Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Johnson v. Discover Bank

United States District Court, W.D. Wisconsin

February 12, 2018

MARK E. JOHNSON, DONNA J. ANDERSON, and JODI M. EICK, on behalf of themselves and all others similarly situated, Plaintiffs,

          OPINION & ORDER


         This proposed class action arises out of credit cards that plaintiffs Mark E. Johnson, Donna J. Anderson, and Jodi M. Eick applied for and received from defendant Discover Bank. Plaintiffs failed to repay the balances on their credit card accounts and subsequently filed bankruptcy actions. Discover filed claims related to plaintiffs' credit card debt in those actions and attached to the pleadings copies of plaintiffs' monthly billing statements. Included in those statements were plaintiffs' credit scores, which Discover did not redact. Plaintiffs contend that publishing their credit scores was an impermissible use of a “consumer report” under the Fair Credit Reporting Act, 15 U.S.C. § 1681b.

         Now before the court is Discover's motion under 9 U.S.C. §§ 3 and 4 to compel arbitration and stay the proceedings. Dkt. 10. Because Discover has shown that plaintiffs' claims fall within the scope of the parties' arbitration agreement and plaintiffs have not identified any valid grounds for refusing to enforce that agreement, the court will grant Discover's motion to compel.


         To prevail on its motion to compel arbitration, Discover must show three things: (1) a valid, written agreement to arbitrate exists; (2) plaintiffs' claims fall within the scope of that agreement; and (3) plaintiffs have refused to proceed to arbitration in accordance with the agreement. Zurich Am. Ins. Co. v. Watts Indus., Inc., 466 F.3d 577, 580 (7th Cir. 2006). It is undisputed that plaintiffs have an arbitration agreement with Discover and that plaintiffs are refusing to arbitrate their claims. But the parties debate whether the agreement is enforceable and, if it is, whether the agreement applies to the claims in this case. The court will address both issues in turn.

         A. Whether the arbitration clause is enforceable under federal law

         Plaintiffs say that a new regulation issued by the Consumer Financial Protection Bureau prohibits class action waivers in arbitration clauses on the claims that plaintiffs are raising in this case. Arbitration Agreements, 82 Fed. Reg 333210, 33428 (July 19, 2017). Although that is a separate question from arbitrability, the two issues are connected under the terms of the arbitration clause in the cardmember agreement. The agreement includes a severability clause, which states that the arbitration clause “will be void” in the event that a court determines that the class action waiver is invalid. Dkt. 13-1, at 3.[1]

         Plaintiffs' reliance on the new regulation fails for the simple reason that Congress already repealed the regulation. Arbitration Agreements, Public Law 115-74, 131 Stat. 1243 (Nov. 1, 2017) (“Congress disapproves the rule submitted by the Bureau of Consumer Financial Protection relating to ‘Arbitration Agreements' (82 Fed. Reg. 33210 (July 19, 2017)), and such rule shall have no force or effect.”). And even if the regulation had not been repealed, it applied only to arbitration agreements “entered into on or after March 19, 2018.” 82 Fed. Reg. 33430.

         B. Whether plaintiffs' claims fall within the scope of the arbitration agreement

         The parties' cardmember agreement includes a clause in which the parties agree to arbitrate “a dispute between [the cardholder] and [Discover] arising under or relating to this Account.” Dkt. 13-1, at 3. The parties debate whether that language is broad enough to encompass claims for violations of the FCRA under the facts of this case. The court concludes that it is.

         The Court of Appeals for the Seventh Circuit has held that the language “arising out of or relating to” is “extremely broad, ” “capable of an expansive reach” and “necessarily create[s] a presumption of arbitrability.” Kiefer Specialty Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907, 909- 10 (7th Cir. 1999). The agreement in this case uses slightly different phrasing by substituting “arising under” for “arising out of.” In Sweet Dreams Unlimited, Inc. v. Dial-A-Mattress Int'l, Ltd., the court stated that “arising under” may have a more limited scope than “arising out of.” 1 F.3d 639, 642 (7th Cir. 1993). Regardless, courts have consistently held that the phrase “relating to” in arbitration agreements has a broad scope. E.g., Welborn Clinic v. MedQuist, Inc., 301 F.3d 634, 639 (7th Cir. 2002) (both “arising out of” and “relating to” are “expansive clauses” that “broadly . . . include all manner of claims tangentially related to the agreement, including claims of fraud, misrepresentation, and other torts involving both contract formation and performance”).[2] When an agreement “contains a generally applicable arbitration clause” such as the clause at issue in this case, there is a presumption of arbitrability, which the party opposing arbitration must rebut with evidence of the parties' intent to exclude the claim from arbitration. Karl Schmidt Unisia, Inc. v. International Union, United Auto., Aerospace, and Agr. Implement Workers of America, UAW Local 2357, 628 F.3d 909, 912-13 (7th Cir. 2010).

         Even without a presumption, plaintiffs' claims in this case fall within the scope of the arbitration clause. Plaintiffs are challenging defendants' decision to publish information in plaintiffs' account statements by attaching those statements to pleadings in which Discover was seeking to recover amounts past due on plaintiffs' accounts. Under any reasonable reading, plaintiffs' claims “relat[e] to” their account with Discover.

         Plaintiffs resist this conclusion on a number of grounds, but none are persuasive. First, plaintiffs say that the use of the word “disputes” is “not broad enough . . . to encompass all ‘claims.'” Dkt. 18, at 13. They point to an earlier version of the cardmember agreement that applies to a “claim or dispute, ” Dkt. 13-2, but they cite no evidence that Discover intended to narrow the scope of the arbitration clause rather than eliminate a redundancy. A review of the relevant case law shows that arbitration agreements use different words such as “claim, ” “dispute, ” and “controversy” interchangeably.[3] Plaintiffs cite no cases in which a court attached any significance to the use of one term over another.

         If anything, the meaning of “dispute” is broader than the meaning of “claim” because a claim is a type of dispute. Compare DISPUTE, Black's Law Dictionary 572 (10th ed. 2014) (“A conflict or controversy, esp. one that has given rise to a particular lawsuit”) with CLAIM, Black's Law Dictionary 300 ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.