United States District Court, W.D. Arkansas, El Dorado Division
O. HICKEY CHIEF UNITED STATES DISTRICT JUDGE
the Court is Defendant's Motion to Compel Arbitration.
(ECF No. 17). Plaintiff has filed a response. (ECF No. 22).
Defendant has filed a reply. (ECF No. 24). The Court finds
this matter ripe for consideration.
Jeffery Smelser applied for a credit card account and
obtained a credit card with Defendant Discover Bank in August
2015. Plaintiff activated his card and made purchases on his
account. However, Plaintiff subsequently failed to make
payments, and his account went into default. Plaintiff
alleges that Defendant then commenced a relentless campaign
of automated telephone calls seeking to recover the
outstanding balance owed on his account. On May 31, 2019,
Plaintiff brought this action, alleging that Defendant's
automated telephone calls have violated the Telephone
Consumer Protection Act, 47 U.S.C. §227
(“TCPA”). Plaintiff has also brought a common law
invasion of privacy claim, alleging that Defendant's
telephone calls have intruded upon his right to seclusion.
Plaintiff applied for the credit card account in August 2015,
Defendant mailed him a packet containing the credit card and
a copy of the cardmember agreement. The cardmember agreement
cautioned Plaintiff that he would agree to its terms and
conditions if he did not cancel his credit card within thirty
days. The cardmember agreement also contained a provision
requiring Plaintiff to arbitrate all claims relating to his
credit card account. In September 2017, Defendant mailed
Plaintiff an updated cardmember agreement containing a
similar arbitration clause.
August 26, 2019, Defendant filed the instant motion, arguing
that Plaintiff's claims are subject to binding, valid
arbitration agreements and that this action should be stayed
pending the outcome of arbitration. (ECF No. 11). Plaintiff
opposes the motion, arguing that the arbitration clauses in
his cardmember agreements are unconscionable and that this
dispute is outside the scope of the arbitration agreements.
(ECF No. 22).
addressing motions to compel arbitration, courts generally
ask: (1) whether there is a valid arbitration agreement, and
(2) whether the particular dispute falls within the terms of
that agreement. E.E.O.C. v. Woodmen of the World Life
Ins. Soc., 479 F.3d 561, 565 (8th Cir. 2007). These two
determinations are guided by a “liberal federal policy
favoring arbitration agreements.” Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991).
Court will first determine whether the arbitration agreements
are valid. If the Court answers that question in the
affirmative, it will then determine whether the claims at
issue fall within the terms of the arbitration agreements. If
so, the Court will determine whether this action should be
dismissed or stayed pending arbitration.
Validity of the Arbitration Agreements
Court will now determine the validity of the arbitration
agreements. “The validity of the agreement is
determined by state contract law.” Woodmen,
479 F.3d at 565. Arbitration agreements are examined in the
same way as other contractual agreements, and the same rules
of construction and interpretation apply to arbitration
agreements as apply to agreements in general. See Keymer
v. Mgmt. Recruiters Int'l, Inc., 169 F.3d 501, 504
(8th Cir. 1999). The instant arbitration agreements appear to
be governed by Arkansas law. Under Arkansas law, “[t]he
essential elements of a contract are (1) competent parties,
(2) subject matter, (3) legal consideration, (4) mutual
agreement, and (5) mutual obligation.” City of
Dardanelle v. City of Russellville, 372 Ark. 486, 490,
277 S.W.3d 562, 565-66 (2008) (citing Williamson v.
Sanofi Winthrop Phars., 347 Ark. 89, 60 S.W.3d 428
(2001)). Moreover, Arkansas law provides that:
[t]he acceptance of the terms and conditions of a credit card
account by a cardholder may be established as binding and
enforceable by . . . [t]he use of the credit card account by
the named credit card account member . . . if the credit card
agreement provides that any use of the credit card account
constitutes an acceptance of the terms and conditions of the
credit card agreement if the time prescribed in 12 C.F.R.
§ 202.12(b) has expired.
Ark. Code Ann. § 4-107-304(2).
case at bar, Plaintiff does not appear to dispute that he
accepted the cardholder agreements, including the arbitration
clauses. However, Plaintiff argues that the
arbitration clauses in his ...