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Crumpler v. Midland Credit Management Inc.

United States District Court, Third Circuit

December 13, 2013




Before the Court is Defendants’ (collectively “Midland”) Motion to Compel Arbitration and Plaintiff’s response thereto. For the reasons stated below the Motion will be denied without prejudice.

I. Background

Anthony Crumpler had a series of cell phones with service provided by T-Mobile.[1] In 2012, T-Mobile determined that he was in arrears in his payments by $835.12. T-Mobile asDated this debt to Midland, a collection agency, which sent Crumpler a notice demanding payment. This notice stated that if Crumpler made a payment to Midland, Midland would cease to charge interest on Crumpler’s debt. According to Crumpler, he was not being charged interest in the first place, so Midland made a false statement in violation of the Fair Debt Collection Practices Act.[2] Crumpler is the lead plaintiff in a putative class action challenging Midland’s alleged practice of making fraudulent statements of this sort to debtors.

Midland responded to Crumpler’s complaint by moving to compel arbitration. Midland alleges that at all times relevant to Crumpler’s complaint, Crumpler’s relationship with T-Mobile was governed by Terms and Conditions that contained an arbitration provision and a class action waiver that Crumpler could have but did not opt out of. Midland further argues that when T-Mobile assigned Crumpler’s debt to Midland, it also assigned its right to enforce the arbitration provision and class action waiver and that these terms are enforceable.

The parties conducted discovery related to this motion. Crumpler took the deposition of Christopher Muzio, a T-Mobile custodian of records. Through Muzio, Midland has produced documents, declarations, and testimony that tend to show that when a phone is sent to a customer, as it was in Crumpler’s case, T-Mobile’s business practice is to include Terms and Conditions in the box. Additionally, Midland, through Muzio, produced an internal T-Mobile memorandum that states that when Crumpler signed up for T-Mobile service over the phone, he orally agreed to the Terms and Conditions. In response, Crumpler requests that the Court strike Muzio’s declaration, and he has submitted his own declaration to the effect that he never received the Terms and Conditions in any form. He further states that he never had any communication regarding Terms and Conditions with any T-Mobile employee. Midland requests that this Court strike Crumpler’s declaration as self-serving, conclusory, and incredible.

II. Discussion

In order to resolve Midland’s motion to compel arbitration, the Court must first determine the scope of the parties’ assertions by resolving their competing requests to strike.

A. Crumpler’s Request to Strike the Muzio Declarations and Their Exhibits

The crucial issue in this motion is whether Crumpler was put on notice that he was subject to Terms and Conditions containing an arbitration clause and a class action waiver. Crumpler asks this Court to strike Muzio’s two declarations from July 2013 (Doc. No. 17-2) and August 2013 (Doc. No. 25-1) and the documents attached to them. If the Court struck Muzio’s declarations and the attached documents, Midland would have produced no evidence in support of its motion to compel arbitration. Crumpler argues that the documents are all hearsay and that Muzio did not testify in his declarations on the basis of personal knowledge.

Crumpler’s argument fails. The relevant facts that Muzio sponsors are: 1) T-Mobile regularly packages Terms and Conditions with its phones; and 2) a T-Mobile memo states that Crumpler accepted the Terms and Conditions over the phone. Crumpler attacks Muzio’s personal knowledge of Crumpler’s relationship with T-Mobile, but Midland does not need to show that Muzio was familiar with Crumpler before the litigation. Midland needs to show first that Muzio had personal knowledge of T-Mobile’s regular practice of packaging Terms and Conditions, and second that he had personal knowledge of T-Mobile’s practice of keeping memoranda.

“Personal knowledge” for purposes of Federal Rule of Evidence 602 “may consist of what the witness thinks he knows from personal perception, ” and only requires that the witness “who testifies to a fact . . . actually observed the fact.”[3] Muzio reviewed business records before his deposition from which he learned of T-Mobile’s business practice to put Terms and Conditions in boxes with phones. This allows him to testify to the business practice, which would be sufficient for a factfinder to infer that T-Mobile acted in conformity with the business practice. Crumpler would have this Court hold that Muzio needed specific personal knowledge of all the details of Crumpler’s account history that he acquired independently of his review of business records. The rules of evidence do not require this degree of proximity to the facts that a witness sponsors, especially in the context of business practices and records. The independent recollection that Crumpler’s attorney distinguished from “knowledge that you obtain as a result of having access to business records”[4] is not required to admit Muzio’s testimony.

Pursuant to Federal Rule of Evidence 406, evidence of “an organization’s routine practice may be admitted to prove that on a particular occasion the . . . organization acted in accordance with the . . . routine practice.” Muzio is a Custodian of Records at T-Mobile and has worked there for more than four years.[5] His employment allows him to testify that “The T-Mobile standard operating procedure [is] to include the terms and conditions in the box with the phone.”[6]

Next, Muzio’s testimony that Crumpler accepted the Terms and Conditions by phone does contain one level of hearsay: Midland wants to admit for truth of the matter asserted that a customer account representative said in a memo that Crumpler accepted the Terms and Conditions. Crumpler’s own alleged statement that he accepted the Terms and Conditions is not hearsay because it is a manifestation of assent not an assertion of a fact. The memo’s declaration that Crumpler accepted is a factual assertion and therefore hearsay, and it is inadmissible unless it is subject to the business records exception. The memo meets the exception’s requirements. It was “made at or near the time [the statement was made] . . . by someone with knowledge”;[7] it was “kept in the course of a ...

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