credit One credit card, Allen accepted the Arbitration Agreement.

B. Scope of Arbitration Agreement

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