Guerrero V Citibank Na

Key Facts

Transaction Type

Issues

• The court considers whether the agreement Plaintiff signed when applying for a Macy's credit card constitutes a valid agreement to arbitrate under the Federal Arbitration Act, including whether the agreement is procedurally unconscionable.
• The court determines whether the Macy's Agreement arbitration provision encompasses Plaintiff's claims related to the Wayfair account, which was allegedly opened by an unknown individual without Plaintiff's consent, and whether claims arising from identity theft fall within the scope of the arbitration agreement.

Holdings

Remedies

• The Court denies Citibank's motion to compel arbitration as to Plaintiff's Wayfair-related claims. Plaintiff did not open the Wayfair Account, and an unknown individual opened it using Plaintiff's personal identifying information without her knowledge or consent. The Macy's Agreement arbitration provision does not govern claims related to the Wayfair account, which was a separate account fraudulently created. The Court concludes that Plaintiff's Wayfair-related claims do not arise out of or relate to her relationship with Citibank or her Macy's Account.
• The Court grants Citibank's motion to compel arbitration as to Plaintiff's Macy's-related claims. Plaintiff entered a valid arbitration agreement when she applied for a Macy's credit card account issued by Citibank, so she must arbitrate claims related to that Macy's account, including claims about Citibank's failure to close the Macy's Account, continued attempts to collect debt on the Macy's Account, and continued reporting of inaccurate information on Plaintiff's credit reports regarding the Macy's Account.

Legal Principles

• The Federal Arbitration Act requires courts to enforce arbitration agreements according to their terms when two gateway issues are met: (1) a valid agreement to arbitrate exists, and (2) the agreement encompasses the dispute at issue. The court applies South Dakota law for contract interpretation, seeking to ascertain and give effect to the intention of the parties by examining the contract as a whole and giving words their plain and ordinary meaning.
• Under the Federal Arbitration Act, an arbitration agreement is invalid when unenforceable under generally applicable contract defenses recognized by state law, such as unconscionability. Under California law, a plaintiff must prove both procedural unconscionability (oppression or surprise due to unequal bargaining power) and substantive unconscionability (overly harsh or one-sided results) to invalidate a contractual provision. The court found the Macy's Agreement arbitration provision was not adhesive because an individual could reject it by sending a written rejection notice within 45 days of account opening.

Precedent Name

• Van Dijen v. Equifax Info. Servs. LLC
• Holloway v. Citibank, N.A.
• Haynes v. TransUnion, LLC
• Rent-A-Center, West, Inc. v. Jackson
• AT&T Mobility LLC v. Concepcion
• Lim v. TForce Logistics, LLC

Key Disputed Contract Clauses

• The agreement defines covered claims as any claim, dispute, or controversy arising out of or related to the account, a previous related account, or the relationship between the parties. The court analyzed whether this language encompasses claims related to the Wayfair account fraudulently opened by identity theft without Plaintiff's consent.
• The Macy's Account Cardholder Agreement contains a binding arbitration provision stating that disputes may be resolved by binding arbitration rather than court litigation, jury trial, or class action, governed by the Federal Arbitration Act and interpreted in the broadest way the law allows.

Cited Statute

• California Identity Theft Act
• California Consumer Credit Reporting Agencies Act
• Fair Credit Reporting Act
• Rosenthal Fair Debt Collection Practices Act
• Federal Arbitration Act

Judge Name

Passage Text

• Courts have concluded that well-supported allegations of fraud in the formation of an arbitration agreement, such as where the party objecting to arbitration alleges an identity thief opened or otherwise interfered with the agreement containing the arbitration provision, preclude a finding as a matter of law that the parties have an enforceable agreement to arbitrate.
• Plaintiff entered a valid arbitration agreement when she applied for a Macy's credit card account issued by Citibank, so she must arbitrate claims related to that Macy's account. However, the Macy's agreement does not govern claims related to a separate Wayfair account, which Plaintiff alleges was opened by an unknown individual without her consent.
• The Court GRANTS in part and DENIES in part Citibank's motion to compel arbitration. The Court GRANTS Citibank's motion to compel as to Plaintiff's Macy's-related claims. The Court DENIES Citibank's motion to compel as to Plaintiff's Wayfair-related claims.