Plaintiffs Gabriela Ramirez ("Ramirez"), Fidela Avina ("Avina"), Ruel Nieto ("Nieto"), Katherine Ranos ("Ranos") and Evalina Gonzalez ("Gonzalez") are individuals who applied for and used credit cards whose card agreements contained arbitration provisions.1 Plaintiffs allegethat they were unable to pay their debts and that defendants violated the FDCPA in attempting to collect the debts.
Gabriela Ramirez and Katherine Ranos Ranos opened a Citibank/Sears credit card in 1990. Ramirez opened a Citibank/Sears credit card in 2011. Each was sent, with her credit card, a copy of the Citibank/Sears card agreement.
The Citibank card agreement contains a choice of law provision which identifies South Dakota as the governing law. (Docket 59-1 at 29; Docket 59-6 at 29) ("Federal law and the law of South Dakota, where we are located, govern the terms of this Agreement."). In addition, the Citibank card agreement provides, among other things:
This card agreement is your contract with us.
* * *
You agree to use your account in accordance with this Agreement. You must pay us for all amounts due on your account. This Agreement is binding on you unless you close your account within 30 days after receiving the card and you have not used or authorized use of the card.
* * *
*You or we may arbitrate any claim, dispute or controversy between you and us arising out of or related to your account, a previous related account or our relationship (called "Claims").
*If arbitration is chosen by any party, neither you nor we will have the right to litigate that Claim in court or have a jury trial on that Claim.
Except as stated below, all Claims are subject to arbitration, no matter what legal theory they're based on or what remedy (damages, or injunctive or declaratory relief) they seek, including 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-partyclaims, interpleaders or otherwise; Claims made regarding past, present, or future conduct; and Claims made independently or with other claims. This also includes Claims made by or against anyone connected with us or you or claiming through us or you, or by someone making a claim through us or you, such as a co-applicant, authorized user, employee, agent, representative or
affiliated/parent/subsidiary company.
* * *
*Claims brought as part of a class action, private attorney general or other representative action can be arbitrated only on an individual basis.
(Docket 59-1 at 27-8; Docket 59-6 at 27-8) (emphasis in the original).
Ranos used the card. The last time she paid was November 18, 2015. On June 30, 2016, Citibank charged off the account. Ramirez also used her card. The last time she paid was November 26, 2015, and Citibank charged off the account in March 2016.
Avina opened a Synchrony Bank/Old Navy card in January 2014. Avina was sent, along with her card, a copy of the Synchrony/Old Navy card agreement. She was later sent, with her billing statement, an updated Synchrony/Old Navy card agreement. That agreement includes a choice of law provision in favor of Utah law. (Docket 59 at 6) ("Utah law shall apply to the extent state law is relevant under the FAA."). That agreement also states, in relevant part:
This Agreement. This is an Agreement between you and Synchrony Bank . . . By opening or using your account, you agree to the terms of the entire Agreement.
* * *
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 make a demand for arbitration, you and we must arbitrate any dispute or claim between you or any other user or your account, and us, our affiliates, agents and/or The Gap, Inc. if it relates to your account, except as noted below.
* * *
*No class actions
YOU AGREE NOT TO PARTICIPATE IN A CLASS, REPRESENTATIVE OR PRIVATE ATTORNEY GENERAL ACTION AGAINST US IN COURT OR ARBITRATION.
* * *
*How to reject this section
You may reject this Arbitration section of your agreement. . . . To reject this section, you must send us a notice within 60 days after you open your account or we first provided you with your right to reject this section.
(Docket 59 at 5-6) (emphasis in original).
Avina used her account but did not reject the arbitration provision. Avina made her last payment in September 2016, and, in April 2017, Synchrony charged off the debt.
In early 2014, Nieto opened a WebBank/Dell credit card. He was sent, with his card, a copy of the WebBank/Dell card agreement. The card agreement contains a choice of law provision in favor of Utah law. (Docket 59-5 at 6) ("The laws of the United States of America, including the Federal Arbitration Act, 9 U.S.C. Sections 1-16 (the "FAA"), and the law of the State of Utah apply to and govern this Agreement and your use of your Account."). The agreement also states, in relevant part:
THIS AGREEMENT CONTAINS AN ARBITRATION CLAUSE. . . . IF EITHER PARTY CHOOSES TO ARBITRATE A CLAIM, NEITHER PARTY WILL HAVE THE RIGHT TO LITIGATE THAT CLAIM IN COURT OR TO HAVE A JURY TRIAL ON THAT CLAIM OR TO PARTICIPATE IN A CLASS ACTION OR REPRESENTATIVE ACTION WITH RESPECT TO SUCH CLAIM.
Arbitration. Except as expressly provided herein, any claim, dispute or controversy (whether based upon contract, tort, intentional or otherwise, constitution, statute, common law, or equity and whether pre-existing, present or future, including initial claims, counter-claims and third-party claims), arising from or relating to you applying for, obtaining, or using this Account, this Agreement (including the validity or enforceability of this arbitration clause, any part thereof or the entire Agreement), or the relationships which result from this
Agreement ("Claim") shall be decided, upon the election of you or us, by binding arbitration . . .
(Docket 59-5 at 6) (emphasis in original).
Nieto used his account but did not reject the arbitration agreement. Nieto made his last payment in October 2015, and WebBank/Dell charged off the account in May 2016.
In December 2013, Gonzalez opened a Citibank/Zales card account. When the account was purchased by Comenity Capital Bank, Comenity mailed to Gonzalez a card, along with a Comenity/Zales card agreement. The card agreement contains a choice of law provision in favor of Utah. (Docket 59-7 at 10) ("THIS AGREEMENT IS GOVERNED BY UTAH AND APPLICABLE FEDERAL LAW.") (emphasis in original). It also states, in relevant part:
Your use of the account, or failure to close the account within the 30 days of receiving this document, indicates your acceptance of the terms of this agreement, including the assessment of any finance charges and fees.
* * *
IF YOU DO NOT REJECT THIS ARBITRATION PROVISION IN ACCORDANCE WITH PARAGRAPH C.1. BELOW, IT WILL BE PART OF THIS AGREEMENT AND WILL HAVE A SUBSTANTIAL IMPACT ON THE WAY YOU OR WE WILL RESOLVE ANY CLAIM WHICH YOU OR WE HAVE AGAINST EACH OTHER NOW OR IN THE FUTURE.
* * *
[Y]ou may reject it by mailing us a written rejection notice which gives the name of each Cardholder and contains a statement that you (both of you, if more than one) reject the Arbitration Provision of this Agreement.
* * *
3. Covered Claims: "Claim" means any claim, dispute or controversy between you and us that in any way arises from or relates to this Agreement, the Account, the issuance of any Card, any rewards program, any prior agreement or account. "Claims includes disputes arising from actions or omissions prior to the date any Card was issued to you, including the advertising related to, application for or approval of the Account. "Claim" has the broadest possible meaning, and includes initial claims, counterclaims, cross-claims and third-party claims. It includes disputes based on contract, tort, consumer rights, fraud and other intentional torts, constitution, statute, regulation, ordinance, common law and equity (including any claim for injunctive or declaratory relief). "Claim" does not include disputes about the validity, enforceability, coverage or scope of thisArbitration Provision or any part thereof (including, without limitation, the prohibition against class proceedings . . .
4. Starting an Arbitration: Arbitration may be elected by any party with respect to any Claim, even if that party has already initiated a lawsuit with respect to a different Claim.
* * *
7. Prohibition Against Certain Proceedings: IF YOU OR WE ELECT TO ARBITRATE A CLAIM: (1) NEITHER YOU NOR WE MAY PARTICIPATE IN A CLASS ACTION IN COURT OR IN CLASS-WIDE ARBITRATION . . . (4) THE ARBITRATOR SHALL HAVE NO POWER OR AUTHORITY TO CONDUCT A CLASS-WIDE ARBITRATION . . .
(Docket 59-7 at 7, 12) (emphasis in original).
Gonzalez used the account and did not reject the agreement or the arbitration provision. Gonzalez made her last payment in April 2016, and Comenity Capital Bank charged off the account in November 2016.
Events leading to this case
After plaintiffs were unable to pay their debts,...
