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Savage v. Citibank N.A.

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

May 12, 2015

SCOTT F SAVAGE, Plaintiff,
CITIBANK N.A., et al., Defendants.



This lawsuit involves claims under the federal Telephone Consumer Protection Act of 1991 ("TCPA"), 47 U.S.C. § 227, as well as various state law claims, in connection with calls made to collect on a debt owed on a Macy's store credit card. Plaintiff Scott Savage alleges that defendants Department Store National Bank ("DSNB"), FDS Bank ("FDS"), and Citibank N.A. ("Citi, " collectively, with DSNB and FDS, "Defendants") repeatedly called him on his cellular phone in connection with the debt owed on the Macy's card despite two written requests that they stop. Before the Court is Defendants' Motion to Compel Arbitration. Def.'s Mot. 23. The Court heard oral argument on February 5, 2015 and then stayed its ruling for 90 days so that the parties could attempt to settle the case through mediation. On May 8, 2015, the parties informed the Court that they were unable to reach a settlement. After careful consideration of the parties' respective written submissions and the oral argument of counsel, for the reasons stated herein, Defendants' Motion to Compel Arbitration is DENIED.


The underlying claims in this action involve debt collection activities concerning a Macy's store credit card issued to Plaintiff by defendant DSNB. Compl. ¶ 1, ECF 1. Plaintiff alleges on information and belief that "the department store Macy's, Inc. is a foreign business corporation doing business in California, which issues lines of credit through its financing arm [DSNB], which are then collected by its agents [FDS] and [Citibank]." Id. ¶ 29. DSNB is also alleged to be a subsidiary of Citibank, N.A. Id. Plaintiff moreover alleges that "[a]t all times mentioned herein, each defendant and employee of defendant named [in the Complaint] was the agent or employee of each of the other defendants." Id. ¶ 36.

In July 2013, Plaintiff stopped paying the Macy's credit card account. Id. ¶ 9. On July 10, 2013, he sent a letter to DSNB indicating that he could no longer pay the account and "requesting that it not telephone him anymore."[1] Id. ¶¶ 2, 11. DSNB and its agents, defendants FDS and Citi, did not cease their collection calls and continued to call him nearly every day, "sometimes three (3) to six (6) times a day." Id. ¶ 12. Plaintiff sent DSNB a second letter in September 3, 2013 requesting that it stop calling him. Id. ¶ 14. The calls continued unabated. Id. ¶ 15. Defendants also mailed letters to Plaintiff from August 2013 to January 2014 in an effort to collect on the "delinquent DSNB account." Id. ¶ 16. Plaintiff alleges that this course of conduct violated federal and state law and asserts claims under the California Fair Debt Collection Practices Act, Cal. Civ. Code §§ 1788 et seq., the federal TCPA, as well as state common law claims for inclusion upon seclusion, and negligent training and supervision.

On November 14, 2014, Defendants moved to compel arbitration pursuant to arbitration provisions in cardholder agreements concerning not the Macy's card issued by DSNB, but rather two Sears cards issued to Plaintiff by Citi. It is undisputed that Citi did not issue the Macy's card. Def.'s Mot. 1.


The Federal Arbitration Act ("FAA") governs the enforceability and scope of an arbitration agreement. 9 U.S.C. §§ 1 et seq. Under the FAA, a party seeking to invoke an arbitration agreement may petition the district court "which, save for such 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. The FAA dictates that 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. Here, there is no dispute that the arbitration clause is valid, only whether it pertains to the claims at issue in this lawsuit.

When determining whether the arbitration clause encompasses the claims at issue, "all doubts are to be resolved in favor of arbitrability." Simula v. Autoliv, 175 F.3d 716, 721 (9th Cir. 1999) (interpreting the language "arising in connection with" in an arbitration clause to "reach[] every dispute between the parties having a significant relationship to the contract and all disputes having their origin or genesis in the contract."). Consistent with the text of the FAA, "courts must rigorously enforce' arbitration agreements according to their terms." Am. Exp. Co. v. Italian Colors Rest., 133 S.Ct. 2304, 2309 (2013) (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221 (1985)).


Defendants do not assert that Plaintiff's Macy's credit card agreement contained an arbitration clause.[2] Instead, Defendants contend that Plaintiff's claims are subject to arbitration because they fall within identical arbitration provisions in cardholder agreements governing two Sears credit cards issued by Citi. The provision is bilateral and provides for binding arbitration concerning: "All claims relating to your account, a prior related account, or our relationship... including Claims regarding the application, enforceability, or interpretation of this Agreement and this arbitration provision." Def.'s Mot. 4; Decl. of Elizabeth S. Barnette, ECF 25 Exhs. 1, 3, 6, 9. The provision explains whose claims are subject to arbitration: "Not only ours and yours, but also Claims made by or against anyone connected with us or you or claiming through us or you, such as a co-applicant, authorized user of your account, an employee, agent, representative, affiliated company, predecessor or successor, heir assignee, or trustee in bankruptcy." Id. Moreover, the arbitration provision is to be interpreted "in the broadest way the law will allow it to be enforced." Id. These Sears card agreements are governed by South Dakota law. Def.'s Mot. 8-9; Barnette Decl. Exhs. 1, 3, 6, 9.

Defendants contend that Plaintiff's claims in this lawsuit-premised upon collection activity in connection with a Macy's card issued by DSNB-fall within the scope of the arbitration provision set forth in the Sears card agreements. Def.'s Mot. 10-11. As to the claims against Citi, Defendants argue that the arbitration provision from the Sears card agreements extends to all claims relating to "our relationship, " meaning the relationship between Plaintiff and the issuer of the Sears cards-Citi. Because Plaintiff's claims concern unauthorized calls to his cell phone number, and Plaintiff provided the same cell phone number to Citi in connection with his Sears cards, Citi contends that Plaintiff's claims are based upon their "relationship" and accordingly subject to arbitration. Def.'s Mot. 10; see also Barnette Decl. ¶ 5. Defendants moreover contend that Plaintiff's claims against FDS and DSNB must be sent to arbitration because Plaintiff has alleged that they are Citi's agents, and the Sears card agreements provide that a cardholder's claims against the issuer's agents is also subject to arbitration. Def.'s Mot. 11.

Because Plaintiff does not dispute the validity of the Sears card agreements, the Court's task is limited to contract interpretation. See Pl.'s Opp. 12-15, ECF 28. Plaintiff moreover does not appear to challenge Defendants' contention that South Dakota law governs the interpretation of the Sears card agreements, though he has briefed his arguments under California law. See id. In any event, the Court agrees with Defendants that South Dakota has a substantial relation to the parties and that the chosen state's principles of contract interpretation do not appear to be contrary to any fundamental policy of California. Nedlloyd Lines B.V. v. ...

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