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Jewell v. HSN, Inc.

United States District Court, W.D. Wisconsin

November 7, 2019

MAURICE JEWELL, JR., on behalf of himself and all others similarly situated, Plaintiff,
v.
HSN, INC., Defendant.

          OPINION AND ORDER

          James D. Peterson District Judge.

         Plaintiff Maurice Jewell brings this proposed class action against defendant retailer HSN, Inc. Jewell used an HSN-branded credit card issued by Comenity Capital Bank to make purchases from HSN, which attempted to collect his unpaid balance. Jewell contends that HSN refused to comply with his requests to stop calling his mobile phone in its collection attempts, thereby violating the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, and the Wisconsin Consumer Act (WCA), Wis.Stat. §§ 427.101-105.

         HSN moves to compel arbitration, relying on an arbitration provision in the account agreement between Jewell and Comenity.[1] Dkt. 11. Because HSN isn't entitled to compel arbitration under the account agreement, the court will deny HSN's motion.

         BACKGROUND

         A motion to compel arbitration is reviewed in the same way as a motion for summary judgment. Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002). The court considers all evidence in the record and draws all reasonable inferences in the light most favorable to Jewell because he is the non-moving party. Id.

         Comenity (which isn't a party to this lawsuit) partners with nearly 150 retailers, including HSN, to issue branded credit cards. Together, Comenity and HSN market the HSN Card, a credit card that can only be used to purchase goods from HSN. The HSN Card's account agreement is solely between the cardholder and Comenity; HSN isn't a party to the agreement.

         HSN also offers some of its goods through its “FlexPay” program, which allows a customer to receive his purchase up front and then pay for it in installments. Dkt. 14, ¶ 12. When due, each installment is billed separately to the customer's credit card, whether it is an HSN Card or another card.

         In 2016, Jewell used his HSN Card to purchase two items from HSN, a t-shirt and a smartphone, under the FlexPay program. Each item's price was divided into five installments, which HSN billed to Jewell's HSN Card. The first four installments for each item were billed successfully, but Comenity declined payment for both items' fifth installments. HSN then called Jewell's mobile phone regarding these declined payments. Those calls form the basis of this lawsuit.

         The HSN Card account agreement contains an arbitration provision that states, “Arbitration may be elected by any party with respect to any Claim.” Dkt. 13-1, at 3. It defines a “Claim” as “any claim, dispute, or controversy between you and us” that relates to the cardholder's use of the card. Id. And it defines “Parties Subject to Arbitration, ” in relevant part, in this way: “Solely as used in this Arbitration Provision (and not elsewhere in this Agreement), the terms ‘we,' ‘us' and ‘our' mean . . . Comenity Capital Bank, any parent, subsidiary or affiliate of the Bank and the employees, officers and directors of such companies.” Id. HSN moves to compel arbitration under these provisions of the account agreement.

         ANALYSIS

         HSN isn't a party to Jewell's account agreement with Comenity, which would normally prevent HSN from invoking the agreement's arbitration provision. Everett v. Paul Davis Restoration, Inc., 771 F.3d 380, 383 (7th Cir. 2014). But a nonparty can sometimes invoke an arbitration provision under principles of state contract law. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009). Because the account agreement states that it is governed by Utah law, the parties agree that Utah law should govern application of the agreement's arbitration provision.

         HSN contends that under Utah law, it is entitled to invoke the agreement's arbitration provision as a third-party beneficiary of the agreement or under equitable estoppel principles and that Jewell's claims fall within the provision's scope. But the court isn't persuaded by either of these theories.

         A. Third-party beneficiary

         HSN's primary contention is that it is expressly included in the account agreement's arbitration provision as an “affiliate” of Comenity entitled to compel arbitration. This is really an argument that HSN is a third-party beneficiary under the express terms of the agreement, although HSN doesn't frame it in this way. HSN argues, alternatively, that it's a third-party ...


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