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Davis v. Cach, LLC

United States District Court, N.D. California, San Jose Division

March 2, 2015

MARLA MARIE DAVIS, on behalf of herself and all others similarly situated; Plaintiff,
CACH, LLC, et al., Defendants.



Plaintiff brings this purported class action against Defendants, alleging that Defendants have violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692a. Defendants jointly move to compel arbitration of all of Plaintiff's claims and stay this action pending the completion of arbitration, [1] which Plaintiff opposes. The Court determined that this motion was appropriate for consideration without oral argument, pursuant to Civil Local Rule 7-1. Having reviewed the briefing of the parties and the governing law, the Court GRANTS Defendants' motion to compel arbitration, and STAYS the action pending the completion of arbitration.


Plaintiff alleges that she incurred a financial obligation for personal, family, or household purposes, a consumer credit account issued by HSBC Bank Nevada, N.A., see Compl. ¶ 25, which is a "debt" as defined under the FDCPA. She later defaulted on this debt, and contends that this defaulted debt was transferred from HSBC to Defendant CACH. Compl. ¶ 26. CACH filed suit in Santa Clara County Superior Court on April 29, 2014 to collect the defaulted debt. Compl. ¶ 28.

On August 15, 2014, Plaintiff contends that Defendants sent Plaintiff a Declaration Under Penalty of Perjury, pursuant to California Code of Civil Procedure § 98 (hereinafter "Section 98 Declaration"). Compl. ¶ 29. Under certain circumstances, CCP Section 98 permits such declarations in lieu of direct testimony, but it requires that the declaration's affiant has a current address within 150 miles of the place of trial, and that the affiant is available for service of process at that address during the 20 days immediately prior to trial. CCP § 98. Ms. Davis alleges that the Section 98 Declaration she received was invalid, because the affiant did not have a current address within 150 miles of the place of trial and was not available for service at the address given, see Compl. ¶¶ 32-36, but that upon receipt of the Section 98 Declaration she was "required to engage legal counsel to represent her, thereby incurring actual damages." Compl. ¶ 31.

Plaintiff contends that the use of such invalid Section 98 Declarations is a routine practice of Defendants, Compl. ¶ 41, and seeks to represent a class of California residents who received Section 98 Declarations in similar circumstances as she. Compl. ¶ 43.[2]

Defendants move to compel arbitration, contending that Ms. Davis' credit card account with HSBC bank is governed by a Cardmember Agreement that includes a binding arbitration clause. See Mot. at 1-2. This clause states, in pertinent parts:

This arbitration provision shall apply to any Claim against us and to each of our... assigns.
You agree any claim, dispute, or controversy... arising from or relating to this Agreement or the relationships which result from this Agreement... shall be resolved, upon the election of you or us, by binding arbitration pursuant to this arbitration provisions and the applicable rules or procedures of the arbitration administrator selected at the time the Claim is filed.

Livits Supp. Decl., ECF 39-1 Exh. 3 at 11-12.[3]


Enforceability of an arbitration clause, and the determination of the scope of that clause, is governed by the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 et seq. Under the FAA, arbitration agreements are "a matter of contract, " and "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. Such generally applicable contract defenses include "fraud, duress, or unconscionability, but not [] defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1746 (2011). A party seeking to invoke an arbitration agreement may petition the district court "which, save for such an agreement, would have jurisdiction [to hear the case], for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4; see also Trompeter v. Ally Financial, Inc., 914 F.Supp.2d 1067, 1071 (N.D. Cal. 2012).

A district court faced with a petition to enforce an arbitration clause engages in a limited two-part inquiry: first, it determines whether the arbitration agreement is valid, and second, it determines whether the agreement encompasses the claims at issue. See, e.g., Mitsubishi Motors Co. v. Soler Chrysler-Plymouth, 473 U.S. 614, 627-28 (1985); see also Trompeter, 914 F.Supp.2d at 1071 ("A district court must compel arbitration under the FAA if it determines that: (1) there exists a valid agreement to arbitrate; and (2) the dispute falls within its terms."). A district court does not consider challenges to the contract as a whole, but rather only specific challenges to the validity of the arbitration clause itself. See Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 71 (2010) ("There are two types of validity challenges under § 2: one type challenges specifically the ...

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