Waverly D. Crenshaw, Jr. Chief Judge
REPORT AND RECOMMENDATION
ALISTAIR E. NEWBERN UNITED STATES MAGISTRATE JUDGE
To The
Honorable Waverly D. Crenshaw, Jr., Chief District Judge
Pro se
Plaintiff Shunta Shepard brings this breach of contract
action against Defendant Credit One Bank, N.A.'s (Credit
One) to challenge Credit One's closing of two credit card
accounts.[1] (Doc. Nos. 12, 18-1.) Credit One filed a
motion to compel arbitration and dismiss this action under
the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 et
seq. (Doc. No. 19.) Shepard responded in opposition (Doc. No
25), and Credit One filed a reply (Doc. No. 26). The Court
referred this action to the Magistrate Judge to dispose or
recommend disposition of any pretrial
motions under 28 U.S.C. § 636(b)(1)(A) and (B). (Doc.
No. 15.) For the reasons that follow, the Magistrate Judge
will recommend that the Court grant in part Credit One's
motion to compel arbitration and dismiss the action without
prejudice.
I.
Factual Background and Procedural History
Shepard
maintained two credit card accounts operated by Credit One.
(Doc. Nos. 12, 18 1, 19-1.) Credit One executive Michael
Wiese states by declaration-and Shepard does not dispute-that
Shepard consented to the terms of a written card agreement
that Credit One mailed to Shepard with each credit card.
(Doc. Nos. 19-1, 25.) That card agreement contains an
arbitration agreement which states:
This agreement to arbitrate provides that you or we can
require controversies or disputes between us to be resolved
by BINDING ARBITRATION. You have the right to REJECT this
agreement to arbitrate by using the procedure explained
below.
If you do not reject this agreement to arbitrate, you GIVE UP
YOUR RIGHT TO GO TO COURT and controversies or disputes
between us will be resolved by a NEUTRAL ARBITRATOR INSTEAD
OF A JUDGE OR JURY, using rules that are simpler and more
limited than in a court. Arbitrator decisions are subject to
VERY LIMITED REVIEW BY A COURT. Arbitration will proceed
INDIVIDUALLY- CLASS ACTIONS AND SIMILAR PROCEDURES WILL NOT
BE AVAILABLE TO YOU.
Agreement to Arbitrate: You and we agree
that either you or we may, without the other's consent,
require that controversies or disputes between you and us
(all of which are called “Claims”), be submitted
to mandatory, binding arbitration. This agreement to
arbitrate is made pursuant to a transaction involving
interstate commerce, and shall be governed by, and
enforceable under, the Federal Arbitration Act (the
“FAA”), 9 U.S.C. §1 et seq., and (to the
extent State law is applicable), the laws of the State of
Nevada.
For purposes of this agreement to arbitrate,
“you” includes you, any co-applicant, any
Authorized User (including Additional Cardholders), or anyone
else connected with you or claiming through you; and
“we” or “us” includes Credit One
Bank, N.A., all of its parents, subsidiaries, affiliates,
successors, predecessors, employees, and related persons or
entities, and all third parties who are regarded as agents or
representatives of us in connection with the subject matter
of the claim or dispute at issue.
Covered Claims: Claims subject to
arbitration include, but are not limited to, any
controversies or disputes arising from or relating in any way
to your Account; any transactions involving your Account; any
disclosures made to you concerning your Account; any
interest, charges, or fees assessed on your Account; any
service(s) or programs related to your Account; and, if
permitted by the rules of the arbitration forum, any
collection of debt related to your Account. Claims also
include controversies or disputes arising from or relating in
any way to advertising, solicitations, or any application
for, approval of, or establishment of your Account. Claims
subject to arbitration include any controversies or disputes
based on any theory of law, whether contract, tort, statute,
regulation, common law, or equity, or whether they seek legal
or equitable remedies. All Claims are subject to arbitration
whether they arose in the past, may currently exist, or may
arise in the future. Arbitration will apply even if your
Account is closed, you pay us in full any outstanding debt
you owe, or you file for bankruptcy. Also, controversies or
disputes about the validity, enforceability, coverage,
meaning, or scope of this agreement to arbitrate or any part
thereof are subject to arbitration and are for the arbitrator
to decide. Any questions about what Claims are subject to
arbitration shall be resolved by interpreting this agreement
to arbitrate in the broadest way the law will allow it to be
enforced.
Claims Not Covered: Claims (whether brought
initially or by counter or crossclaim) are not subject to
arbitration if they are filed by you or us in a small claims
court, so long as the case remains in such court and only
individual claims for relief are advanced in the case.
How to REJECT this Agreement to Arbitrate:
You can reject this agreement to arbitrate but only if we
receive from you a written notice of rejection within 45 days
after it was first provided to you. To reject this agreement
to arbitrate you must send the notice of rejection to: Credit
One Bank, Attention: Arbitration Opt Out, P. O. Box 98873,
Las Vegas, NV 89193-8873. Rejection notices sent to any other
address will not be accepted or effective. If you decide to
reject this agreement to arbitrate in writing, your notice
must state that you reject this agreement to arbitrate and
include your name, address, account number, and personal
signature. Rejection of arbitration will not affect your
other rights or responsibilities under this Card Agreement.
Survival, Severability, and Amendment of
Terms: Survival. This agreement to
arbitrate shall survive changes in the Agreement and
termination of the Account or the relationship between you
and us, including the bankruptcy of any party and any
transfer or sale of your Account, or amounts owed on your
Account, to another person or entity. Severability.
If any part or parts of your agreement to arbitrate are
declared unenforceable, then such specific part or parts
shall be of no force or effect and shall be severed, but the
remainder of this agreement to arbitrate shall continue in
full force and effect. If, however, the entire agreement to
arbitrate or your waiver
of the right to bring or participate in a class or
representative action or in consolidation procedures is
unenforceable, then the agreement to arbitrate shall be of no
force or effect. Notwithstanding the preceding sentence, with
respect to California Account Holders, if arbitration is
unenforceable, in whole or in part, you and we agree to
resolve any Claim by a judicial reference proceeding as
described above.
Amendment in Writing Only. This agreement to
arbitrate may not be amended, severed, or waived, except as
expressly provided in the Agreement or in a written agreement
between you and us.
(Doc. No. 19-1, PagelD# 106-08, 120, 122.) Wiese states, and
Shepard concedes, that Shepard did not reject the arbitration
clause when entering into the card agreements with Credit
One. (Doc. Nos. 19-1, 25.)
Shepard
incurred charges and made payments on the credit cards
between 2019 and 2022. (Doc. No. 19-1.) Shepard alleges that,
on October 11, 2022, she sent Credit One two money orders and
a handwritten letter instructing Credit One to apply the
money orders to the balances on her credit card accounts.
(Doc. Nos. 12, 18-1.) Credit One sent Shepard letters dated
October 17 and 18, 2022, informing her that it had closed her
accounts “due to unauthorized payment activity”
and that the accounts would “be reported to the
consumer reporting agencies as ‘Account Closed by
Credit Grantor.'” (Doc. No. 18-1, PageID# 60, 61;
Doc. No. 19-1, PageID# 179, 180.) Shepard demanded that
Credit One reopen her accounts, but Credit One refused. (Doc.
No. 18-1.)
Shepard's
amended complaint alleges breach of contract and defamation
claims against Credit One. (Doc. No. 12.) Credit One
responded to the amended complaint by filing a motion to
compel arbitration under the FAA and dismiss Shepard's
amended complaint with prejudice. (Doc. No. 19.) Shepard
argues that the Court should deny Credit One's motion
because the card agreement and arbitration agreement are
“null and void” and her breach of contract claims
fall outside the scope of the arbitration agreement. (Doc.
No. 25, PageID# 196.) Credit One argues that Shepard's
challenges to the validity of the card agreement and the
scope of the arbitration agreement must be resolved by an
arbitrator, not by the Court. (Doc. No. 26.)
The FAA
provides that written agreements to arbitrate disputes
arising out of commercial contracts “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 provision reflects
“a ‘liberal federal policy favoring
arbitration[.]'” AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 (2011) (quoting Moses
H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24 (1983)). However, arbitration remains
“‘a matter of contract and a party cannot be
required to submit to arbitration any dispute which he [or
she] has not agreed so to submit.'” AT&T
Techs., Inc. v. Commc'ns Workers of Am., 475 U.S.
643, 648 (1986) (quoting United Steelworkers of Am. v.
Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960)).
Under
the FAA, anyone aggrieved by another's alleged failure or
refusal to arbitrate pursuant to a written arbitration
agreement may petition a federal district court for an order...
