United States District Court, E.D. Pennsylvania
MEMORANDUM AND ORDER
Federal Credit Reporting Act case is presently before the
Court on Motion of Defendant Credit One Bank to Compel
case arose in September, 2016 when in the course of applying
for a mortgage, Plaintiff Ali Burgos learned that Defendants
Credit One and Midland Credit Management (to whom Credit One
had transferred Plaintiff's account) had inaccurately
reported her credit data to the three nationwide consumer
reporting agencies - Equifax, Trans Union and Experian. Upon
discovering this incorrect reporting, Plaintiff disputed the
reports with Equifax, Trans Union and Experian, each of which
purportedly acknowledged receipt of Plaintiff's dispute
and reported the dispute to Credit One and Midland.
Thereafter, Trans Union, Equifax and Experian notified
Plaintiff that the reported accounts had been
“verified” and that the alleged inaccuracies
within the trade lines of Credit One and Midland would not be
corrected. Plaintiff avers that she filed a second dispute
with Defendants on October 2, 2016 with the same outcome.
submits that the defendants were negligent and willful in
their refusal to investigate and/or to employ proper
procedures in investigating her disputes and to correct the
inaccuracies in her credit reports with the result that the
information which the defendants are continuing to
disseminate concerning Plaintiff is false and misleading. As
a consequence, Plaintiff's credit score is lower than it
should be, she has had to refrain from applying for
additional credit and she was caused to be charged a higher
interest rate on her mortgage. Plaintiff claims that
Defendants' actions violated the Fair Credit Reporting
Act, 15 U.S.C. §1681, et. seq., the Fair Debt
Collections Practices Act, 15 U.S.C. §1692, et.
seq., and that she suffered defamation of her character.
Although each of the defendants have filed an answer to the
complaint, Defendant Credit One now moves to compel this
matter to arbitration on the basis of an agreement to
arbitrate contained within the credit card application and
the cardholder agreement issued by Credit One to Plaintiff
when it mailed her the card. Plaintiff opposes arbitration
for the reason that the arbitration agreement is
Governing Motions to Compel Arbitration
requires district courts to stay judicial proceedings and
compel arbitration of claims covered by a written and
enforceable arbitration agreement. James v. Global
Tellink Corp., No. 16-1555, 2017 U.S. App.
LEXIS 5448 at *4-*5 (3d Cir. Mar. 29, 2017)(citing 9 U.S.C.
§3). As articulated by the U.S. Court of Appeals for the
Third Circuit in Guidotti v. Legal Helpers Debt
Resolution, L.L.C., 716 F.3d 764 (3d Cir. 2013), the
standards to be applied to motions to compel arbitration
differ depending upon the state of the existing record of the
case and on what may or may not appear from the face of the
complaint. According to Guidotti:
when it is apparent, based on “the face of a complaint,
and documents relied upon in the complaint, ” that
certain of a party's claims “are subject to an
enforceable arbitration clause, a motion to compel
arbitration should be considered under a Rule 12(b)(6)
standard without discovery's delay.” ... (citation
omitted). But if the complaint and its supporting documents
are unclear regarding the agreement to arbitrate, or if the
plaintiff has responded to a motion to compel arbitration
with additional facts sufficient to place the agreement to
arbitrate at issue, then “the parties should be
entitled to discovery on the question of arbitrability before
a court entertains further briefing on the question.”
After limited discovery, the court may entertain a renewed
motion to compel arbitration, this time judging the motion
under a summary judgment standard. In the event that summary
judgment is not warranted because “the party opposing
arbitration can demonstrate, by means of citations to the
record, ” that there is “a genuine dispute as to
the enforceability of the arbitration clause, ” the
“court may then proceed summarily to a trial regarding
“the making of the arbitration agreement or the
failure, neglect, or refusal to perform the same, ” as
Section 4 of the FAA envisions.”
Id, at 776 (quoting Somerset Consulting, LLC v.
United Capital Lenders, LLC, 832 F.Supp.2d 474, 482
(E.D. PA. 2011) and 9 U.S.C. §4); Monfared v. St.
Luke's University Health Network, 182 F.Supp.2d 188,
190-191 (E.D. Pa. 2016).
is a strong federal policy in favor of arbitration, and a
‘party to a valid and enforceable arbitration agreement
is entitled to a stay of federal court proceedings pending
arbitration as well as an order compelling such
arbitration.'” In re: Pharmacy Benefit Managers
Antitrust Litigation, 700 F.3d 109, 116 (3d Cir.
2012)(quoting Alexander v. Anthony International,
L.P., 341 F.3d 256, 263 (3d Cir. 2003)). To be sure,
“[a]rbitration is a matter of contract between the
parties and a judicial mandate to arbitrate must be
predicated upon an agreement to that effect.”
James, supra, (quoting Par-Knit Mills,
Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 (3d
Cir. 1980)). See also, AT & T Technologies,
Inc. v. Communications Workers of America, 475 U.S. 643,
648-649, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648
(1986)(“arbitration is a matter of contract and a party
cannot be required to submit to arbitration any dispute which
he has not agreed so to submit”). Hence, before a
federal district court entertaining a motion to compel
arbitration may order a reluctant party to arbitrate, the FAA
requires the court “to engage in a limited review to
ensure that the dispute is arbitrable - i.e. that a
valid agreement to arbitrate exists and that the specific
dispute falls within the substantive scope of that
agreement.” Cuie v. Nordstrom, Civ. A. No.
05-4771, 2005 U.S. Dist. LEXIS 26698 at *6 (E.D. Pa. Nov. 4,
2005)(quoting PaineWebber, Inc. v. Hartmann, 921
F.2d 507, 511 (3d Cir. 1990)). And, in determining whether a
valid arbitration agreement exists, federal courts are to
“apply ordinary state-law principles that govern the
formation of contracts.” James,
supra, (quoting First Options of Chicago, Inc.
v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 1924, 131
L.Ed.2d 985 (1995)). See also, Cuie, 2005
U.S. Dist. 26698 at *7 (quoting Spinetti v. Service
Corporation, International, 324 F.3d 212, 214 (3d Cir.
2004)). Similarly, in “applying the relevant state
contract law, a court may also hold that an agreement to
arbitrate is ‘unenforceable based on a generally
applicable contractual defense, such as
unconscionability.'” Id, at *7(quoting
Parilla v. IAP Worldwide Services, VI, Inc., 368
F.3d 269, 276 (3d Cir. 2004)).
Pennsylvania, it is black letter law that in order to form an
enforceable contract, there must be an offer, acceptance,
consideration, or mutual meeting of the minds. Walton v.
Johnson, 2013 PA Super 108, 66 A.3d 782 (Pa. Super.
2013); Neyvas v. Morgan, 2007 PA Super 66, 921 A.2d
8 (Pa. Super. 2007); Jenkins v. County of
Schuylkill, 441 Pa. Super. 642, 648, 658 A.2d 380, 383
(Pa. Super. 1995). To determine whether an agreement is
enforceable then, it is incumbent upon the courts to examine:
(1) whether both parties manifested an intention to be bound
by the agreement; (2) whether the terms of the agreement are
sufficiently definite to be enforced, and (3) whether there
was consideration. Jenkins, 441 Pa. Super. at 650,
658 A.2d at 384.
Credit One alleges in the motion which is now before us that
on January 5, 2010, Plaintiff accepted a written solicitation
for a pre-approved credit card which Credit One had sent to
her on December 28, 2009 by completing an online application.
The written solicitation contained the notation:
“SEE REVERSE FOR IMPORTANT INFORMATION ON
RATES, FEES, COSTS, AND AVAILABLE CREDIT.”
Included among the headings on the reverse side of the