Wagner v. Discover Bank
| Decision Date | 10 January 2014 |
| Docket Number | Civil Action No. 12-cv-02786-MSK-BNB |
| Parties | WALTER F. WAGNER, Plaintiff, v. DISCOVER BANK, Defendant. |
| Court | U.S. District Court — District of Colorado |
Honorable Marcia S. Krieger
THIS MATTER comes before the Court on the Defendant Discover Bank's Motion to Compel Arbitration and Stay Action (#28). The Plaintiff Walter F. Wagner filed a Response (#36), and the Defendant replied (#44).
Mr. Wagner holds a Discover brand credit card with the Defendant, Discover Bank (Discover). Mr. Wagner admits that he incurred a debt with Discover on his credit card, and that he eventually was unable to make payments on his account.
The Complaint (#1) alleges that, beginning in 2010, Discover called Mr. Wagner's cellular phone multiple times a day via an automated dialing system and using a prerecorded voice. (Presumably, the calls were made with regard to Mr. Wagner's unpaid account.) It is further alleged that Mr. Wagner did not provide his cell phone number on his application for an account, and that the calls were made "with the intent to annoy[,] abuse, embarrass, and/or harass him." Mr. Wagner asserts that with each phone call, Discover violated the Telephone ConsumerProtection Act (TCPA), 47 U.S.C. § 227, et seq. He alleges that Discover committed a total of 93 violations.
In the instant motion, Discover seeks to compel arbitration of Mr. Wagner's TCPA claims pursuant to sections 3 and 4 of the Federal Arbitration Act (FAA), 9 U.S.C. §§ 3-4. It contends that, at all relevant times, Mr. Wagner's Discover credit card was subject to a "Cardmember Agreement," which contains an arbitration provision. The pertinent arbitration provision provides that the parties may elect to arbitrate disputes that are covered by the agreement. It further provides that if one party elects arbitration, the other party no longer has the right to pursue its claims in court. Discover asserts that it has elected to arbitrate Mr. Wagner's TCPA claims pursuant to the arbitration agreement, and therefore Mr. Wagner is contractually bound to proceed to arbitration.
Mr. Wagner responds that an arbitration agreement does not exist between himself and Discover because he never received the specific Cardmember Agreement that Discover relies on, and he therefore did not agree to its terms. Alternatively, if an agreement is found to exist, Mr. Wagner contends that his TCPA claims do not fall within the scope of the arbitration agreement.1
Before a court may direct parties to proceed to arbitration under the Federal Arbitration Act, it must first be satisfied that the making of the agreement for arbitration is not at issue. 9 U.S.C. § 4. In other words, the Court must determine that a binding arbitration agreement exists between the parties before ordering arbitration. Here, Mr. Wagner disputes that he entered intoan arbitration agreement with Discover. Only if an arbitration agreement exists between the parties does the Court consider the question of whether Mr. Wagner's TCPA claims must be submitted to arbitration.
An agreement to arbitrate is a form or part of a contract between the parties. When the parties dispute the existence of an agreement to arbitrate, a trial is warranted if there are material facts in dispute. 9 U.S.C. § 4; Avedon Engineering, Inc. v. Seatex, 126 F.3d 1279, 1283 (10th Cir. 1997). Courts apply a standard similar to that which governs motions for summary judgment. See, e.g., Stein v. Burt-Kuni One, LLC, 396 F.Supp.2d 1211, 1213 (D.Colo. 2005).
Discover bears the initial burden of setting forth sufficient evidence to demonstrate that an enforceable arbitration agreement exists. The burden then shifts to Mr. Wagner to show that there is a genuine dispute of material fact as to the making of the agreement, using evidence comparable to that identified in Fed. R. Civ. P. 56. If Mr. Wagner fails to meet his burden, then arbitration is appropriate for disputes covered by the arbitration agreement. On the other hand, if Mr. Wagner establishes a genuine issue of material fact, a trial (or evidentiary hearing) on the existence of the arbitration agreement is required.
Generally, courts "apply ordinary state-law principles that govern the formation of contracts" to determine whether a party has agreed to arbitrate a dispute.2 First Options ofChicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). The formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration. Pierce v. St. Vrain Valley School Dist. RE-1J, 981 P.2d 600, 603 (Colo. 1999). While assent may be implied from the totality of the circumstances and the acts of the parties, it must appear in some form. Mumm v. Adam, 307 P.2d 797, 801 (Colo. 1957). An objective manifestation of assent is not rebutted by that same party's uncommunicated, subjective intent. Avemco Ins. Co. v. Northern Colo. Air Charter, Inc., 38 P.3d 555, 559 (Colo. 2002).
Here, Discover has met its initial burden. It is undisputed that in 2007, Mr. Wagner applied for and received a Discover brand credit card. A Discover representative testified that according to Discover's business records, when Mr. Wagner applied for his account, the account he applied for was called a Discover "Platinum" account. Upon opening the account, Discover mailed him a "fulfillment kit" at the address he provided. This kit included his credit card and the applicable "Platinum" Cardmember Agreement. According to Discover, a credit card is not mailed to an account holder without a Cardmember Agreement. Based on this showing, Discover contends that if Mr. Wagner received his credit card, he also received the Agreement.
The Cardmember Agreement contained an arbitration provision, which provided the cardholder an opportunity to reject the arbitration agreement within thirty days of receiving the card.3 The Agreement further provided that use of the account "means you accept thisAgreement, including the Arbitration of Disputes provision." Discover never received a notice of rejection of the arbitration agreement from Mr. Wagner, and it is undisputed that Mr. Wagner used his account.
In May 2007, Discover renamed Mr. Wagner's "Platinum" account as a Discover "More" account. The account number and the terms and conditions in the Platinum Cardmember Agreement, remained the same.
In January 2008, however, Discover sent Mr. Wagner a notice of amendment to the Cardmember Agreement with his billing statement. The amendment modified the arbitration agreement in ways not relevant here, and Mr. Wagner continued to use his account.
Mr. Wagner asserts that he "believes he has saved every piece of correspondence that Discover sent to him regarding his account" and because he does not have a copy of the Cardmember Agreement, he must not have ever received it. He represents that "[i]f [he] had received a Cardmember Agreement [he] would have kept that document," and that "[his] Discover file contains no such Agreement."
The Court finds Mr. Wagner's assertions to be insufficient to create a genuine dispute of material fact. Mr. Wagner's affidavit does not affirmatively state that he never received the Cardmember Agreement. Rather, he assumes that because he cannot find a copy of the agreement in his file, he must not have received it. Mr. Wagner's assumption does not create a genuine dispute. More importantly, however, Mr. Wagner concedes that he received notices about periodic changes to the Agreement. These notices, copies of which were attached to Mr. Wagner's response, include a conspicuously placed phone number that Mr. Wagner could have called to request a copy of the Cardmember Agreement that applied to his account. Thus, at theleast, Mr. Wagner was on notice that the use of his credit card subjected him to the Agreement. Despite such notices, Mr. Wagner continued using his card and thereby manifested his assent to the terms of the Cardmember Agreement.
Mr. Wagner further asserts that in 2007, he applied for a Discover "More" card, and therefore the "Platinum" Cardmember Agreement that was sent to him never applied to his account. Mr. Wagner asserts that Discover "mistakenly" identified his account as a Platinum account after he was approved. He asserts that by May 2007, "Discover corrected this mistake and all subsequent monthly statements refer to his card as a 'Discover More Card,' consistent with his application and approval for a 'Discover More Card.'" Mr. Wagner submits an "application record" consisting of a website print-out of what appears to be an online profile of his account. The print-out indicates that Mr. Wagner holds a Discover More account and that he has been a holder since 1/29/2007.
The Court finds that this evidence is insufficient to create a genuine dispute of material fact as to whether the terms of the Platinum Account Cardmember Agreement applied to his account. Assuming that Mr. Wagner had a Discover More account rather than a Platinum account, he has not submitted any evidence suggesting that the terms set forth in the Platinum Cardmember Agreement would not otherwise apply to his Discover More account. Accordingly, the Court finds that there is no genuine dispute of material fact as to the making of the arbitration agreement.
Having found that an agreement to arbitrate exists, the next issue is whether Mr. Wagner is required to submit his TCPA claims to arbitration. Discover argues that Mr. Wagner's TCPA claims clearly fall within the scope of the agreement because the calls were made in an attemptto collect on Mr. Wagner's account. Mr. Wagner responds that his claims, which concern the manner in which Discover acted, do not arise from or relate to his account or relationship with Discover because the claims are independent of his account or his relationship...
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