Theodore v. American Express National Bank
- Martinez-Olguin
- 3:23-cv-03710
- U.S. District Court · Northern District of California
- 4
In Theodore v. American Express, Judge Martinez-Olguin granted American Express’s motion to compel arbitration and dismissed the case pending arbitration.
Diana Theodore’s claims against American Express National Bank must proceed through individual arbitration rather than this court case, and the putative class action was dismissed pending arbitration.
What happened
In Theodore v. American Express National Bank, Diana Theodore brought a proposed class action alleging that American Express violated federal and California law by unlawfully increasing interest rates. American Express asked the court to require Theodore to arbitrate her individual claims.
The court found that Theodore’s 2018 card agreement required arbitration. It read the agreement’s two dispute-resolution provisions together and concluded that the optional provision for certain protected borrowers did not apply to Theodore unless she was a member of the Armed Forces or a dependent.
Judge Araceli Martinez-Olguin granted the motion to compel arbitration and dismissed the action pending arbitration. The clerk was ordered to close the case, although either party may seek a limited modification if the Supreme Court changes the rule allowing dismissal instead of a stay during arbitration.
The detailed version
- Theodore v. American Express National Bank · No. 3:23-cv-03710
- Martinez-Olguin
- Apr. 4, 2024
Background
Diana Theodore brought a putative class action against American Express National Bank. She alleged that American Express violated the Truth in Lending Act and California’s Unfair Competition Law by implementing unlawful interest-rate increases. American Express moved to compel Theodore to arbitrate her individual claims and to dismiss or stay the case while arbitration proceeded. The court identified the sole disputed issue as whether Theodore had agreed to arbitrate her claims.
Agreement to Arbitrate
The 2018 agreement governing Theodore’s American Express card included a “Claims Resolution” provision stating that either side could elect individual arbitration and that claims subject to arbitration could not be litigated in court or pursued as part of a class. The agreement also included a separate section titled “Claims Resolution for Covered Borrowers,” which stated that a covered borrower could elect arbitration but was not required to accept American Express’s request to arbitrate.
Theodore argued that the covered-borrower provision gave her a choice whether to arbitrate. The court rejected that interpretation, explaining that the agreement had to be read so that each provision had effect. The court relied on the agreement’s Military Lending Act section, which stated that the covered-borrower provisions applied to members of the Armed Forces and their dependents, while the general Claims Resolution provision did not apply to those borrowers. The court concluded that this explanation harmonized the two provisions and supported applying the general arbitration requirement to Theodore.
Disposition
The court GRANTED the motion to compel arbitration. It DISMISSES this action pending arbitration and ordered the clerk to close the file. The court noted that the Supreme Court had granted review in a case concerning whether a district court may dismiss, rather than stay, litigation when all claims are subject to arbitration. The court stated that either party may seek a limited modification of this order to request a stay instead of dismissal if the Supreme Court eliminates that exception.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.