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Gonzalez v. Comenity Bank

United States District Court, E.D. California

October 30, 2019

LORI ANN GONZALEZ, individually and on behalf of others similarly situated, Plaintiff,
v.
COMENITY BANK, DOES 1-30, Defendants.

          ORDER ON DEFENDANT COMENITY BANK'S MOTION TO COMPEL ARBITRATION (Doc. No. 22)

         INTRODUCTION

         This is a putative class action in which Plaintiff Lori Ann Gonzalez (“Gonzalez”) alleges that Defendant Comenity Bank (“Comenity”) has violated California statutes relating to identity theft in connection with credit cards branded for a clothing retailer called “The Limited.” Comenity contends that an arbitration agreement applies and has brought a motion for an order compelling arbitration pursuant to the terms of that agreement. For the reasons set forth below, the Court will deny Comenity's motion to compel arbitration without prejudice pending a summary determination as to the existence of an arbitration agreement.

         BACKGROUND

         This action involves a credit card account (the “Account”) issued by Comenity and branded for a clothing retailer called “The Limited.” Doc. No. 1, Ex. A (Complaint). Gonzalez contends that she did not open the Account and filed an action against Comenity in Fresno County Superior Court alleging various forms of misconduct on Comenity's part in connection with her claim of identity theft. Id., Ex. A. For example, Gonzalez alleges that Comenity “pursued [her] for a debt she did not owe” on the Account; “ignored her when she said the account was not hers”; and “ignored her requests for information about the alleged debt, violating California laws for how creditors and debt collector[s] must respond to reports of identity theft.” Id., Ex. A ¶ 1. Further, Gonzalez alleges that Comenity failed to notify her that her claim of identity theft with respect to the Account “must be in writing, ” id., Ex. A, ¶ 52; failed to provide “information and/or documents” Gonzalez requested with respect to the Account, id., Ex. A ¶ 55; and “failed to diligently investigate [Gonzalez's] notification of identity theft” with respect to the Account. Id., Ex. A ¶ 69.

         Based on these and other such allegations, Gonzalez brought claims against Comenity under the California Identity Theft Act (“CITA”), California's Rosenthal Fair Debt Collection Practices Act (the “Rosenthal Act”), the California Penal Code, and California's Unfair Competition Law (“UCL”). Id., Ex. A, pp. 7-10. The CITA claim is brought individually, while the claims under the Rosenthal Act, Penal Code and UCL are brought individually and on a class basis. Id. Comenity removed the action to this Court based on diversity jurisdiction on March 14, 2019, see Doc. No. 1, and later filed the instant motion to compel arbitration. See Doc. No. 22. The Court denied Gonzalez's motion to remand in an Order dated October 21, 2019, Doc. No. 40, and now addresses Comenity's motion to compel arbitration.

         DEFENDANT'S MOTION TO COMPEL ARBITRATION

         Comenity argues that the Court is required under the Federal Arbitration Act (“FAA”) to send this action to arbitration in its entirety because the agreement governing the Account (the “Credit Card Agreement”) includes a valid and enforceable arbitration provision (the “Arbitration Provision”) that encompasses all four of Gonzalez's claims and bars her from arbitrating any claims on a class basis. Doc. No. 22, Part III.A. Comenity also seeks a stay of this action pending arbitration of Gonzalez's claims. Id., Part III.C.

         According to Comenity, the “totality of the evidence” shows that Gonzalez entered into the Credit Card Agreement - and manifested assent to the Arbitration Provision - because she opened, used and managed the Account; was provided with the Credit Card Agreement on two occasions; and did not opt out of the Arbitration Provision. Id., Part III.A.3.

         In support of this argument, Comenity filed, inter alia, a declaration (the “Comenity Declaration”) supported by business records and executed by a company paralegal with knowledge of Comenity's[1] records and record-keeping practices, Doc. No. 22-1 ¶ 3, that shows the following:[2]

• The Account was opened on or about July 26, 2016 through an online application containing Gonzalez's name, home address, date of birth, social security number and phone number, Doc. No. 22-1, ¶¶ 6, 8, 21;
• The Credit Card Agreement was displayed on-screen at the time the online application for the credit card was submitted, id. ¶¶ 7-8;
• Comenity mailed numerous items relating to the Account to Gonzalez's home address after the application for the Account had been submitted online - including the Credit Card Agreement, more than two dozen billing statements, several letters, and the credit card itself - and none of these items were returned to Comenity as undeliverable, id. ¶¶ 8-9, 18a;
• The Account was used to make purchases that posted in November 2016 and December 2016, id. ¶ 16;
• An online bill pay account was setup for the Account in December 2016 using Gonzalez's email address, id. ¶ 15;
• Payments on the Account were scheduled through the online bill pay account in December 2016, January 2017 and April 2017, id. ¶ 16;
• Numerous telephone calls were placed to Comenity between August 2016 and April 2017 from the phone number in the online application for the Account, id. ¶ 14; and
• On June 28, 2017, Comenity called Gonzalez at the phone number in the online application for the Account and spoke to her about the delinquent balance on the credit card. Id. ¶ 17.

         Further, the Comenity Declaration attaches an authenticated version of the Credit Card Agreement, as sent to Gonzalez's home address and as displayed online at the time the online application for the Account was submitted. The Arbitration Provision in the Credit Card Agreement contains, inter alia, the following paragraphs:

C. Arbitration provision.
READ THIS ARBITRATION PROVISION CAREFULLY. IF YOU DO NOT REJECT THIS ARBITRATION PROVISION IN ACCORDANCE WITH PARAGRAPH C.1. BELOW, IT WILL BE PART OF THIS AGREEMENT AND WILL HAVE A SUBSTANTIAL IMPACT ON THE WAY YOU OR WE WILL RESOLVE ANY CLAIM WHICH YOU OR WE HAVE AGAINST EACH OTHER NOW OR IN THE FUTURE.
1. Your Right to Reject: If you don't want this Arbitration Provision (and any prior arbitration agreement between you and us (“Prior Arbitration Agreement”)) to apply, you may reject it by mailing us a written rejection notice which gives the name of each Cardholder and contains a statement that you (both of you, if more than one) reject the Arbitration Provision of this Agreement. The rejection notice must be sent to us at Comenity Bank, PO Box 182422, Columbus, Ohio 43218-2422. A rejection notice is only effective if it is signed by you (all of you, if more than one) and if we receive it within thirty (30) calendar days after the date we first provide you with a credit card agreement or written notice providing you a right to reject this Arbitration Provision. Your rejection of this Arbitration Provision will not affect any other provision of this Agreement or your ability to obtain credit.
2. Parties Subject to Arbitration: Solely as used in this Arbitration Provision (and elsewhere in this Agreement), the terms ‘we,' ‘us,' and ‘our' mean (a) Comenity Bank, any parent, subsidiary or affiliate of the Bank and the employees, officers and directors of such companies (the ‘Bank Parties'); and (b) any other person or company that provides any services in connection with this Agreement if you assert a Claim against such other person or company at the same time you assert a Claim against any Bank Party.
3. Covered Claims: ‘Claim' means any claim, dispute or controversy between you and us that in any way arises from or relates to this Agreement, the Account, the issuance of any Card, any rewards program, any prior agreement or account. ‘Claim' includes disputes arising from actions or omissions prior to the date any Card was issued to you, including the advertising related to, application for or approval of the Account. ‘Claim' has the broadest possible meaning, and includes initial claims, counterclaims, cross-claims and third-party claims. It includes disputes based upon contract, tort, consumer rights, fraud and other intentional torts, constitution, statute, regulation, ordinance, common law and equity (including any claim for injunctive or declaratory relief. . . .
4. Starting an Arbitration: Arbitration may be elected by any party with respect to any Claim, even if that party has already initiated a lawsuit with respect to ...

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