Comrey v. Discover Fin. Servs., 2011 U.S. Dist. LEXIS 41239 (M.D. Pa., Apr. 15, 2011)
Facts: Plaintiff brought suit in state court against Discover alleging unspecified violations of the FCRA. Discover removed the case to the Middle District of Pennsylvania and filed a motion to compel arbitration and stay all proceedings. Plaintiff had opened a Discover credit card in 1991. Upon the approval of her application, a credit card and card member agreement ("agreement") were mailed to her residence. Plaintiff agreed to the terms of the agreement when she first utilized the card. Pursuant to the agreement's "change of terms" provision, Discover modified the agreement numerous times between 1991 and 2006. Discover sent Plaintiff amendments in 2003 and 2006 which included provisions for arbitration of all disputes pursuant to the Federal Arbitration Act ("FAA"). In each case, the notice contained specific instructions regarding Plaintiff's option to reject the agreement in writing. The agreement further stated that the use of the card after the effective date of a change would be deemed acceptance of the new terms even if the card member previously notified Discover that they did not agree to the change. The District Court granted Discover's motion to compel arbitration.
Arbitration. The FAA establishes a strong federal policy in favor of arbitration. When adjudicating a motion to compel arbitration, the court must address two issues: (1) whether the parties have entered into a valid written agreement to arbitrate; and (2) whether the dispute in question falls within the scope of that agreement. The party seeking to avoid arbitration bears the burden of proving the invalidity of an arbitration agreement.
Arbitration. Plaintiff contended that the agreement was unconscionable because Discover failed to notify her of the proposed addition of the arbitration clause. She argued that Discover was unable to prove that it effectively served her with any amendments to the agreement. Plaintiff bears the burden of rebutting the presumption of receiving an arbitration agreement. Interestingly, Plaintiff did not deny that she received the amendments, rather she claimed that the amendments were mailed to her "in a deceptive manner designed to hide the true purpose of the mailing." The Court held that by virtue of her application for the credit card and her subsequent use of same, she agreed to the terms of the agreement. Therefore, she was notified of both her right to reject the arbitration provision and the procedure by which she could do so. The Court found, as a matter of law, that the notices were not deceptive or ambiguous. Moreover, Discover had no record that Plaintiff took a single affirmative step to reject the arbitration agreement. Accordingly, Plaintiff was deemed to have accepted the terms of the agreement and its subsequent amendments.
Arbitration. The presumption of arbitrability is particularly strong when the parties contractually agree to an arbitration provision broadly encompassing all disputes arising from or relating to the agreement. Plaintiff's claim against Discover for statutory violations of the FCRA arose directly from her account with Discover. The Court found that Plaintiff's dispute clearly related to her agreement with Discover. Thus, her claims fell within the broad scope of the Discover arbitration agreement. Accordingly, Discover's motion to compel arbitration was granted.
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