Bey v. Citi Health Card, CIVIL ACTION NO. 15-6533

• Decision Date: 06 July 2017
• Docket Number: CIVIL ACTION NO. 15-6533
• Parties: YAHYA SALEEM BEY, Plaintiff, v. CITI HEALTH CARD, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

YAHYA SALEEM BEY, Plaintiff, v. CITI HEALTH CARD, Defendant.

CIVIL ACTION NO. 15-6533

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

July 6, 2017

OPINION

Slomsky, J.

I. INTRODUCTION

Plaintiff Yahya Saleem Bey initiated this action against Defendant Citibank, N.A. ("Citibank") alleging violations of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, et seq.¹ (Doc. No. 3.) Bey alleges that Citibank violated provisions of the TCPA when it auto-dialed his cellphone in attempts to collect an outstanding debt on Plaintiff's Citi Health credit card, which was issued by Citibank. (Id. at ¶¶ 12-20.) Defendant moved to compel arbitration of this dispute pursuant to the arbitration clause contained in the Card Agreement that the parties entered into when Bey opened the credit card account. (Doc. No. 11.) For reasons that follow, this Court will grant Defendant's Motion (Doc. No. 11).

II. BACKGROUND

On April 21, 2015, Plaintiff Yahya Saleem Bey applied for and obtained a Citi Health credit card account at Champion Dentistry, Inc., located at 1170 N. 63rd Street, Philadelphia Pennsylvania. (Doc. No. 11-2 at ¶ 7, Doc. No. 11-3 at 2.)

To obtain the credit card, Bey signed a Card Agreement, which included an agreement to arbitrate all disputes related to the account. (Doc. No. 11-3 at 10.) The Card Agreement reads, in pertinent part:

ARBITRATION

PLEASE READ THIS PROVISION OF THE AGREEMENT CAREFULLY. IT PROVIDES THAT ANY DISPUTE MAY BE RESOLVED BY BINDING ARBITRATION. ARBITRATION REPLACES THE RIGHT TO GO TO COURT, INCLUDING THE RIGHT TO HAVE A JURY AND THE RIGHT TO INITIATE OR PARTICIPATE IN A CLASS ACTION OR SIMILAR PROCEEDING. IN ARBITRATION, A DISPUTE IS RESOLVED BY AN ARBITRATOR INSTEAD OF A JUDGE OR JURY. ARBITRATION PROCEDURES ARE SIMPLER AND MORE LIMITED THAN COURT PROCEDURES.

Agreement to Arbitrate: Either you or we may, without the other's consent, elect mandatory, binding arbitration for any claim, dispute, or controversy between you and us (called "Claims").

Claims Covered

What Claims are subject to arbitration? All Claims relating to your account, a prior related account, or our relationship are subject to arbitration, including Claims regarding the application, enforceability, or interpretation of this Agreement and this arbitration provision. All Claims are subject to arbitration, no matter what legal theory they are based on or what remedy (damages, or injunctive or declaratory relief) they seek. This includes Claims based on contract, tort (including intentional tort), fraud, agency, your or our negligence, statutory or regulatory provisions, or any other sources of law; Claims made as counterclaims, cross-claims, third-party claims, interpleaders or otherwise; and Claims made independently or with other claims. A party who initiates a proceeding in court may elect arbitration with respect to any Claim advanced in that proceeding by any other party. Claims and remedies sought as part of a class action, private attorney general or other representative action are subject to arbitration on an individual (non-class, non-representative) basis, and the arbitrator may award relief only on an individual (non-class, non-representative) basis.

Whose Claims are subject to arbitration? Not only ours and yours, but also Claims made by or against anyone connected with us or you claiming through us or you, such as a co-applicant, authorized user of your account, an employee, agent, representative, affiliated company, predecessor or successor, heir assigned, or trustee in bankruptcy.

* * *

How Arbitration Works

How does a party initiate arbitration? The party filing an arbitration must choose one of the following two arbitration firms and follow its rules and procedures for initiating and pursuing an arbitration: American Arbitration Association or JAMS. Any arbitration hearing that you attended will be held at a place chosen by the arbitration firm in the same city as the U.S. District Court closest to your then current billing address, or at some other place to which you and we agree in writing. . . .

(Id. at 10-11.)

After opening the credit card, Bey used the account to make a purchase in the amount of $3,898. (Doc. No. 11-2 at ¶ 9, Doc. No. 11-3 at 17.) Bey presumably failed to make regular payments on the account. Thereafter, Bey began receiving calls from a Citibank auto-dialer attempting to collect the outstanding balance on his account. (Doc. No. 3 at ¶¶ 15-20.) On October 20, 2015, Bey mailed a letter to Defendant revoking any prior consent to receive collection calls. (Id. at ¶ 14.) However, Bey continued to receive these calls. (Id. at ¶¶ 15-20.)

On December 15, 2015, Plaintiff filed a Complaint against Citibank alleging violations of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, et seq., in connection with the continued collection calls. (Doc. No. 3.) Upon receiving service of the Complaint, Defendant filed a Motion to Compel Arbitration and Stay Proceedings. (Doc. No. 11.) On January 24, 2017, Plaintiff filed a Response in Opposition to the Motion to Compel and Stay Proceedings. (Doc. No. 12.) On February 1, 2017, Defendant filed a Reply. (Doc. No. 13.) Thereafter, Plaintiff filed a Sur-reply. (Doc. No. 14.) Additionally, on March 29, 2017, Plaintiff filed a Motion for Summary Judgment.² (Doc. No. 15.) On April 13, 2017, Defendant filed a Response in Opposition to Plaintiff's Motion for Summary Judgment. (Doc. No. 17.)

III. STANDARD OF REVIEW

The Motion to Compel Arbitration filed in this case will be considered under the standard for summary judgment in Federal Rule of Civil Procedure 56(c).³ Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 159 (3d Cir. 2009). A court will compel arbitration only when there is "no genuine issue of fact concerning the formation of the agreement" to arbitrate. Id. The court must consider all evidence provided by the party opposing arbitration and draw all reasonable inferences in that party's favor. Ostroff v. Alterra Healthcare Corp., 433 F. Supp. 2d 538, 541 (E.D. Pa. 2006).

The Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1, et seq., "establishes a strong federal policy in favor of compelling arbitration over litigation." Sandvik AB v. Advent Int'l Corp., 220 F.3d 99, 104 (3d Cir. 2000). Section 2 is the primary substantive provision of the FAA, declaring that a written agreement to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983) (citing 9 U.S.C. § 2).

Before compelling arbitration, a court must determine: (1) whether a valid agreement to arbitrate exists, and (2) whether the particular dispute falls within the scope of that agreement. Trippe Manufacturing Co. v. Niles Audio Corp., 401 F.3d 529, 532 (3d Cir. 2005). To determine whether a valid arbitration agreement exists, courts look to ordinary state-law principles of contract formation. Alexander v. Anthony Int'l, L.P., 341 F.3d 256, 264 (3d Cir. 2003). Thus, "generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening [Section] 2." Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687 (1996).

IV. ANALYSIS

Defendant argues that arbitration should be compelled in this case because there is a valid agreement to arbitrate in the Card Agreement and the dispute falls within the scope of that agreement. (Doc. No. 11-1 at 14-20.) Plaintiff contests the Motion to Compel Arbitration, preferring to litigate the allegations of TCPA violations in this Court. For reasons that follow, Defendant's Motion to Compel Arbitration and Stay Proceedings (Doc. No. 11) will be granted.

A. A Valid Agreement to Arbitrate Exists in the Card Agreement

Defendant first argues that a valid agreement to arbitrate is included in the Card Agreement, which Plaintiff read, signed, and entered into when obtaining the Citi Health credit card. (Doc. No. 11-1 at 9.) A court must initially inquire into whether a valid agreement to arbitrate exists before compelling arbitration. Trippe Manufacturing Co., 401 F.3d at 532. Courts look to ordinary state law principles of contract formation to make this determination. Alexander, 341 F.3d at 264.

The Card Agreement at issue here contains a choice-of-law provision, which states that "Federal law and the law of South Dakota, where we are located, govern the terms of and enforcement of the Agreement." (Doc. No. 11-3 at 12.) Therefore, South Dakota state law principles of contract formation apply here.⁴

Under South Dakota law, the elements necessary for contract formation are: (1) parties capable of contracting; (2) their consent; (3) a lawful object; and (4) sufficient consideration. American Prairie Construction Co. v. Hoich, 594 F.3d 1015, 1023 (8th Cir. 2010) (citing S.D. Codified Laws § 53-1-2). To form a contract, there must be an objective manifestation of mutual assent. Jacobsen v. Gulbransen, 623 N.W.2d 80, 90 (S.D. 2001). Regarding consumer credit cards, South Dakota defines the use of a credit card as acceptance of a credit card agreement. See S.D. Codified Laws § 54-11-9 (establishing that "[t]he use of an accepted credit card . . . creates a binding contract between the card holder and the card issuer.").

All elements necessary for contract formation are present here. First, Bey and Citibank are both parties capable of contracting. Second, both provided their consent in contracting. Demonstrably, on April 21, 2015, Bey signed the Citi Health Card application to obtain a credit card account. (Doc. No. 11-3 at 2.) The application provided in part that "By signing below, I certify that I have read and agree to the Credit Card Disclosures, Terms and Conditions of the Offer and the Card Agreement, all of which are attached." (Id.) The Card Agreement explicitly stated that it was...