Minor v. Best Buy Stores, LP

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

DOCKET NO. 3:21-cv-00325-FDW-DCK

CATHERINE MINOR, )

)

Plaintiff, )

)

vs. )

) ORDER

CITIBANK, N.A., AND BEST BUY )

STORES, LP, )

)

Defendants. )

)

THIS MATTER is before the Court on Defendant Best Buy Stores, LP (Defendant “Best

Buy”) Motion to Stay and Compel Arbitration and Dismiss, (Doc. No. 8), and Plaintiff’s Motion

to Strike, (Doc. No. 16). Having carefully considered the motion, memoranda, and the record, the

Court GRANTS Defendant Best Buy’s Motion to Compel Arbitration, STAYS this case, and

DENIES Plaintiff’s motion to strike.

I. BACKGROUND

On January 20, 2019, Plaintiff used her “Best Buy credit card, which is serviced by

CitiBank” to pay $209.10 to purchase electronics and a four (4) year Geek Squad Protection Plan

(hereafter “Protection Plan”). (Doc. No. 1-1, p. 2). At the time of purchase, Plaintiff was a member

of the Best Buy Rewards Program and her receipt indicates she used her Best Buy Member ID as

part of the transaction. Plaintiff had enrolled in the Rewards Program in 2004; however, the parties

dispute whether she was provided the terms and conditions upon enrollment or at any time she

participated in the Program between. On February 25, 2019, Plaintiff returned the purchased

electronics, including the Protection Plan, to receive a refund on her Best Buy credit card. Plaintiff

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contends that “[c]ontrary to Best Buy's representations on February 25, 2019, that Plaintiff's Best

Buy credit card balance was $0.00, Best Buy had only refunded Plaintiff $208.42 of the original

$209.10 purchase price and unbeknownst to Plaintiff charged the un-refunded balance, $0.68, back

to Plaintiff's Best Buy credit card and allegedly emailed said statement to Plaintiff.” (Id.). Plaintiff

contends she did not discover this balance until June 2019 when she sought to finalize her mortgage

financing and was informed her credit report reflected a “Serious Delinquency” and “Amount

owed on delinquent accounts.” (Id.). Plaintiff contends that as a result, she did not qualify for the

preapproval mortgage rate, received a significantly higher mortgage rate, and paid her mortgage

provider “in points” in order to procure a lower interest rate.

Plaintiff filed suit against Best Buy and Citibank asserting claims for violation of the North

Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”), negligent misrepresentation, and

fraudulent misrepresentation. Plaintiff also asserted a claim against Citibank for violation of the

Fair Credit Reporting Act. Plaintiff has consented to arbitration with Citibank, (Doc. No. 13).

Best Buy has moved to compel arbitration based on the arbitration provision contained in

the Best Buy Rewards Program terms and conditions, which provides:

IN CONSIDERATION FOR PARTICIPATING IN THE PROGRAM, YOU

AGREE THAT IF (1) YOU HAVE ANY DISPUTE WITH OR CLAIM AGAINST

BEST BUY ARISING OUT OF OR RELATING IN ANY WAY TO ANY

PRODUCTS OR SERVICES SOLD OR DISTRIBUTED BY BEST BUY

INCLUDING, BUT NOT LIMITED TO, THE ADVERTISING OF OR THE

SALES PRACTICES FOR SUCH PRODUCTS AND SERVICES, AND (2) YOU

RECEIVED POINTS, COULD HAVE RECEIVED POINTS, OR YOU APPLIED

POINTS OR A CERTIFICATE TOWARD SUCH TRANSACTION, THEN YOU

WILL RESOLVE DISPUTES OR CLAIMS BY BINDING ARBITRATION,

RATHER THAN IN COURT, EXCEPT THAT YOU MAY ASSERT CLAIMS

IN SMALL CLAIMS COURT IF YOUR CLAIMS QUALIFY.

BY AGREEING TO ARBITRATION, YOU UNDERSTAND AND AGREE

THAT YOU ARE WAIVING YOUR RIGHT TO MAINTAIN OTHER

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AVAILABLE RESOLUTION PROCESSES, SUCH AS A COURT ACTION OR

ADMINISTRATIVE PROCEEDING, TO SETTLE DISPUTES. . .

(Doc. No. 15-1, p. 14).

II. ANALYSIS

Section 2 of the Federal Arbitration Act (“FAA”) provides that a written arbitration

agreement in “a contract evidencing a transaction involving commerce ... shall be valid,

irrevocable, and enforceable ....” 9 U.S.C. § 2. The Supreme Court has noted that the FAA

represents “a liberal federal policy favoring arbitration agreements.” Moses H. Cone Mem'l Hosp.

v. Mercury Constr. Corp., 460 U.S. 1, 24, (1983); see also Adkins v. Labor Ready, Inc., 303 F.3d

496, 500 (4th Cir. 2002). The Fourth Circuit has explained:

In order for a court to compel arbitration, the court must first find that an arbitration

agreement exists between the parties. If an agreement is found to exist, the court

must then decide whether the dispute at issue falls within the scope of the

agreement. To determine whether the parties agreed to arbitrate, courts apply state

law principles governing contract formation.

Hightower v. GMRI, Inc., 272 F.3d 239, 242 (4th Cir. 2001) (citation omitted). Under North

Carolina law, a valid contract “requires offer, acceptance, consideration, and no defenses to

formation.’” Id. (quoting Koltis v. N.C. Dep't of Human Res., 480 S.E.2d 702, 704 (N.C. Ct. App.

1997)). Additionally, “the public policy of North Carolina strongly favors the settlement of

disputes by arbitration and requires that the courts resolve any doubts concerning the scope of

arbitrable issues in favor of arbitration.” Revels v. Miss N.C. Pageant Org., Inc., 627 S.E.2d 280,

283 (2006). “The party seeking to compel arbitration bears the burden to demonstrate such an

agreement was reached.” D & R Constr. Co., Inc. v. Blanchard’s Grove, 667 S.E.2d 305 (N.C.

App. 2008).

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As an initial matter, the Court finds Plaintiff’s motion to strike to be wholly without merit.

As the Fourth Circuit has explained, “Rule 12(f) motions are generally viewed with disfavor

‘because striking a portion of a pleading is a drastic remedy and because it is often sought by the

movant simply as a dilatory tactic.’” Waste Management Holdings, Inc. v. Gilmore, 252 F.3d 316,

347 (4th Cir. 2001) (quoting.5A A. Charles Alan Wright & Arthur R. Miller, Federal Practice &

Procedure § 1380, 647 (2d ed.1990)). A motion to strike may be directed only towards material

contained in a “pleading.” Fed. R. Civ. P. 12(f). A pleading is defined as “a complaint, an answer

to a complaint, an answer to a counterclaim, an answer to a cross claim, an answer to a third-party

complaint, or a court-ordered reply to an answer.” Fed. R. Civ. P. 7(a). An affidavit or

memorandum in support of a motion to dismiss is not a pleading. See id. Even if the documents

Plaintiff seeks to strike were subject to a Rule 12(f) motion, she has not established any basis under

law for doing so. To the extent Plaintiff relies on Local Civil Rule 7.1(e), the Court finds that the

Reply pleading and affidavit relate to the issues raised in Plaintiff’s response, particularly

Plaintiff’s argument that she did not receive the terms and conditions of the Rewards Program that

contained the arbitration provision at issue here. Accordingly, striking the pleadings is not

warranted here. And finally, Plaintiff has not indicated how allowing a surreply would be helpful

to the Court beyond what she has already argued in her response to the instant motion.

Turning to the merits of the motion to compel arbitration, the record before the Court

indicates a valid arbitration agreement exists between Plaintiff and Best Buy. The dispute among

the parties rests on whether Plaintiff agreed to the arbitration provision as part of her participation

in the Rewards Program, as it is undisputed that the Rewards Program terms and conditions contain

an arbitration provision. Although Plaintiff does not recall receiving a copy of these terms and

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conditions when she enrolled as a member in 2004 or at any time she remained a member leading

up to the 2019 transaction at the heart of this case, the record before the Court tends to show

Defendant provided all Reward Program participants electronic notice in 2016 of the terms and

conditions, including the updated provision regarding arbitration. The record also indicates that

Plaintiff continued to participate in the Rewards Program by making several purchases after the

2016 notice that updated the terms and including the arbitration provision. There is sufficient

evidence to conclude that Plaintiff had notice of, and access to, the arbitration provision and, by

participating in the Rewards Program, agreed to be bound by it. The fact she may have chosen not

to access or read the language of the arbitration provision in the Rewards Program terms and

conditions does not render it invalid or non-binding. See Dieng v. College Park Hyundai, No.

DKC-09-0068, 2009 WL 2096076, at *5 (D. Md. July 9, 2009) (holding that plaintiffs were bound

to an agreement they “did not have or take the time to read and understand”). Plaintiff has failed

to persuade this Court that the agreement to arbitrate is unenforceable.

Next, the Court concludes the language of the arbitration clause clearly indicates that all

disputes between the parties will be submitted to arbitration. The disputes at issue fall within that

broad scope. The Court therefore finds and concludes that the parties entered into a valid and

binding agreement to arbitrate and that the disputes at issue fall within the scope of that agreement.

In the alternative, even if Plaintiff did not consent to the arbitration provision in the terms

and conditions of the Rewards Program, the Court is especially compelled under this record to sua

sponte find and conclude that Plaintiff’s claims against Best Buy are so intertwined with the claims

against Citibank that estoppel principles counsel in favor of enforcing arbitration among Best Buy

and Plaintiff. Of course, “arbitration is a matter of contract and a party cannot be required to

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submit to arbitration any dispute which he has not agreed so to submit.” United Steelworkers v.

Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960). However, in certain limited

circumstances, a nonparty can enforce, or be bound by, an arbitration provision within a contract

executed by other parties. See Int’l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH,

206 F.3d 411, 416–17 (4th Cir. 2000). Indeed, “[a] number of courts, including the Fourth Circuit,

have recognized an ‘intertwined claims’ exception to the general rule.” James C. Greene Co. v.

Great Am. E & S Ins. Co., 321 F. Supp. 2d 717, 719 (E.D.N.C. 2004) (collecting cases and citing

J.J. Ryan & Sons v. Rhone Poulenc Textile, S.A., 863 F.2d 315 (4th Cir.1988)). The Fourth Circuit

has explained that “equitable estoppel is warranted when the signatory to the contract containing

the arbitration clause raises allegations of substantially interdependent and concerted misconduct

by both the nonsignator[ies] and one or more of the signatories to the contract.” Brantley v.

Republic Mortgage Ins. Co., 424 F.3d 392, 396 (4th Cir. 2005). “To be equitably estopped from

denying the applicability of an arbitration clause, therefore, the signatory need not necessarily

assert a cause of action against the nonsignatory for breach of the contract containing the

arbitration clause. Instead, estoppel is appropriate if in substance. the signatory's underlying

complaint is based on the nonsignatory’s alleged breach of the obligations and duties assigned to

it in the agreement. Am. Bankers Ins. Grp., Inc. v. Long, 453 F.3d 623, 627–28 (4th Cir. 2006)

(cleaned up).

Applying these principles of equitable estoppel to the instant case, the Court finds and

concludes that Plaintiff is estopped from refusing to arbitrate her dispute with Best Buy because

Best Buy is entitled to enforce arbitration as a third-party beneficiary of the Citibank credit card

agreement. Indeed, Plaintiff refers to the “Best Buy credit card” throughout her Complaint. All

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of Plaintiff’s claims arise out of and relate directly to the credit card, and the specific allegations

against Best Buy relate to its representations regarding processing a refund to that credit card. A

fair reading of the Complaint leads to only one conclusion: but for the existence of the “Best Buy

credit card” provided by Citibank, Plaintiff would have no claims against Best Buy here. Plaintiff

consented to arbitration with Citibank, which precludes Plaintiff from arguing the unenforceability

of that arbitration provision to the claims at issue. In sum, because of the unique allegations and

claims in the instant case, the arbitration provision in Plaintiff’s credit card agreement with

Citibank supports arbitration of Plaintiff’s claims against Best Buy pursuant to the principles of

equitable estoppel.

Having found the parties shall arbitrate their disputes among them, Section 3 of the FAA

guides this Court as to next steps in the instant case. It provides:

If any suit or proceeding be brought in any of the courts of the United States upon

any issue referable to arbitration under an agreement in writing for such arbitration,

the court in which such suit is pending, upon being satisfied that the issue involved

in such suit or proceeding is referable to arbitration under such an agreement, shall

on application of one of the parties stay the trial of the action until such arbitration

has been had in accordance with the terms of the agreement, providing the applicant

for the stay is not in default in proceeding with such arbitration.

9 U.S.C. § 3. Thus, the Fourth Circuit has said: “The FAA requires a court to stay ‘any suit or

proceeding’ pending arbitration of ‘any issue referable to arbitration under an agreement in writing

for such arbitration.’ This stay-of-litigation provision is mandatory.” Adkins v. Labor Ready, Inc.,

303 F.3d 496, 500 (4th Cir. 2002) (quoting 9 U.S.C. § 3)). Nevertheless, in lieu of a stay, some

courts have determined that “dismissal is a proper remedy when all of the issues presented in a

lawsuit are arbitrable.” Choice Hotels Int'l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709-

10 (4th Cir. 2001). Because Plaintiff’s claims against Citibank are currently stayed pending

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resolution of arbitration, the Court finds a stay of Plaintiff's claims against Best Buy is likewise

appropriate. This matter will be stayed, and parties are required to submit a status report every 90

days to apprise the Court of their progress in resolving the claims between them.

III. © CONCLUSION

Because a valid arbitration agreement exists between the parties and governs their disputes

in this case, Defendant’s Motion to Stay Proceedings and Compel Arbitration is granted while its

Alternative Motion to Dismiss is denied.

IT IS THEREFORE ORDERED that Best Buy’s Motion to Stay and in the Alternative

Dismiss, (Doc. No. 8), is GRANTED IN PART and DENIED IN PART.

IT IS FURTHER ORDERED that Plaintiff's Motion to Strike, (Doc. No. 16), is DENIED.

IT IS FURTHER ORDERED that the parties shall proceed to arbitration and submit reports

to the Court every ninety (90) days. Accordingly, this matter is STAYED for twelve (12) months.

The dispute must be resolved within twelve (12) months from the date of this Order. Failure to do

so will result in Court action.

IT IS SO ORDERED.

Signed: March 3, 2022

Frank D. Whitney

United States District Judge * ey