United States District Court, W.D. Wisconsin
MARK E. JOHNSON, DONNA J. ANDERSON, and JODI M. EICK, on behalf of themselves and all others similarly situated, Plaintiffs,
DISCOVER BANK, Defendant.
OPINION & ORDER
D. PETERSON, DISTRICT JUDGE.
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.
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
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.
Whether the arbitration clause is enforceable under federal
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
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.
Whether plaintiffs' claims fall within the scope of 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.
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”). 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).
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.
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. Plaintiffs cite
no cases in which a court attached any significance to the
use of one term over another.
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