806 F. Supp. 2d 778
M.D. Penn.2011Background
- Comrey, plaintiff, alleges Discover furnished information to credit agencies in violation of the Fair Credit Reporting Act.
- Discover moves to compel arbitration under the 2006 cardmember agreement and to stay proceedings.
- Comrey opened a Discover Bank account in 1991; changes to the agreement were sent by mail with an option to reject amendments.
- 2003 Amendment introduced an arbitration clause with a Notice of Right to Reject; Comrey did not reject the arbitration provision.
- 2006 Amendment again included an arbitration clause; Comrey did not notify Discover of objections.
- Comrey filed suit in 2010; Discover removed and moved to compel arbitration; court must decide validity, scope, and enforceability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of the arbitration agreement under the FAA and Delaware law | Comrey contends notice failed; agreement may be unconscionable. | Notice satisfied; Delaware law allows amendment adding arbitration. | Arbitration agreement valid and enforceable |
| Scope of the arbitration clause to Comrey's FCRA claim | Dispute relates to card terms, not subject to arbitration. | Clause broadly covers disputes arising from or relating to the account; FCRA claim included. | FCRA claim falls within broad arbitration scope |
| Waiver of arbitration rights | Discovery delay constitutes waiver by not timely raising arbitration. | Waiver not shown; delay short and non-prejudicial. | No waiver of arbitration rights |
| Enforceability by Discover Products, Inc. as a non-signatory | Only Discover Bank bound; non-signatory not entitled to enforce. | Discover Products bound as successor or third-party beneficiary under the contract. | Discover Products can enforce arbitration |
Key Cases Cited
- AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643 (1986) (arbitrability presumption and contract interpretation)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (strong federal policy in favor of arbitration; referability)
- Green Tree Fin. Corp. v. Randolph, 531 U.S. 79 (2000) (contract defenses may invalidate arbitration agreements)
- Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996) (unconscionability as a defense to arbitration)
- Discover Bank v. Vaden, 489 F.3d 594 (4th Cir. 2007) (enforceability of arbitration and opt-out considerations)
- Graham v. Comm. Credit Co., 194 A.2d 863 (Del. Ch. 1963) (presumption of receipt for mailed arbitration amendments under Delaware law)
- Cohen v. Chase Bank, N.A., 679 F. Supp. 2d 582 (D.N.J. 2010) (Delaware-style amendment of credit card agreements authorizing arbitration)