Plaintiff Anthony Hornicek, on behalf of himself and all others similarly situated, filed a complaint against defendant Cardworks Servicing, LLC, alleging a violation of the Fair Debt Collection Practices Act, codified at 15 U.S.C. § 1692 et seq. Presently before the court is Cardworks Servicing's Motion to Compel Arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. § 3. For the reasons set forth below, the court will grant Cardworks Servicing's motion.
On or about December 24, 2004, plaintiff Anthony Hornicek ("Hornicek" or "plaintiff") opened a credit card account with Merrick Bank and received a credit card and a copy of the cardholder agreement.*fn1 The credit card agreement reads, in pertinent part:
Any claim, dispute or controversy ("Claim") by either you or us against the other arising from or relating in any way to the Agreement or your Account . . . shall, at the demand of any party, be resolved by binding arbitration. . . . . . . .
This agreement to arbitrate Claims includes all controversies and claims of any kind between us. It also includes any disputes you have with our agents, contractors, employees, officers, or assignees, . . . or any other third party that has been involved or becomes involved with, or whose trademarks are used in connection with, any purchase, marketing, soliciting, servicing, or credit-reporting activity relating to your Account.
The Claims covered by this agreement to arbitrate include, without limitation . . . Any disputes arising from the collection of amounts you owe in connection with your Account. . . .
Watson Decl. (Docket No. 12) Ex. A; id. Ex. B. Hornicek used the card
to make purchases, and he made several payments on the account.
Hornicek admits that, at some point, he stopped making payments on the
credit card. On or about August 26, 2008, Merrick Bank hired Cardworks
Servicing, LLC ("Cardworks" or "Cardworks Servicing"), to engage in
collection activities related to Hornicek's account.*fn2
February 16, 2010, in regard to the alleged debt, Cardworks sent to Hornicek a letter, which Hornicek characterizes as containing false and misleading statements. On July 23, 2010, Hornicek filed a complaint with this court on behalf of himself and all others similarly situated, alleging a violation of the Fair Debt Collection Practices Act ("FDCPA"), codified at 15 U.S.C. § 1692 et seq. The complaint was served on Cardworks on August 6, 2010. Cardworks made a timely demand for arbitration on September 9, 2010. On November 1, 2010, Cardworks filed a Motion to Compel Arbitration and Stay Proceedings. Presently before the court are Cardworks' Motion to Compel Arbitration and Stay Proceedings, and all responses thereto.
Under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., agreements to arbitrate are enforceable to the same extent as other contracts. Alexander v. Anthony Int'l, L.P., 341 F.3d 256, 263 (3d Cir. 2003). The FAA provides, in pertinent part, "A written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist in law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA reflects a strong federal policy in favor of resolving of disputes through arbitration. Alexander, 341 F.3d at 263. If a party to a binding arbitration agreement is sued in federal court on a claim that the plaintiff has agreed to arbitrate, he is entitled under the FAA to a stay of the court proceeding pending arbitration and an order compelling arbitration. 9 U.S.C. §§ 3--4; Alexander, 341 F.2d at 263. If all of the claims are arbitrable, a court may dismiss the entire action. See Blair v. Scott Specialty Gases, 283 F.3d 595, 600 (3d Cir. 2002).
As a matter of contract law, no party can be forced to arbitrate unless that party has entered into an agreement to do so. See PaineWebber Inc. v. Hartmann, 921 F.2d 507, 511 (3d Cir. 1990), overruled on other grounds by Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 85 (2002). Therefore, before a court can dismiss a suit and compel an unwilling party to arbitrate, it must conduct a review to ensure that (1) a valid agreement to arbitrate exists between the parties, and (2) that the specific dispute falls within the scope of that agreement. Id. In conducting this limited review, the court must apply ordinary contractual principles, with a "healthy regard for the strong federal policy in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
(1) Is there a valid agreement to arbitrate
In general, only parties to a contract are bound by its terms. See AT&T Techs., Inc. v. Comm. Workers, 475 U.S. 643, 648 (1986). In limited circumstances, the Third Circuit has recognized that non-signatories may be parties to a contract for the purpose of enforcing arbitration provisions. See, e.g., In re Prudential Ins. Co. of Am. Sales Practice Litig., 133 F.3d 225, 229 (3d Cir. 1998) ("The identification of the parties bound by the agreement to arbitrate need not be confined to . . . identifying the signatories to the arbitration agreement. Rather, the dispositive finding is an express and unequivocal agreement between parties to arbitrate their disputes."). In the absence of an express contractual agreement to arbitrate with a non-signatory, traditional state-law contract principles can be used "by or against nonparties" to enforce an arbitration agreement. Arthur Andersen, LLP v. Carlisle, 129 S. Ct. 1896, 1902 (2009). These include: (1) incorporation by reference; (2) assumption; (3) agency; (4) veil-piercing/alter-ego; (5) estoppel; and (6) third-party beneficiaries. See id.; Century Indem. Co. v. Certain Underwriters at Lloyd's, London, 584 F.3d 513, 534 n.18 (3d Cir. 2009); see also E.I. Dupont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187, 195 (3d Cir. 2001).
Defendant Cardworks Servicing moves to compel Hornicek to arbitrate his claims based on the arbitration provision in the cardholder agreement between Hornicek and Merrick Bank. Even though Cardworks is not a signatory to the agreement, Cardworks contends that (1) the language of the arbitration provision is sufficiently broad to encompass Cardworks, and (2) the agreement expressly includes all claims related to debt collection regardless of the target of those claims. Hornicek opposes this motion, arguing that there is no valid agreement to arbitrate with Cardworks because Cardworks is neither a signatory, nor entitled to an exception that would confer ...