Clarke v. Alltran Fin., LP

• Decision Date: 22 February 2018
• Docket Number: No. 17-CV-3330 (JFB) (AYS),17-CV-3330 (JFB) (AYS)
• Parties: DONOVAN J. CLARKE, Plaintiff, v. ALLTRAN FINANCIAL, LP F/K/A UNITED RECOVERY SYSTEMS, LP, Defendant.
• Court: U.S. District Court — Eastern District of New York

DONOVAN J. CLARKE, Plaintiff, v. ALLTRAN FINANCIAL,LP F/K/A UNITED RECOVERY SYSTEMS, LP, Defendant.

No. 17-CV-3330 (JFB) (AYS)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

February 22, 2018

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge:

Plaintiff Donovan J. Clarke ("plaintiff" or "Clarke") brings this putative class action against Alltran Financial, LP, formerly known as United Recovery Systems, LP ("defendant" or "Alltran") under the Fair Debt Collection Practices Act ("the FDCPA"), 15 U.S.C. § 1692 et seq. Clarke claims that Alltran violated the FDCPA by sending him an allegedly false and misleading debt collection letter relating to amounts owed on his Citibank credit card.

Presently before the Court is Alltran's motion to compel arbitration on an individual basis under the credit card agreement between Clarke and Citibank—to which Alltran is not a signatory. The parties' dispute centers on whether Alltran, as a non-signatory, can compel arbitration under that agreement. Alltran asserts that it can compel arbitration (1) based on the plain language of the card agreement; (2) as a third-party beneficiary; (3) as Citibank's agent; and (4) under the doctrine of equitable estoppel. Clarke, in turn, disputes each of these grounds.

For the reasons that follow, the Court concludes that Alltran can compel arbitration under the card agreement's plain language, and, alternatively, as Citibank's agent. Because the Court concludes that Alltran can compel arbitration on these grounds, it does not reach Alltran's additional grounds.

The Court further concludes that whether arbitration must proceed on an individual basis under the card agreement's class action waiver is for the arbitrator to decide.

Finally, the Court stays this action pending the arbitration.

I. BACKGROUND

A. Facts

The Court takes the following facts from the complaint, the Declaration of Terri Montgomery ("Montgomery Decl.") filed in support of defendant's motion to compel arbitration, and the exhibits thereto.¹

In October 2014, Citibank issued plaintiff a credit card. (Montgomery Decl. ¶ 11.) In connection with obtaining the credit card, plaintiff received a card agreement that governed his account. (Id. ¶ 7.) The card agreement provided that Clarke agreed to be bound by its terms by either using the credit card or failing to cancel the credit card within thirty days of receiving it. (Montgomery Decl. Ex. 1 at 1.) The card agreement also contained a broad arbitration provision that stated, in relevant part:

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 A JURY AND THE RIGHT TO PARTICIPATE IN A CLASS ACTION OR SIMILAR PROCEEDING.

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").

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 toarbitration 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 or 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 assignee, or trustee in bankruptcy.

Broadest Interpretation. Any questions about whether Claims are subject to arbitration shall be resolved by interpreting this arbitration provision in the broadest way the law will allow it to be enforced. This arbitration provision is governed by the Federal Arbitration Act (the "FAA").

(Id. at 9-10.)

At some point before December 2015, plaintiff allegedly failed to make payments on his Citibank credit card (Compl. ¶¶ 13, 16), and Citibank "retained and authorized" Alltran to collect the amount owed (Montgomery Decl. ¶ 6). To that end, Alltran sent a debt collection letter to plaintiff on June 3, 2016. (See Compl. Ex. A.) Clarke alleges that the letter was false and misleading in violation of the FDCPA. (Compl. ¶¶ 29-51.)

B. Procedural History

Plaintiff filed the complaint on June 2, 2017. (ECF No. 1.) Defendant moved to compel arbitration on August 2, 2017. (ECF No. 12.) Plaintiff opposed defendant's motion on August 23, 2017. (ECF No. 16.) Defendant replied on September 15, 2017. (ECF No. 18.) On September 29, 2017, plaintiff submitted a notice of supplemental authority to the Court. (ECF No. 19.) Defendant submitted a response to that notice on October 24, 2017. (ECF No. 21.) The Court heard oral argument on November 2, 2017, and has fully considered the parties' submissions and arguments.

II. STANDARD OF REVIEW

Courts evaluate motions to compel arbitration under a standard similar to that for summary judgment motions. Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003) (citing Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 n.9 (3d Cir. 1980)); Hines v. Overstock.com, Inc., 380 F. App'x 22, 24 (2d Cir. 2010); Guida v. Home Sav. of Am., Inc., 793 F. Supp. 2d 611, 614 (E.D.N.Y. 2011). The court must "consider all relevant admissible evidence" and "draw all reasonable inferences in favor of the non-moving party." Nicosia v. Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016). "If there is an issue of fact as to the making of the agreement for arbitration, then a trial is necessary." Bensadoun, 316 F.3d at 175 (citing 9 U.S.C. § 4). If, however, the arbitrability of the dispute can be decided as a matter of law based on the undisputed facts in the record, the court "may rule on the basis of that legal issue and 'avoid the need for further court proceedings.'" Wachovia Bank, Nat'l Ass'n v. VCG Special Opportunities Master Fund, Ltd., 661 F.3d 164, 171 (2d Cir. 2011) (quoting Bensadoun, 316 F.3d at 175).

III. DISCUSSION

A. The Card Agreement's Plain Terms Allow Alltran to Compel Arbitration

The Federal Arbitration Act mandates that arbitration agreements "evidencing a transaction involving [interstate] 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 statutory provision "reflect[s] both a 'liberal federal policy favoring arbitration' and the 'fundamental principle that arbitration is a matter of contract.'" AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (citations omitted). Thus, "courts must place arbitration agreements on an equal footing with other contracts and enforce them according to their terms," id. (citation omitted), including "terms that 'specify with whom the parties choose to arbitrate their disputes,'" Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013) (quoting Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 683 (2010)).

"[T]he interpretation of an arbitration agreement is generally a matter of state law." Stolt-Nielsen S.A., 559 U.S. at 681. At the same time, "in applying general state-law principles of contract interpretation . . . to an arbitration agreement within the scope of the [FAA], due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration." Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 475-76 (1989) (citation omitted).

Under South Dakota law,² "[t]he goal of contract interpretation is to determine the parties' intent." Tri-City Assocs., L.P. v. Belmont, Inc., 845 N.W.2d 911, 915 (S.D. 2014). To do so, courts must examine contracts "as a whole" and "give words their 'plain and ordinary meaning.'" Coffey v. Coffey, 888 N.W.2d 805, 809 (S.D. 2016) (citations omitted). Further, courts must interpret contracts to give "a reasonable and effective meaning" to all terms, id., and not "in a manner that renders a portion of [the contract] meaningless," Tri-City Assocs., 845 N.W.2d at 915 (quoting Estate of Fisher v. Fisher, 645 N.W.2d 841, 846 (S.D. 2002)).

Plaintiff argues that Alltran cannot compel arbitration here because the card agreement's plain terms do not allow non-signatories to do so. In support, plaintiff points to two provisions of the card agreement: the definitions section and the paragraph entitled "Agreement to Arbitrate." The latter states, "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')." (Montgomery Decl. Ex. 1 at 9 (emphasis added).) The card agreement defines "you" as "the person who applied to open the account" and "us" as "Citibank, N.A., the issuer of yourAccount." (Id. at 1.) Plaintiff argues that, read together, these provisions mandate that only Clarke ("you") or Citibank ("we") can compel arbitration...