Guerrero v. Citibank, N.A.

Background

Susana Guerrero sued Citibank, N.A., Calvary Portfolio Services, LLC, Experian Information Solutions, Inc., Trans Union LLC, and Equifax Information Services, LLC. She alleged that the defendants failed to properly investigate her disputes and reported inaccurate information that harmed her creditworthiness. The complaint asserted claims under the Fair Credit Reporting Act, the Rosenthal Fair Debt Collection Practices Act, the California Identity Theft Act, and the California Consumer Credit Reporting Agencies Act.

Guerrero alleged that she opened a Macy’s credit-card account issued by Citibank in 2020. After her purse was stolen in 2021, an unknown person allegedly used the Macy’s card. Guerrero said she notified Citibank, asked it to close the account, filed police reports, and disputed Citibank’s reporting, but Citibank continued reporting inaccurate information and trying to collect the alleged debt.

Guerrero also alleged that an unknown person opened a separate Wayfair credit-card account in her name in 2022 using her personal information without her knowledge or consent. She said she did not open, authorize, or use that account. The court noted that Guerrero said her Costco-related claims were brought only against other defendants and were not at issue in Citibank’s motion.

Citibank’s Motion

Citibank moved to compel arbitration and to stay the pending proceedings. Under the Federal Arbitration Act, courts generally enforce valid arbitration agreements according to their terms. The court examined whether a valid agreement existed and whether it covered the disputes.

Macy’s-Related Claims

The parties did not dispute that the Macy’s cardholder agreement was valid and contained an arbitration provision. The provision covered claims between Guerrero and Citibank arising out of or related to the account, a previous related account, or their relationship. It also stated that the provision applied broadly to claims under statutory and other legal theories. Guerrero had 45 days after the account opened to reject the arbitration provision in writing, and the record showed that she did not opt out.

The court held that the Macy’s-related claims fell within the agreement because they concerned Citibank’s alleged failure to close the Macy’s account, continued collection efforts, and continued reporting about that account. The court rejected Guerrero’s argument that the arbitration provision was an unconscionable contract of adhesion. The court explained that, even if California law applied, the opportunity to opt out meant the provision was not procedurally unconscionable. Because Guerrero did not establish procedural unconscionability, the court did not need to decide substantive unconscionability, which concerns whether a contract produces overly harsh or one-sided results.

Wayfair-Related Claims

The court applied South Dakota law because the Macy’s agreement contained a South Dakota choice-of-law provision. It interpreted the agreement by considering its language as a whole and giving the words their ordinary meaning.

The court concluded that the Wayfair-related claims did not arise out of or relate to Guerrero’s Macy’s account, a previous related account, or her relationship with Citibank as described in the agreement. The Wayfair account was opened after the Macy’s account, and Guerrero alleged that an unknown person—not Guerrero—opened it without her permission. The court found it unreasonable to conclude that the parties expected the Macy’s agreement to cover a separate account fraudulently created in Guerrero’s name.

The court also rejected Citibank’s reliance on a presumption favoring arbitration. It held that the agreement’s language was not ambiguous on this issue and that the Wayfair-related claims did not arise out of or relate to Guerrero’s relationship with Citibank within the meaning of the Macy’s agreement.

Disposition

Judge Jacquelyn Scott Corley granted in part and denied in part Citibank’s motion to compel arbitration. The court granted the motion as to the Macy’s-related claims and denied the motion as to the Wayfair-related claims. The order stated that it disposed of Docket No. 58.