Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—D. Colo.: Credit card holder’s TCPA claims not subject to arbitration, (Jan 15, 2014)

By Jody Coultas, J.D.

Discover Bank’s motion to compel arbitration and stay a credit card holder’s Telephone Consumer Protection Act (TCPA) claims was denied by the federal district court in Denver (Wagner v. Discover Bank, January 10, 2014, Krieger, M.).

Discover allegedly called the credit card holder’s cellular phone multiple times a day, using an automated dialing system and a prerecorded voice. The credit card holder stated that he did not provide Discover his cell phone number, and that the calls were made “with the intent to annoy[,] abuse, embarrass, and/or harass him” in violation of the TCPA.

Based on a “Cardmember Agreement,” Discover sought to compel arbitration of the TCPA claims pursuant to sections 3 and 4 of the Federal Arbitration Act (FAA). The agreement contained an arbitration provision. The card holder argued that an arbitration agreement did not exist between himself and Discover because he never received the specific Cardmember Agreement and did not agree to its terms. If an agreement is found to exist, the card holder contends that his TCPA claims do not fall within the scope of the arbitration agreement.

An arbitration agreement existed between the parties, according to the court. The card holder applied for and received a Discover brand credit card and a Discover “Platinum” account. According to Discover, a credit card is not mailed to an account holder without a Cardmember Agreement. Discover sent a notice of amendment to the Cardmember Agreement with a billing statement that modified the arbitration agreement. The card holder represented that he kept all correspondence between Discover and himself, and that his Discover file contained no such Agreement. These assertions were insufficient to create a genuine dispute of material fact. The card holder’s assertions that he applied for a Discover “More” card, and therefore the “Platinum” Cardmember Agreement never applied, were rejected. There was no evidence suggesting that the terms set forth in the Platinum Cardmember Agreement would not otherwise apply to his Discover More account.

The court held that the TCPA claims did not fall within the scope of the arbitration agreement and arbitration cannot be compelled. The credit card holder argued that the TCPA claims were based on Discover’s actions and did not arise from or relate to his account or relationship with Discover. The arbitration provision was broad and purported to encompass any dispute and did not specifically exclude any particular type of claim. However, the agreement expressly applied only to disputes related to an account. The claims related to the legality of Discover’s collection activities. Although the existence of a debt on the account and the right to collect the debt would “arise from” or “relate to” the account, the legality of the way Discovery collected that debt was not related to the account. Therefore, the claims were outside the scope of the agreement and not subject to arbitration.

The case is No. 12-cv-02786-MSK-BNB.

Attorneys: T.A. Taylor-Hunt (Law Office of T. A. Taylor-Hunt, LLC) for Walter F. Wagner. Kasey Kay McDaniel (Snell & Wilmer, LLP) for Discover Bank.

Companies: Discover Bank

Cases: ConsumerProtection Privacy ColoradoNews