United States District Court, D. Maryland
ASANTI T. COLLINS, et al., Plaintiffs,
DISCOVER FINANCIAL SERVICES, et al., Defendants.
MEMORANDUM OPINION AND ORDER
Paula Xinis United States District Judge.
before the Court in this consumer protection action is the
Motion to Dismiss Proceedings and Compel Individual
Arbitration filed by Defendants Discovery Financial Services,
Discover Bank, Discover Products, Inc., and U.S. Bank
National Association as Trustee for the Discover Card Master
Trust I (collectively, “Discover Defendants” or
“Defendants”) (ECF No. 5). For the reasons
below, the Court GRANTS IN PART and DENIES IN PART
Asanti T. Collins (“Collins”) and Bradley Clayton
(“Clayton”) both have Discover Card accounts.
Plaintiffs initially filed this suit in Montgomery County
Circuit Court, alleging that various practices of and among
the Discover Defendants when seeking to collect on delinquent
accounts are illegal under Maryland and federal consumer
protection laws, and that Defendants violated certain other
applicable Maryland regulations. Plaintiffs seek declaratory
and injunctive relief (Counts I and II), and bring claims
under various federal and state consumer protection and
licensing statutes (Counts III-IX), for unjust enrichment
(Count X), and for other ancillary relief (Count XI). See
generally ECF No. 2. Defendants removed the action to
this Court on the basis of federal question jurisdiction. ECF
No. 1 at 2.
the Complaint is voluminous and detailed, the question the
Court must answer is narrow: whether the cardmember
agreements that Collins and Clayton signed, which expressly
provide for arbitration in lieu of litigation, require the
Plaintiffs to submit to arbitration under the Federal
Arbitration Act (“FAA”).
pertinent cardmember agreements include arbitration
provisions that permit either party to the agreement to elect
to resolve any dispute arising from the use of
Plaintiffs' Discover accounts through binding
arbitration. ECF No. 5-3 at 8; ECF No. 5-4 at 5. Both
agreements also provide procedures Plaintiffs could follow to
reject the arbitration provisions. See ECF No. 5-3
at 9; ECF No. 5-4 at 7. The agreements include class action
waivers that specifically bar individual card members from
arbitrating claims on behalf of any other member or group
apart from that member's individual claims. ECF No. 5-3
at 8; ECF No. 5-4 at 5. Importantly, both provide that the
arbitration agreement is governed by the FAA. ECF No. 5-3 at
8; ECF No. 5-4 at 5-6. Finally, both cardmember agreements
provide that they are governed by applicable federal law or
by Delaware law where state law applies. ECF No. 5-3 at 9;
ECF No. 5-4 at 5.
moved to compel arbitration pursuant to the FAA, 9 U.S.C.
§ 1, et seq. In opposition, Plaintiffs argue
that the Court should apply Maryland law on the issue of
waiver and determine that Defendants waived the right to
arbitrate by previously initiating collection actions against
Plaintiffs in Maryland courts.
defendant who seeks to compel arbitration under the Federal
Arbitration Act bears the burden of establishing the
existence of a binding contract to arbitrate the
dispute.” Minnieland Private Day Sch., Inc. v.
Applied Underwriters Captive Risk Assurance Co., Inc.,
867 F.3d 449, 456 (4th Cir. 2017). To prevail on a motion to
compel arbitration under the FAA, the moving party must
demonstrate (1) the existence of a dispute between the
parties, (2) a written agreement between the parties that
includes an arbitration provision which purports to cover the
dispute, (3) the relationship of the transaction, which is
evidenced by the agreement, to interstate or foreign
commerce, and (4) the failure, neglect or refusal of the
opposing party to arbitrate the dispute. Adkins v. Labor
Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002).
motions to compel arbitration “exist in the netherworld
between a motion to dismiss and a motion for summary
judgment, ” the decision to treat a motion to compel as
one or the other “turns on whether the court must
consider documents outside the pleadings.” PC
Const. Co. v. City of Salisury, 871 F.Supp.2d 475, 477
(D. Md. 2012); see Butler v. Mariner Finance, LLC.,
Civil Action No. CCB-17-1738, 2017 WL 6406804, at *2 (D. Md.
Dec. 15, 2017). Because Plaintiffs' cardmember agreements
are not integral to the Complaint, and thus the Court must
consider the agreement itself as extrinsic evidence, the
Court construes the Motion to Compel as a motion for summary
judgment. Cf. Butler, 2017 WL 6406804, at *2 &
n.3 (treating motion to compel as motion to dismiss when
contract containing the arbitration agreement was integral to
and explicitly relied on in the complaint). Under this
standard, “motions to compel arbitration shall be
granted if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to
judgment as a matter of law.” Thomas v. Progressive
Leasing, Civil Action No. RDB-17-1249, 2017 WL 4805235,
at *2 (D. Md. Oct. 25, 2017) (internal marks and citations
enacted the FAA in 1925 “to reverse the longstanding
judicial hostility to arbitration agreements that had existed
at English common law and had been adopted by American
courts, and to place arbitration agreements upon the same
footing as other contracts.” Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991).
The FAA embodies a federal policy that is emphatically in
favor of arbitral dispute resolution, and courts must
rigorously enforce agreements to arbitrate. See Dillon v.
BMO Harris Bank, N.A., 787 F.3d 707, 712 (4th Cir. 2015)
(Dillon I). “Under the FAA, arbitration
agreements are valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation
of any contract.” Dillon v. BMO Harris Bank,
N.A., 856 F.3d 330, 334 (4th Cir. 2017) (Dillon
II) (internal quotation marks and citations omitted).
parties do not dispute that the arbitration agreements are
valid and enforceable. However, Plaintiffs contend that this
Court should not compel arbitration because, under the
Maryland Court of Appeals' holding in Cain v. Midland
Funding, LLC, 452 Md. 141 (2017), Defendants have waived
the right to arbitrate.
is inapplicable to this case. As this Court has recognized
several times since Cain was decided in 2017,
Cain involved compelling arbitration under the
Maryland Uniform Arbitration Act, not the FAA. See
Castellanos v. Mariner Fin., LLC, Civil Action ...