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Bridge v. Credit One Financial

United States District Court, D. Nevada

February 23, 2018

WILLIAM BRIDGE, individually and on behalf of all others similarly situated, Plaintiff,
CREDIT ONE FINANCIAL, a Nevada Corporation, d/b/a CREDIT ONE BANK, N.A., Defendant.



         In his Amended Complaint, William Bridge alleges that Credit One violated the Telephone Consumer Protection Act when, without his prior express consent, it used an auto-dialer to place calls to his cellular telephone number from around January to March 2014.

         On January 18, 2014, Bridge used his cell phone to contact Credit One regarding his mother's account. He alleges he did so without her knowledge or consent, that he talked with a Credit One representative, and that he advised that he was making the call in relation to his mother's account. Credit One counters that its records establish that Bridge called its Automated Account Information number, but used his mother's account information to access its systems. In either event, Bridge alleges and Credit One does not dispute that it captured his cell phone number and associated that number with his mother's account. When his mother's account became delinquent, Credit One began calling Bridge's cell phone.

         Credit One moves to stay (ECF No. 109) and compel arbitration (ECF No. 110) arguing that, because Bridge used his mother's account information to contact Credit One, he should be bound by the arbitration clause in the Cardholder Agreement his mother signed. Alternatively, Credit One moves to strike the class claims (ECF No. 111) and disqualify Bridge as a class representative (ECF No. 112), arguing that Bridge's conduct not only establishes that his claim is highly unique but that he is an improper class representative. Credit One also asks that Bridge's Nevada Deceptive Trade Practices Act claim be dismissed (ECF No. 113). Bridge opposes each motion.

         Bridge has moved to certify a class, appoint a class representative, and appoint class counsel (ECF No. 150). Credit One opposes the motion.[1]


         Bridge's mother was a Credit One account holder. Credit One's standard Visa/MasterCard Cardholder Agreement, Disclosure Statement and Arbitration Agreement ("cardholder agreement") provides the following:

COMMUNICATIONS: You are providing express written permission authorizing Credit One Bank or its agents to contact you at any phone number (including mobile, cellular/wireless, or similar devices) or email address you provide at anytime, for any lawful purpose. . . . Phone numbers and email addresses you provide include those you give to us, those from which you contact us or which we obtain through other means.

         The Cardholder Agreement also contains the following arbitration provision:

Claims subject to arbitration include not only Claims made directly by you, but also Claims made by anyone connected with you or claiming through you, such as a co-applicant or authorized user of your account, your agent, representative or heirs, or a trustee in bankruptcy.

         The cardholder agreement's arbitration provision further states:

Claims subject to arbitration include, but are not limited to, disputes relating to the establishment, terms, treatment, operation, handling, limitations on or termination of your account; any disclosures or other documents or communications relating to your account; any transactions or attempted transactions involving your account, whether authorized or not: billing, billing errors, credit reporting, the posting of transactions, payment or credits, or collections matters relating to your account.

         In January 2014, Bridge's mother underwent surgery and Bridge learned that her prognosis was not favorable. In addition to the emotional impact of his mother's condition on Bridge, he was also concerned that he had no understanding of his mother's finances in the event that she passed away. Bridge stayed in his mother's house while she was in the hospital. During that time, he discovered a folder in which his mother kept her bills. On January 18, 2014, Bridge called his mother's creditors using the toll-free numbers he found on her bills. He made the calls from her home, using his mobile phone, while she was in the hospital. He did not discuss making these calls with his mother, received neither her consent nor her instruction to do so, and did so without her knowledge.

         Credit One's toll-free number connects its customers to its "Automated Account Information" system. According to Credit One's records, Bridge reached its IVR technology which allows customers to interact with its systems using a telephone keypad. The records further establish that Bridge performed a "Full" IVR authentication of his mother's account. That is, in response to an automated message requesting the customer to "enter your sixteen digit card number, " Bridge entered his mother's account number that he found on her billing statement. Next, in response to an automated message that the customer "enter the last four digits of your social security number, " Bridge entered the last four digits of his mother's social security number. Bridge then received an automated instruction to "[p]lease stay on the line while we access your account." As Bridge had entered the validation information for his mother's account, he was able to access information related to his mother's account, including the account balance, delinquency status, and payment due dates.

         Upon successful authentication of the account and partial social security information, Credit One associated the phone number Bridge had used to contact it with his mother's account. Bridge's mother's account became delinquent, and Credit One made calls to Bridge's mobile phone to recover the debt. Bridge alleges that over 100 such calls were made to his mobile phone number between January 2014 and March 2014. On or about March 18, 2014, Bridge instructed a Credit One representative to stop calling his cell phone, and no subsequent calls were made.

         Analysis - Nevada Deceptive Trade Practices Act Claim

         Credit One's motion to dismiss the NDTPA claim, brought pursuant to Fed. R. Civ. P, 12(b)(6), challenges whether Bridge's complaint states "a claim upon which relief can be granted." In ruling upon this motion, the court is governed by the relaxed requirement of Rule 8(a)(2) that the complaint need contain only "a short and plain statement of the claim showing that the pleader is entitled to relief." As summarized by the Supreme Court, a plaintiff must allege sufficient factual matter, accepted as true, "to state a claim to relief that is plausible on its face." Bell Atlantic Corp, v. Twombly, 550 U.S. 544, 570 (2007), Landers v. Quality Communications, Inc., 771 F.3d 638, 641 (9th Cir. 2015). Nevertheless, while a complaint "does not need detailed factual allegations, a plaintiffs obligation to provide the 'grounds' of his 'entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, Landers, 771 F.3d at 642. In deciding whether the factual allegations state a claim, the court accepts those allegations as true, as "Rule 12(b)(6) does not countenance . . . dismissals based on a judge's disbelief of a complaint's factual allegations." Neitzke v. Williams, 490 U.S. 319, 327 (1989). Further, the court "construe[s] the pleadings in the light most favorable to the nonmoving party." Outdoor Media Group, inc. v. City of Beaumont, 506 F.3d 895, 900 (9th Cir. 2007).

         However, bare, conclusory allegations, including legal allegations couched as factual, are not entitled to be assumed to be true. Twombly, 550 U.S. at 555, Landers, 771 F.3d at 641. "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. at 679. Thus, this court considers the conclusory statements in a complaint pursuant to their factual context.

         To be plausible on its face, a claim must be more than merely possible or conceivable. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not 'show[n]'-'that the pleader is entitled to relief." Id. (citing Fed.R.Civ.P. 8(a)(2)). Rather, the factual allegations must push the claim "across the line from conceivable to plausible." Twombly, 550 U.S. at 570. Thus, allegations that are consistent with a claim, but that are more likely explained by lawful behavior, do not plausibly establish a claim. Id. at 567.

         As relevant to Bridge's NDTPA claim, "[a] person engages in a "deceptive trade practice" when in the course of his or her business or occupation he or she knowingly: . . . 3. Violates a state or federal statute or regulation relating to the sale or lease of goods or services." Nev. Rev. Stat. 598.0923(3). Bridge argues that the TCPA is such a "statute, " as 47 U.S.C, §227(a)(4) defines "telephone solicitation" as meaning "the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person, but such term does not include a call or message (A) to any person with that person's prior express invitation or permission, (B) to any person with whom the caller has an established business relationship, or (C) by a tax exempt nonprofit organization." Bridge fails, however, to identify any allegation of his Amended Complaint suggesting that Credit One violated a statute within the TCPA relevant to the Act's regulation of telephone solicitations. Rather, he alleges that Credit One violated 47 U.S, C. §227(b)(1)(A)(iii) of the TCPA, which prohibits a person from making "any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice- .. . (iii) to any telephone number assigned to a . . . cellular telephone service." Further, Bridge has alleged that Credit One's calls concerned attempts to collect a debt which, for purposes of the NDTPA, does not constitute doing business, See Nev. Rev. Stat. 80, 015(1)(h), Dismissal of Bridge's NDTPA claim is appropriate.

         Analysis - Motion to Compel Arbitration

         In its motion to compel arbitration, Credit One asserts that Bridge should be bound by the cardholder agreement including the arbitration provision even though he is a non-signatory to the agreement. Credit One argues that non-signatories may be bound by arbitration agreements under ordinary contract and agency principles. Alternatively, It argues that estoppel precludes Bridge from avoiding the arbitration clause. Bridge argues that the cardholder agreement does not apply to him under any legal theory.

         In determining whether parties have agreed to arbitrate a dispute, the court applies general state-law principles of contract interpretation, while giving due regard to the federal policy in favor of arbitration by resolving ambiguities as to the scope of arbitration in favor of arbitration. Mundi v. Union Security Life Ins. Co., 555 F.3d 1042, 1044 (9th Cir. 2009) (citations omitted). The presumption in favor of arbitration, however, does not apply if contractual language is plain that arbitration of a particular controversy is not within the scope of the arbitration provision. Id., (citations omitted).

         In some circumstances, a non-signatory to an arbitration agreement may be bound by the agreement. Comer v. Micor, Inc., 436 F, 3d 1098, 1101 (9th Cir. 2006). Federal courts have identified five theories pursuant to which an arbitration clause can be enforced by or against a non-signatory: (1) incorporation by reference, (2) assumption, (3) agency, (4) veil piercing alter ego, and (5) estoppel. Id. However, "[t]he strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement." Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1287 (9th Cir. 2009) (quoting Buckner v. Tamarin, 119 Cal.Rptr.2d 489 (Cal.App. 2002)).

         Credit One's argument that agency principles bind Bridge to the arbitration provision is without merit. "Where Nevada law is lacking, its courts have looked to the law of other jurisdictions, particularly California, for guidance." Eichacker v. Paul Revere Life Ins. Co., 354 F.3d 1142, 1145 (9th Cir.2004) (quotation omitted). "Under California law, when a non-signatory and one of the parties to an arbitration agreement have an agency relationship, the arbitration agreement may be enforced against the non-signatory." Tamsco Properties, LLC v. Langemeier, 597 Fed.Appx. 428, 429 (9th Cir. 2015). The court in Tamsco relied, in part, on Nguyen v. Tran, 157 Cal.App.4th 1032, 68 Cal.Rptr.3d 906 (2007). In Nguyen, the court noted that an arbitration agreement may be enforced by or against a non-signatory "when a non-signatory and one of the parties to the agreement have a preexisting agency relationship that makes it equitable to impose the duty to arbitrate on either of them." 157 Cal.App. 4th at 1036-37. In that case, the court found that the non-signatory who was identified in the underlying agreement as an agent of the signatory could, as the agent of the signatory, enforce the arbitration agreement against another signatory.

         The Court in Tamsco also cited Berman v. Dean Witter & Co., 44 Cal.App.3d 999, 1003, 119 Cal.Rptr. 130, 133 (Ct. App. 1975). In Berman, the plaintiff purchased futures contracts on his wife's account with a securities broker, then brought a suit arising from that purchase. The broker and its agent sought to enforce the arbitration provision in the agreement establishing the wife's account. Neither the plaintiff nor the broker's agent were signatories to the agreement. Nevertheless, the court noted that the dispute arose out of and was related to the agreement. As such, the broker's agent (a non-signatory) was entitled to the benefit of the arbitration provision to the same extent as his principal (a signatory). Conversely, the plaintiff (a non-signatory) was "not entitled to any greater right than his principal (a signatory). Under the agreement, the broker could enforce the arbitration provision against the wife, and the agent of the broker could likewise enforce the agreement against the plaintiff-the agent of the wife.

         In the present matter, Credit One has not shown that Bridge was acting as an agent for his mother at the time she entered the Cardholder Agreement. Further, Bridge was not identified as an agent for his mother in the Cardholder Agreement. Accordingly, the arbitration provision cannot be enforced against Bridge on the basis that he had a preexisting agency relationship with his mother at the time Credit One and Bridge's mother agreed to arbitrate disputes, and whose claims arise from or concern the Cardholder Agreement.

         Even assuming Bridge acted as his mother's agent at the time he called Credit One using his mother's account information, such act of agency is insufficient to compel arbitration against Bridge. Credit One is "not entitled to any greater right" against Bridge than those rights to which it is entitled as against his mother, who is the principal and signatory. Pursuant to the Cardholder Agreement, a Credit One customer agrees to arbitrate claims arising from communications relating to her account. The customer also agrees that she is "providing express written permission authorizing Credit One Bank ... to contact [her] at any phone number (including mobile, cellular/wireless, or similar devices), ., [she] provide[d] at anytime . . . includ[ing] those from which [she] contact[ed Credit One.]"

         Pursuant to the TCPA, however, a customer cannot give Credit One express written permission to use a regulated device to contact her at a cell phone number for which the customer is neither the subscriber nor the customary user. More particularly, she could not give Credit One such permission by the mere act of contacting Credit One using a phone for which she was neither subscriber nor customary user. If Credit One used a regulated device to call a mobile phone number used by a customer to contact Credit One, and the customer was neither the subscriber nor customary user of that number (and did not otherwise have any authority to grant permission regarding that number), Credit One's calls to that number would be outside the terms of, and not governed by, the Cardholder Agreement and not subject to its arbitration provision. Credit One cannot merely rely on a customer's use of a mobile phone to contact Credit One, and the terms of the Cardholder Agreement, to establish that the customer could and did grant consent to Credit One to make calls to that particular phone. Conversely, the terms of the Cardholder Agreement and a customer's use of a cell phone to contact Credit One do not establish that Credit One's subsequent calls to that cell phone number are governed by the Cardholder Agreement. Rather, in the context of the TCPA, Credit One must show (in addition to the terms of the Cardholder Agreement, and the customer's use of a phone) that the customer could, for the mobile phone number used to contact Credit One, grant consent to Credit One to call that mobile phone number. As Credit One has neither argued nor shown that Bridge's mother could grant it permission to use a regulated device to contact Bridge's phone, the Court cannot conclude that Bridge, as her agent, could grant that permission. Accordingly, Credit One cannot compel Bridge, in his capacity as an agent of his mother, to arbitrate his TCPA claim.

         Whether Bridge should be equitably estopped from avoiding the arbitration provision, however, presents a closer and more difficult question. "Equitable estoppel 'precludes a party from claiming the benefits of a contract while simultaneously attempting to avoid the burdens that contract imposes.'" Comer v. Micor, Inc., 436 F.3d 1098, 1101 (9th Cir. 2006) (quoting Wash. Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260, 267 (5th Cir.2004)), "[N]onsignatories have been held to arbitration clauses where the nonsignatory 'knowingly exploits the agreement containing the arbitration clause despite having never signed the agreement.'" Id., (quoting E.I, DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187, 199 (3d Cir.2001)). In Comer, the Ninth Circuit affirmed the district court's denial of the defendant's motion to compel arbitration. The court noted that the plaintiff was "simply a participant" in an ERISA plan, did not seek to enforce the terms of the underlying agreement, and did not otherwise take advantage of the agreements.

         In Nevada, the elements of equitable estoppel are: "(1) the party to be estopped must be apprised of the true facts, (2) that party must intend that his conduct shall be acted upon or must so act that the party asserting estoppel has the right to believe it was so intended, (3) the party asserting estoppel must be ignorant of the true state of the facts, and (4) the party asserting estoppel must have detrimentally relied on the other party's conduct." Las Vegas Convention and Visitors Authority v. Miller, 124 Nev. 669, 698, 191 P.3d 1138, 1157 (2008); see also Holland Livestock Ranch v. U.S., 655 F.2d 1002 (9th Cir. 1981).

         "A non-signatory to an arbitration agreement may be compelled to arbitrate where the non-signatory 'knowingly exploits' the benefits of the agreement and receives benefits flowing directly from the agreement. Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1179 (9th Cir. 2014) (citing MAG Portfolio Consultant, GMBH v. Merlin Biomed Grp. LLC, 268 F.3d 58, 61 (2d Cir.2001)). In Nguyen, the Ninth Circuit indicated the plaintiff was "not the type of non-signatory contemplated by the rule." Id. It went on to note that "[e]quitable estoppel typically applies to third parties who benefit from an agreement made between two primary parties." Id. The plaintiff brought suit against an online retailer. The plaintiff relied on the Terms of Use's "choice of law provision in his complaint and asserting class claims under New York law." Id., at 1179. The retailer's website had a link to its Terms of Use, but the plaintiff neither read nor clicked on the link to the Terms of Use. The plaintiff did use the website in an unsuccessful attempt to purchase a product from the retailer. On this evidence, the court determined that the plaintiff was "not equitably estopped from avoiding arbitration because he relied on the Terms of Use's choice of law provision."

         In MAG Portfolio Consultant, GMBH v. Merlin Biomed Grp. LLC, 268 F.3d 58, 61 (2d Cir. 2001), the Second Circuit explained that "[t]he benefits must be direct-which is to say, flowing directly from the agreement." The court went on to explain:

Deloitte [Noraudit A/S v. Deloitte Haskins & Sells, __ U.S. __, 9 F.3d 1060, 1064 (2d Cir.1993)], for example, concerned an agreement containing an arbitration clause which governed the terms of use of a trade name. A non-signatory who had received a copy of the agreement, raised no objections to it and made use of that trade name pursuant to the agreement was estopped from arguing it was not bound by the arbitration clause in the agreement. Deloitte, 9 F.3d at 1064.
By contrast, the benefit derived from an agreement is indirect where the non-signatory exploits the contractual relation of parties to an agreement, but does not exploit (and thereby assume) the agreement itself. Thomson-CSF, [S.A. v. Am. Arbitration Ass'n, 64 F.3d 773, 776 (2d Cir.1995)]. In Thomson-CSF, for example, two companies agreed to trade exclusively with each other. Id. at 775. A third-party competitor acquired one of the companies, apparently with the intent of squeezing the remaining company out of the market. Id. The unacquired signatory was contractually bound to trade only with a company that was now a subsidiary to its competitor. Id. Thus, interest in trading waned. Id. While the agreement was crucial to the benefit the third party gained by shutting its competitor out of the market, the agreement was not the direct source of the benefit. Id. at 778-79. Rather, the benefit flowed from the non-signatory's exploitation of the contractual relation created through the agreement by acquiring one of the signatories to the agreement.

268 F.3d at 61-62.

         Bridge quotes, in his opposition, the Texas Supreme Court in In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739-40 (Tex. 2005) for the proposition that if "a non-signatory's claims can stand independently of the underlying contract, then arbitration generally should not be compelled under this theory." As suggested by the court's discussion in that matter, a suit brought to enforce the terms of a contract is an obvious example of a non-signatory seeking a direct benefit-a benefit flowing directly from the contract. Deloitte, however, provides an example of direct benefit estoppel applying to a non-signatory who argued that its claim did not arise from the agreement containing the arbitration provision. The court concluded, however, that the non-signatory's acceptance of the benefits of the agreement, as well as its knowledge of and failure to object to the agreement, estopped it from denying its obligation to arbitrate under the agreement.

         Bridge argues that "even if none of the terms of the Cardholder Agreement existed, [he] would still have a viable TCPA claim against Credit One." The argument is accurate only to the extent that the elements of his TCPA claim do not rely upon any term within the Cardholder Agreement. The argument ignores, however, the allegations of his own amended complaint, in which he acknowledges that he first contacted Credit One in relation to his mother's account. The issue raised by Credit One's motion is whether Bridge should be permitted to engage in and benefit from conduct governed by the Cardholder Agreement, which conduct elicited Credit One's response that is the subject of his TCPA claim, but avoid its arbitration provision.

         The Court disagrees with Bridge's argument that this case is more like Bridas S.A.P.I.C. v. Govt, of Turkmenistan, 345 F.3d 347 (5th Cir. 2003) than Hellenic Investment Fund, Inc. v. Det Norske Veritas, 464 F.3d 514 (5th Cir. 2006). Both matters are distinguishable. Bridge is accurate in noting that, in Bridas, the non-signatory did not sue the signatory based upon the underlying agreement. He ignores, however, that Bridas involved a signatory initiating an arbitration proceeding against the non-signatory to pursue a claim against the non-signatory under the provisions of the underlying agreement. The present matter concerns a non-signatory bringing a claim against the signatory. At issue is whether that suit against the signatory is "premised in part upon the agreement." Bridas, 345 F.3d at 362.

         The matter underlying Hellenic is similar to the present matter in that it involved a signatory seeking to enforce an arbitration provision against a non-signatory who had brought suit against the signatory. The claim in Hellenic, however, depended on establishing that the signatory had acted contrary to other provisions of the same document containing the arbitration provision. In ...

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