164 F. Supp. 3d 77
D.D.C.2016Background
- In 2010 McMullen bought training sessions from One World Fitness and financed an initial purchase through Chase Health Advance. She canceled membership in Sept. 2011 and requested a refund.
- After cancellation, McMullen alleges One World owners Stewart and Bullen caused Chase and Synchrony (CareCredit) to open unauthorized credit lines in her name and process charges to "Bullen Wellness" totaling about $8,500.
- McMullen repeatedly disputed the accounts with both banks and the D.C. Attorney General; she alleges the banks failed to investigate, failed to supply contract/application documents, demanded payment, and reported/charged interest, causing her to pay portions to avoid credit harm.
- She filed suit in D.C. Superior Court asserting CPPA, common-law fraud and conspiracy, conversion, breach claims, and sought class relief; Chase removed under CAFA to federal court.
- Synchrony moved to compel arbitration; both banks moved to dismiss CPPA, fraud/conspiracy, and punitive-damages claims. The Court treated the proposed Second Amended Complaint as operative and resolved the motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration clause in Synchrony Card Agreement binds McMullen | McMullen never agreed to or received the Card Agreement; payments were made under protest to avoid credit harm and do not show assent | Synchrony: using or making payments on the account constitutes acceptance of the Card Agreement including arbitration; contract’s choice-of-law (Utah) applies | D.C. law governs contract-formation; genuine issue whether McMullen assented — payments under protest do not establish meeting of the minds; arbitration not compelled |
| Choice of law for formation question | D.C.: contract-formation governed by local law since contact, performance, and plaintiff domiciled in D.C. | Synchrony: Card Agreement’s Utah choice-of-law clause controls | Court: cannot apply contractual choice clause before formation; D.C. law applies |
| Whether banks are "merchants" under the D.C. Consumer Protection Procedures Act (CPPA) and whether CPPA claims pleadable | McMullen: banks are tied to the supply side (financing) and participated in scheme; CPPA is remedial and liberal pleading standard applies | Banks: not merchants for these services or CPPA claims must meet Rule 9(b) heighted fraud pleading | Court: Banks are merchants for CPPA; CPPA claims not subject to Rule 9(b) heightened pleading requirement |
| Whether CPPA and common-law fraud/conspiracy claims survive dismissal | McMullen: banks failed to supply contract/documentation (§28-3904(q)), made material misrepresentations (§28-3904(e)), committed fraud and conspired with One World defendants | Banks: pleadings insufficient, lack particularity, no meeting of minds, prior agreements cover alleged conduct; punitive damages not a standalone claim | Court: CPPA claims under §§ 3904(q) and (e) sufficiently pleaded; common-law fraud and conspiracy adequately pleaded under Rule 9(b)/Twombly standards; standalone punitive-damages count dismissed (remedy only) |
Key Cases Cited
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (federal policy favoring arbitration)
- AT&T Techs., Inc. v. Commc'ns Workers, 475 U.S. 643 (1986) (arbitration is a matter of contract)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (apply ordinary state-law contract-formation principles to arbitration consent)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard for motions to dismiss)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (factual allegations must permit reasonable inference of liability)
- Saucier v. Countrywide Home Loans, 64 A.3d 428 (D.C. 2013) (CPPA construed liberally; standards for misrepresentation under § 28-3904(e))