The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
CHANTEL K. REDENSKY, : No. 1:23cv1579
Plaintiff :
: (Judge Munley)
V. :
VERIZON COMMUNICATIONS, INC.,_ :
Defendant :
MEMORANDUM
Before the court for disposition is Defendant Verizon Pennsylvania □□□□□□
motion to compel arbitration and to stay proceedings in this case involving
alleged violations of the Fair Credit Reporting Act (“FCRA’), 15 U.S.C. § 1681 ef
seq.’ The parties have briefed their respective positions and the matter is ripe
for decision.
Background?
Plaintiff Chantel K. Redensky instituted the instant action alleging that
Defendant Verizon Communications, Inc. (hereinafter “Verizon” or “defendant’)
' Defendant indicates that it is erroneously sued as “Verizon Communications, Inc.” and shoulc
rather be identified as “Verizon Pennsylvania LLC.” (Doc. 4-1, Def.’s Supp. Br. at 1). For
purposes of this Memorandum, the court will identify the defendant as it is named in the
complaint, that is, Verizon Communications, Inc. (See Doc. 1, Compl.)
* These brief background facts are derived from plaintiffs complaint. At this stage of the
proceedings, the court must accept all factual allegations in the complaint as true. Phillips v.
Cnty. of Allegheny, 515 F. 3d 224, 233 (3d Cir. 2008). The court makes no determination,
however, as to the ultimate veracity of these assertions.
violated the FCRA. The FCRA is a statute that created a regulatory framework
“to protect consumers from the transmission of inaccurate information about
them, and to establish credit reporting practices that utilize accurate, relevant,
and current information[.]” Seamans v. Temple Univ., 744 F.3d 853, 860 (3d Cir.
2014). Plaintiff alleges that defendant provided inaccurate information to various
credit reporting agencies involving her account. (See Doc. 1, Compl.)
Specifically, this case involves allegations that the defendant provided
inaccurate information to various credit reporting agencies regarding the “date of
first delinquency” (“DOFD”) regarding plaintiff's account in violation of the FCRA.
According to the complaint, the DOFD is the month and year of the
commencement of the delinquency on the account immediately preceding the
credit account being placed for collection, charged to profit or loss, or subject to
any similar action. (Doc. 1, 96); 15 U.S.C. § 1681c(c)(1). The DOFD is
important to consumers such as the plaintiff because it determines the age of the
delinquency. (Id. 7). Delinquencies which are more recent operate to lower a
consumer's credit score as compared to older delinquencies. (Id. 8). If an
improper, inaccurate DOFD is disclosed, consumers cannot dispute information
about the “age” of their accounts and are therefore subject to low, inaccurate
credit scores. (Id. ] 9).
Per the complaint, from June through October 2022, several Verizon
Tradelines® reported inaccurate information regarding, inter alia, the DOFD in
credit reports of several consumer crediting reporting companies including
Experian, Equifax, and TransUnion. (Id. 10-12). Defendant then sold the
Tradelines to U.S. Asset Management Inc. in a portfolio debt transfer sale. (Id.
14).
Subsequently, plaintiff was denied credit and discovered the inaccurate
credit information being reported for the Verizon Tradelines. (Id. {f] 58-66).
Accordingly, plaintiff brought suit alleging the following two causes of action
against Verizon: Count | — Willful and Reckless Violations of the FCRA; Count II
~— Negligent Violations of the FCRA. In response to the complaint, Verizon filed a
motion to compel arbitration and to stay proceedings. (Doc. 4). The motion has
been fully briefed, bringing the case to its present posture.
Jurisdiction
Plaintiff brings suit under the FCRA, 15 U.S.C. § 1681 et seg., therefore,
the court has federal question jurisdiction pursuant 28 U.S.C. § 1331 (“The
district courts shall have original jurisdiction of all civil actions arising under the
Constitution, laws, or treaties of the United States.”).
3 “Tradeline” evidently means “account” in this context.
Legal Standard
As noted above, defendant has filed a motion to compel arbitration and to
stay proceedings. Under the Federal Arbitration Act (“FAA”), “a contract
evidencing a transaction involving commerce to settle by arbitration...shall be
valid, irrevocable, and enforceable, save upon such grounds...as otherwise
provided in chapter 4.” See 9 U.S.C. § 2. Additionally, a “party to a valid and
enforceable arbitration agreement is entitled to a stay of federal court
proceedings pending arbitration as well as an order compelling such arbitration.”
Alexander v. Anthony Int'l, L.P., 341 F.3d 256, 263 (3d Cir. 2003); see also 9
U.S.C. §§ 3, 4. The FAA “reflects an emphatic federal policy in favor of arbitral
dispute resolution.” Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530, 533
(2012) (internal quotation marks and citations omitted).
Generally, to compel arbitration under the FAA, a court must conclude that:
(1) the parties entered into a valid agreement to arbitrate; and (2) plaintiff's
claims fall within the scope of the arbitration agreement. Century Indem. Co. v.
Certain Underwriters at Lloyd's, London, 584 F.3d 513, 523 (3d Cir. 2009).
Discussion
Defendant argues that a valid arbitration agreement exists and the parties’
dispute falls within it. Plaintiff raises the following three issues in opposition to
the defendant’s motion: 1) Defendant failed to comply with Local Rule 7.1; 2)
, .
Defendant waived its right to arbitrate; and 3) Defendant's arbitration clause is
unenforceable or discovery is needed before ruling on the motion. The court will
address these issues in turn.
1. Compliance with Local Rule 7.1
Plaintiff initially argues that the motion to compel arbitration should be
denied because the defendant did not properly seek concurrence pursuant to
Local Rule of Procedure 7.1. Rule 7.1 requires a party who files a motion to seek
concurrence of opposing counsel and then to file a certificate of concurrence or
non-concurrence with the motion. Defendant’s motion indicates that pursuant to
Local Rule 7.1, defense counsel contacted plaintiff's counsel to determine
whether plaintiff would consent to the relief requested in the motion, but plaintiff
did not consent. (Doc. 4, at 11.1).
Plaintiff admits that defendant sought concurrence, but argues that the
motion was altered after concurrence was sought. Thus, the motion that was
filed is different from the one that concurrence was sought on. The change
plaintiff discusses appears to be that a declaration attached to the motion
originally indicated that plaintiff established her account on a certain date,
whereas the declaration/motion as filed indicates that she updated her account
on that date, instead of establishing it. (Doc. 8, at ECF 17, Doc. 7, ECF 6-7).
While the date of establishing and/or updating the account may be relevant
to the underlying merits of the case, the change made by the defendant after
seeking concurrence is de minimus. Failing to seek concurrence after the
change does not so frustrate the purpose of the Local Rules as to justify denying
defendant’s motion. The court will not deny the motion on this basis.
Defendant is reminded, however, that it should strictly comply with the Local
Rules including Rule 7.1.
2. Waiver of Right to Arbitrate
Plaintiff next argues that defendant waived its right to arbitrate. Plaintiff
explains that the defendant participated in extensive pre-litigation settlement
discussions without ever alleging any right to arbitration. (Doc. 7, ECF 13).
Furthermore, when the settlement negotiations failed, the parties engaged in
several email messages where defendant asked plaintiff how she wished to
proceed and told her that if she chose to file a complaint then one of defendant’s
attorneys would be handling the matter going forward. (Id.) According to the
plaintiff, defendant agreed to litigate and not arbitrate by informing plaintiff that if
she filed a complaint, one of defendant's attorneys would be handling the case.
After a careful review the court disagrees.
The United States Supreme Court has held that waiver occurs when a
party has “intentional[ly] relinquish[ed] or abandon[ed] ... a known right.” White
v. Samsung Electronics Am. Inc., 61 F.4th 334, 339 (3d Cir. 2023) (quoting
Morgan v. Sundance, Inc., 596 U.S. 411, 417 (2022)) (editing marks in original).
Here, the known right is defendant's alleged right to arbitrate the dispute.
Additionally, “[i]n analyzing whether waiver has occurred, a ‘court focuses on the
actions of the p[arty] who held the right’ and is informed by the ‘circumstances
and context of each case.’” Id. (quoting Morgan, 596 U.S. at 417) (editing marks
in original). The court therefore must now decide whether Verizon acted
inconsistently with an intent to assert its right to arbitrate.
Here, plaintiff served the complaint on defendant on October 6, 2023.
(Doc. 3). Twenty-one days later, defendant filed the instant motion to compel
arbitration and stay the proceedings. (Doc. 4). Thus, the motion to arbitrate was
filed at the very beginning of the lawsuit. Additionally, plaintiff does not allege
that the parties have engaged in extensive discovery, and defendant indicates
that no discovery has been propounded against plaintiff and no litigation on the
merits at all has occurred. (Doc. 8, ECF 16). These facts do not demonstrate
that defendant waived its alleged right to arbitrate.
Plaintiff argues that defendant engaged in extensive settlement talks before
the lawsuit was filed and this led to a waiver of any arbitration agreement. The
court finds that engaging in prelitigation settlement talks does not evince an
intent to waive arbitration rights. It appears that such discussions are an attempt
to resolve the issues between the parties before having to proceed through
litigation or arbitration. Thus, engaging in settlement talks does not show a
preference for either litigation or arbitration.
Plaintiff's second argument regarding waiver is that the parties engaged in
several email messages where defendant asked plaintiff how she wished to
proceed and told her that if she chose to file a complaint that one of defendant's
attorneys would be handling the matter going forward. Again, the actions of the
defendant here does not evince an intent to waive arbitration. Defendant merely
stated that an attorney would be handling the matter if plaintiff filed a complaint,
which appears to be exactly what happened. After the service of the complaint
on the defendant, an attorney quickly filed the instant motion to compel
arbitration and stay proceedings. Accordingly, the court finds that the arguments
of plaintiff are unconvincing and defendant has not waived its right to arbitrate.*
3. Existence of a Valid Arbitration Agreement
Plaintiff's final argument is that a valid arbitration agreement does not exist
or, ata minimum, the parties need to engage in discovery before the question of
whether an arbitration agreement exists can be adjudicated by the court.
4 The court does not here decide whether the alleged arbitration agreement is enforceable.
Rather, the court merely concludes that the defendant did not waive any right to arbitration tha
it might have.
To determine whether a valid arbitration agreement exists, a court must
initially decide whether the appropriate standard of review to apply to the motion
to compel arbitration is the Rule 12(b)(6) motion to dismiss standard or the Rule
56 summary judgment standard. See Guidotti v. Legal Helpers Debt Resolution,
L.L.C., 716 F.3d 764 (3d Cir. 2013). The law provides that “when it is apparent,
based on the face of a complaint, and documents relied upon in the complaint,
that certain of the party’s claims are subject to an enforceable arbitration clause,
a motion to compel arbitration should be considered under a Rule 12(b)(6)
standard without discovery’s delay.” Id. at 776 (internal quotation marks and
citation omitted). Where, however, “the complaint and its supporting documents
are unclear regarding the agreement to arbitrate, or if the plaintiff has responded
to a motion to compel arbitration with additional facts sufficient to place the
agreement to arbitrate in issue, then the parties should be entitled to discovery
on the question of arbitrability before a court entertains further briefing on the
question.” Id. at 776. (internal editing marks, quotation marks and citation
omitted).
Here, the initial complaint makes no mention of either an agreement to
arbitrate or a contract between the parties. It certainly can be inferred that some
sort of agreement governed the parties’ relationship. The contract, however, is
not attached to the complaint and no mention of an arbitration agreement is
made in the complaint’s allegations.
The alleged arbitration agreement is addressed for the first time in the
defendant’s motion to compel. The declaration of Meryl Friedman, a Litigation
Supervisor and Senior Paralegal for defendant is attached to the motion. (Doc.
4-2). The declaration indicates that in requesting an upgrade for an existing
Verizon account, plaintiff accepted Verizon’s Online Terms of Service. (Id. □□ 5).
The arbitration agreement is found in this “Terms of Service” agreement. (See
Doc. 4-2, Exh. B). Even with these documents that defendant has provided, the
court is left with questions that make resolution of the motion at this time
inadvisable.
The plaintiff's filings reveal that there may, in fact, be two contracts at
issue. One that the parties entered into when plaintiff initially obtained services
from defendant and one that may have taken effect when plaintiff updated her
account at a later date. Without further factual development it is impossible for
the court to make a reasoned analysis of the issues presented in defendant's
motion.
As the United States District Court for the District of New Jersey has
explained, where a complaint makes no reference to an arbitration agreement,
and the complaint contains no attachment that makes reference to such an
10
agreement, the court must look outside of the complaint and its attachments to
decide the issue of arbitrability. Corsi v. Celco Partnership d/b/a Verizon
Wireless, No. 3:22cv461, 2023 WL 3775320 at *3 (D.N.J. June 2, 2023).
Because matters outside of the complaint and its attachments are considered, it
is inappropriate to apply the Rule 12(b)(6) standard. Id. (citing Guidotti, 716 F.3d
at 774). In such acase, “the motion to compel arbitration must be denied
pending further development of the factual record.” Id. (quoting Guidotti, 716 F.3d
at 774).
Accordingly, the defendant’s motion to compel will be denied and the
parties will be granted a short period of time to engage in discovery to develop
the record regarding the alleged arbitration agreement. The motion will be
denied without prejudice to the defendant raising the issue again after the
discovery period if appropriate. If defendant files a second motion to compel
arbitration, it should follow the rules regarding motions for summary judgment,
including the filing of a statement of material facts, and plaintiff should file the
appropriate response to the statement of material facts. See Local Rule 56.1.
Conclusion
For the reasons set forth above, the defendant’s motion to compel
arbitration and to stay proceedings will be denied without prejudice. The parties
shall be provided sixty (60) days to engage in discovery, limited to the issue of
11
the arbitration agreement. The defendant will be permitted to file a new motion t
compel arbitration and to stay proceedings within twenty (20) days after the close
of this discovery period. An appropriate order follows.
| CX □□□
Date: /()//5/c
JUDGEJUHIAK. MU
Uni TY
12