Klein v. Experian Information Solutions, Inc.

Background

Hindy Klein sued Experian Information Solutions, Inc., Transunion, LLC, Equifax Information Services, LLC, American Express Company, and Chase Bank (USA), N.A., alleging that each willfully or negligently violated the Fair Credit Reporting Act, a federal law governing credit reporting. Klein alleged that Amex furnished inaccurate information about her credit-card account, including an allegedly inconsistent charged-off status and past-due balance, to credit-reporting companies.

The opinion states that Klein voluntarily dismissed Equifax, Chase, and Experian with prejudice. The case therefore proceeded against Amex and Transunion. Amex moved under the Federal Arbitration Act to compel Klein to arbitrate her claims against Amex and to stay the court case as to Amex while arbitration proceeded.

Issues

The court considered whether Klein and Amex entered into a valid arbitration agreement, whether Klein’s Fair Credit Reporting Act claims fell within that agreement, and whether the agreement was unconscionable, meaning so unfair in its formation or terms that it could not be enforced.

Court’s Analysis

The Cardmember Agreement stated that either party could choose individual arbitration for claims relating to Klein’s account, the agreement, or any agreement or relationship between Klein and Amex. It also stated that Utah law and federal law governed the agreement and included a process allowing Klein to reject the arbitration provision. The court applied Utah law because the parties agreed that Utah law governed the agreement.

The court found that the agreement was valid and enforceable under Utah law. Amex provided evidence that it mailed the agreement to Klein, that the agreement stated using the credit card would constitute acceptance, and that Klein used the card. The court also noted that Klein did not dispute that the agreement was binding under the relevant Utah statute.

The court rejected Klein’s unconscionability arguments. It concluded that the arbitration provision was not substantively unconscionable because it covered disputes related to the credit-card account, not every possible dispute for the rest of Klein’s life. The court also relied on the agreement’s severability provision, which allowed an invalid portion to be removed without invalidating the rest of the arbitration section.

The court further concluded that Klein had not shown procedural unconscionability. Although the agreement was a standardized consumer contract, it gave Klein a meaningful opportunity to reject arbitration, which she did not use. The court also noted that the arbitration provision appeared under a bold “Claims Resolution” heading and an “Arbitration” heading in the agreement.

The court determined that it could decide whether the claims fell within the arbitration clause because the agreement excluded disputes about the validity, enforceability, or scope of the arbitration provision from the definition of an arbitrable claim. The court stated that Fair Credit Reporting Act claims are not exempt from arbitration. It concluded that Klein’s claims related to the credit-card account and the agreement because they concerned Amex’s alleged failure to report accurately amounts due on that account.

Disposition

Judge Philip M. Halpern granted Amex’s motion to compel arbitration. The court stayed the case insofar as it concerned Amex pending arbitration. The Clerk was directed to terminate the motion filed at Document 44. The ruling did not state that the claims against Transunion were stayed.