United States District Court, W.D. Wisconsin
SASHA RIZZO, on behalf of herself and all others similarly situated, Plaintiff,
KOHN LAW FIRM S.C., Defendant.
OPINION & ORDER
D. PETERSON, District Judge
proposed class action arises out of a credit card that
plaintiff Sasha Rizzo applied for and received from Discover
Bank. Rizzo alleges that she failed to repay the balance on
her credit card account, so both Discover and defendant Kohn
Law Firm S.C., a law firm that regularly engages in the
collection of consumer debts, sued Rizzo in the Circuit Court
for Eau Claire County, Wisconsin. Attached to the complaint
was a copy of Rizzo's monthly billing statement for her
Discover account and included in the statement was
Rizzo's credit score, which was not redacted. Rizzo
contends that publishing her credit score qualifies as
unlawful debt collection activity under the Fair Debt
Collection Practices Act, 15 U.S.C. §§ 1692d,
1692e(1), and 1692f, and was an impermissible use of a
“consumer report” under the Fair Credit Reporting
Act, 15 U.S.C. § 1681b.
the court is Kohn's motion under 9 U.S.C. §§ 3
and 4 to compel arbitration and stay the proceedings in this
court. Dkt. 21. Rizzo objects to Kohn's motion on several
grounds, but the court need only consider one of them, which
is that Rizzo's claim is not subject to an arbitration
agreement. Because Kohn is not a party to the agreement at
issue and Kohn has not otherwise shown that it has the right
to enforce the agreement, the court will deny Kohn's
motion to compel.
first question in resolving a motion to compel is determining
whether the parties have an agreement to arbitrate their
dispute. Zurich Am. Ins. Co. v. Watts Indus., Inc.,
466 F.3d 577, 580 (7th Cir. 2006). Although questions about
the scope of an arbitration clause are resolved in
favor of arbitration as a matter of federal law, Gore v.
Alltel Commc'ns, LLC, 666 F.3d 1027, 1032 (7th Cir.
2012), the presumption in favor of arbitration does not apply
“when deciding whether there is an agreement to
arbitrate in the first instance.” Druco
Restaurants, Inc. v. Steak N Shake Enters., Inc., 765
F.3d 776, 782 (7th Cir. 2014). That question is answered by
applying state principles of contract law. Faulkenberg v.
CB Tax Franchise Systems, LP, 637 F.3d 801, 809 (7th
case, Kohn is relying on an arbitration clause in the
cardmember agreement between Rizzo and
Discover. Kohn is not a party to that agreement, but
it says that it nevertheless has the right to enforce the
litigant who was not a party to the relevant arbitration
agreement may [enforce the agreement] if the relevant state
contract law allows him to” do so. Andersen LLP v.
Carlisle, 556 U.S. 624, 632 (2009). Although the
cardmember agreement contains a Delaware choice of law
provision, neither party makes an argument regarding choice
of law. Because both parties rely primarily on Wisconsin law
and neither party suggests that there is any difference
between Wisconsin and Delaware law on the issues debated by
the parties, the court will look to Wisconsin law. RLI
Ins. Co. v. Conseco, Inc., 543 F.3d 384, 390 (7th Cir.
2008) (“When neither party raises a conflict of law
issue in a diversity case, the applicable law is that of the
state in which the federal court sits.”).
state law doctrines allow nonparties to enforce contracts
under certain circumstances, including “assumption,
piercing the corporate veil, alter ego, incorporation by
reference, third-party beneficiary, waiver, . . . estoppel .
. . and agency.” Scheurer v. Fromm Family Foods
LLC, 863 F.3d 748, 753 (7th Cir. 2017). Kohn does not
rely on most of these doctrines. In fact, it expressly
disavows any reliance on estoppel in its reply brief in
attempting to distinguish cases that Rizzo cites discussing
that doctrine. Dkt. 32, at 6 (distinguishing In re
Henson, 869 F.3d 1052 (9th Cir. 2017), Cox v.
ScreeningOne, Inc., No. 14-cv-229, 2015 WL 413812 (N.D.
Ohio Jan. 30, 2015), and Pagan v. Integrity Sol. Servs.,
Inc., 42 F.Supp.3d 932 (E.D. Wis. 2014)). Instead, Kohn
says that it is entitled to enforce the arbitration clause
because it is a third-party beneficiary of the cardmember
agreement. The court will follow Kohn's lead and
consider only the issues raised in its briefs.
person may enforce a contract as third-party beneficiary if
the contract indicates that he or she was either specifically
intended by the contracting parties to benefit from the
contract or is a member of the class the parties intended to
benefit.” Milwaukee Area Tech. Coll. v.
Frontier Adjusters of Milwaukee, 2008 WI.App.
76, ¶ 20, 312 Wis.2d 360, 377, 752 N.W.2d 396, 404.
support of its contention that it is a member of the class
the arbitration clause is intended to benefit, Kohn relies on
the following language in the clause:
Other beneficiaries of this Provision. In
addition to [the cardholder] and [Discover], the rights and
duties described in this arbitration agreement apply to: our
Affiliates and our and their officers, directors and
employees; any third party co-defendant of a claim subject to
this arbitration provision; and all joint Accountholders and
Authorized users of your Account(s).
Dkt. 24-1, at 4.
says that it is entitled to invoke the arbitration clause
because it is a “third party party co-defendant of a
claim subject to this arbitration
provision.” The court will assume for the purpose of
Kohn's motion that Rizzo's claims fall within the
subject matter of those that are “subject to th[e]
arbitration provision, ” but this assumption does not
help Kohn because Kohn is the only defendant in the case. It
is not a “third party co-defendant” with
asks the court to overlook Discover's absence from the
case because Discover was a defendant when Rizzo
first filed her complaint. But Rizzo has since dismissed
Discover from the case, Dkt. 19, and she did so before Kohn
filed its motion to compel. Thus, Kohn no longer qualifies as
a “third party co-defendant.” Kohn does not
contend that it would have a right to invoke the arbitration
clause if Discover had never been a defendant and the court
sees no logical difference between that situation and the
situation in this ...