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Samenow v. Citicorp Credit Services, Inc.

United States District Court, District of Columbia

May 25, 2017



          COLLEEN KOLLAR-KOTELLY, United States District Judge

         Defendant, by the real party-in-interest, Citibank, N.A., has moved this Court to compel an arbitration pursuant to the Federal Arbitration Act (“FAA ”), 9 U.S.C. § 1 et seq., of Plaintiff's claims under the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et seq., stemming from the termination of five credit card accounts, apparently without explanation. Plaintiff is proceeding pro se. The pending motion pertains to this and four related actions, [1] which were previously consolidated by the Court, with each action corresponding to one of the five credit card accounts at issue.[2] Defendant also requests a stay of this consolidated action until the arbitration is resolved. Upon consideration of the pleadings, [3] the relevant legal authorities, and the record for purposes of the pending motion, the Court GRANTS Defendant's [16] Motion to Compel Arbitration and Stay Action.[4] This action shall remain STAYED pending conclusion of the arbitration.

         I. BACKGROUND

         Plaintiff opened five credit card accounts with Defendant in the District of Columbia between 2010 and 2016. Opp'n Mem. at 6. In March 2016, Defendant terminated these accounts, allegedly “without providing . . . a reason for its action.” Id. Each of the five accounts is associated with a card agreement that was mailed to Plaintiff (the “Card Agreements”). Decl. of Kelly Booth, ECF No. 16-2, ¶¶ 6-10. Defendant has provided copies of “exemplar” versions of these Card Agreements, which were created by Defendant in the course of its regularly conducted business activity, and Plaintiff does not challenge the accuracy of these documents. Id. ¶ 3. For two of the credit lines, with account numbers ending in 1436 and 3347 (the “1436 Account” and the “3347 Business Account”), the original Card Agreements mailed to Plaintiff at the time the accounts were opened contained arbitration provisions. Id. ¶¶ 6, 10. For the other three credit lines, those with account numbers ending in 4726, 1489, and 0386 (the “4726, 1489, and 0386 Accounts”), the original Card Agreements did not contain arbitration provisions, but were subsequently added through notices of amendment mailed to Plaintiff between September and October 2015. Id. ¶¶ 7- 9. The Court refers to the arbitration provisions found in the five Card Agreements as the • Mem. of Law in Opp'n of Mot. to Compel Arbitration and Stay Action, ECF No. 22 (“Opp'n Mem.”); • Reply Mem. in Supp. of Def.'s Mot. to Compel Arbitration and Stay Action, ECF No. 23 (“Reply”); • Sur-Reply to Def.'s Reply Mem. in Supp. to Compel Arbitration and Stay Action, ECF No. 24 (“Surreply”).

         “Arbitration Agreements.” The language in each such agreement is approximately the same, except for the following differences: (a) all five accounts provided for arbitration before the American Arbitration Association, but two provide additional options (infra at 16); (b) two agreements include a severability clause, but the others do not (this is irrelevant to the Court's decision, as there is no finding that any portion of the agreements is invalid); and (c) four of the agreements indicate that the rules of the arbitral forum are trumped by the terms of the Card Agreements, to the extent there is a conflict between the two (infra at 16-17). See Opp'n Mem. at 8-9 (conceding that these are the only material differences between the five Arbitration Agreements). Finally, each of the Card Agreements contains a choice-of-law provision specifying that federal and South Dakota law “govern[] the terms and the enforcement of this agreement.” Def.'s Mem. at 3 (citing Decl. of Kelly Booth, ECF No. 16-2, Exs. 1-5).


         The FAA provides that “a written provision in . . . a contract . . . to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable save upon any grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The final phrase in section 2 of the FAA “permits agreements to arbitrate to be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability” under the applicable state law. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). A party seeking to enforce an arbitration agreement may petition a district court with jurisdiction “for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4.

         A motion to compel arbitration is treated as “a request for summary disposition of the issue of whether or not there had been a meeting of the minds on the agreement to arbitrate.” Aliron Int'l, Inc. v. Cherokee Nation Indus., Inc., 531 F.3d 863, 865 (D.C. Cir. 2008); see also Haire v. Smith, Curie & Hancock LLP, 925 F.Supp.2d 126, 129 (D.D.C. 2013). “Under Rule 56(c), summary judgment is appropriate only if ‘there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law.'” Aliron Int'l, 531 F.2d at 865 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986)). “The party seeking to compel arbitration must ‘present evidence sufficient to demonstrate an enforceable agreement to arbitrate.'” Haire, 925 F.Supp.2d at 129 (quoting Hill v. Wackenhut Servs. Int'l, 865 F.Supp.2d 84, 89 (D.D.C. 2012)). “The burden then shifts to plaintiffs to show that there is a genuine issue of material fact as to the making of the agreement.” Id. “The Court will compel arbitration if the pleadings and the evidence show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Id. (quoting Fox v. Computer World Servs. Corp., 920 F.Supp.2d 90, 96 (D.D.C. 2013)).

         If arbitration is compelled, section 3 of the FAA permits the district court to stay proceedings pending completion of the arbitration. 9 U.S.C. § 3 (the court “shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement”).


         The analysis below proceeds in three parts. First, the Court concludes that Plaintiff's contract defenses must be assessed under District of Columbia law. Second, the Court finds that Plaintiff assented to the Arbitration Agreements, and third, that those agreements are not procedurally or substantively unconscionable. As a result, and because the claims at issue are plainly covered by the terms of the Arbitration Agreements, arbitration shall be compelled, and this matter shall be stayed.

         A. Choice of Law

         As a threshold issue, the parties disagree on the law that should apply to determine the validity and enforceability of the Arbitration Agreements. Defendant contends that South Dakota law should apply because of the choice-of-law provisions in the Card Agreements. Plaintiff challenges the enforceability of those provisions, and furthermore contends that District of Columbia law should apply given the factual nexus between the contracting of the Card Agreements and the District of Columbia. In particular, Plaintiff resides, claims to have entered the Card Agreements, and claims to have predominately used the credit cards in the District of Columbia. Opp'n Mem at 6, 31.

         In an action brought pursuant to the FAA, such as this one, “‘federal courts use the conflict of law principles applied by the state in which they sit.'” McMullen v. Synchrony Bank, 164 F.Supp.3d 77, 87 (D.D.C. 2016) (citing Aneke v. Am. Exp. Travel Related Servs., Inc., 841 F.Supp.2d 368, 375 (D.D.C.2012)). Consequently, the Court applies District of Columbia law in the first instance to determine what state law should apply in adjudicating Plaintiff's challenges to the Arbitration Agreements. As a general rule, District of Columbia law holds that “‘parties to a contract may specify the law they wish to govern, as part of their freedom to contract, as long as there is some reasonable relationship with the state specified.'” Ekstrom v. Value Health, Inc., 68 F.3d 1391, 1394 (D.C. Cir. 1995) (citing Norris v. Norris, 419 A.2d 982, 984 (D.C. 1980)). Defendant contends that under this standard, South Dakota law should apply as the Arbitration Agreements call for the application of South Dakota law, and Defendant's corporate residence is in South Dakota, meaning that there is a “reasonable relationship” between the contracts and that state. Nonetheless, this line of analysis is flawed in that it presumes the validity of the choice-of-law provision in the Arbitration Agreements, which Plaintiff expressly challenges in his opposition as both procedurally and substantively unconscionable. Surreply at 3. As a result, the Court would first need to determine whether a valid and enforceable agreement exists, by application of District of Columbia law, before it could enforce the choice-of-law provisions, and apply South Dakota l a w. See Amirmotazedi v. Viacom, Inc., 768 F.Supp.2d 256, 261 n. 2 (D.D.C. 2011) (“in cases such as this where one party is alleging that no contract was formed, it would be premature to enforce the choice of law provision before deciding whether an agreement exists”).

         Given the circumstances of this case, however, the Court need not reach this far.[5] “Under District of Columbia choice-of-law principles, the absence of a true conflict compels the application of District of Columbia law by default.” Signature Tech. Sols. v. Incapsulate, LLC, 58 F.Supp.3d 72, 80 (D.D.C. 2014) (internal quotation marks and alternations omitted); see also GEICO v. Fetisoff, 958 F.2d 1137, 1141 (D.C. Cir. 1992) (“Under [the District of Columbia] approach, the first step is to determine whether a ‘true conflict' exists . . . .”). A false conflict is one where the laws of the two states are “1) the same; 2) different but would produce the same outcome under the facts of the case; or 3) when the policies of one state would be furthered by the application of its laws while the policy of the other state would not be advanced by the application of its laws.” Greaves v. State Farm Ins. Co., 984 F.Supp. 12, 14 (D.D.C. 1997) (Kollar-Kotelly, J.), aff'd, 172 F.3d 919 (D.C. Cir. 1998). Here, Plaintiff challenges the Arbitration Agreements as invalid for lack of mutual assent, and as unenforceable, due to unconscionability. Based on this Court's review, there is no relevant, substantive difference between District of Columbia and South Dakota law with respect to procedural ...

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