Chris Rowland vs American Express Company

Case Number

24CV04834

Case Type

Hearing Date / Time

Mon, 05/05/2025 - 10:00

Nature of Proceedings

CMC; Motion: Compel Arbitration and Stay Action; Memorandum in Support Thereof

Tentative Ruling

Chris Rowland v. American Express Company

Case No. 24CV04834          

Hearing Date: May 5, 2025                                                     

HEARING:              Defendant American Express Company’s Motion to Compel Arbitration and Stay Action

ATTORNEYS:        For Plaintiff Chris Rowland: Richard J. Meier

                                    For Defendant American Express Company: Brian C. Frontino      

          

TENTATIVE RULING:

The motion of Defendant American Express Company to compel arbitration and stay claims is granted. The action is stayed pending completion of arbitration.

Background:

This action commenced on September 3, 2024, by the filing of the complaint by plaintiff Chris Rowland (Rowland) against defendant American Express Company (AMEX) for violation of the Rosenthal Fair Debt Collection Practices Act.

As alleged in the complaint:

On March 31, 2024, Rowland’s attorney sent AMEX a letter notifying AMEX that Rowland is represented by counsel with respect to consumer debt. (Compl., ¶ 13.) Despite the notice of representation, AMEX c contacted Rowland at least one more time attempting to collect on the debt, in violation of the Rosenthal Fair Debt Collection Practices Act. (Compl., ¶¶ 15, 16.)

On November 15, 2024, AMEX filed its answer to the complaint, asserting a general denial and 12 affirmative defenses.

AMEX now moves to compel arbitration, pursuant to the Federal Arbitration Act (FAA) based on arbitration provisions contained in the AMEX cardmember agreements, and seeks to stay this action pending completion of arbitration.

Rowland opposes the motion to compel arbitration based solely on the grounds that the arbitration clauses are procedurally and substantively unconscionable.

Analysis:

“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.)

“[T]he Legislature has expressed a ‘strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.’ [Citations.] Consequently, courts will ‘indulge every intendment to give effect to such proceedings.’ [Citations.]” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.)

“The burden of persuasion is always on the moving party to prove the existence of an arbitration agreement with the opposing party by a preponderance of the evidence.” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 164.)

“The party seeking arbitration bears the initial burden of demonstrating the existence of an arbitration agreement. Once the moving party has satisfied its burden, the litigant opposing arbitration must demonstrate grounds which require that the agreement to arbitration not be enforced.” (Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 380-381.)

American Express has provided a copy of the cardmember agreements containing the arbitration clauses as Exhibits A and B to the declaration of the Assistant Custodian of Records for American Express. The arbitration clauses are virtually identical and provide, in part, under the large and bold font heading “Claims Resolution”:

“You may reject the arbitration provision by sending us written notice within 45 days after your first card purchase. See Your Right to Reject Arbitration below.”

“Claim means any current or future claim, dispute or controversy relating to your Account(s), this Agreement, or any agreement or relationship you have or had with us, except for the validity, enforceability or scope of the Arbitration provision. Claim includes but is not limited to: (1) initial claims, counterclaims, crossclaims and third-party claims; (2) claims based upon contract, tort, fraud, statute, regulation, common law and equity; (3) claims by or against any third party using or providing any product, service or benefit in connection with any account; and (4) claims that arise from or relate to (a) any account created under any of the agreements, or any balances on any such account, (b) advertisements, promotions or statements related to any accounts, goods or services financed under any accounts or terms of financing, (c) benefits and services related to card membership (including fee-based or free benefit programs, enrollment services and rewards programs) and (d) your application for any account. You may not sell, assign or transfer a claim.”

“You or we may elect to resolve any claim by individual arbitration. Claims are decided by a neutral arbitrator.

“If arbitration is chosen by any party, neither you nor we will have the right to litigate that claim in court or have a jury trial on that claim. Further, you and we will not have the right to participate in a representative capacity or as a member of any class pertaining to any claim subject to arbitration. Arbitration procedures are generally simpler than the rules that apply in court, and discovery is more limited. The arbitrator’s decisions are as enforceable as any court order and are subject to very limited review by a court. Except as set forth below, the arbitrator’s decision will be final and binding. Other rights you or we would have in court may also not be available in arbitration.”

“Before beginning arbitration, you or we must first send a claim notice. Claims will be referred to either JAMS or AAA, as selected by the party electing arbitration. Claims will be resolved pursuant to the Arbitration provision and the selected organization’s rules in effect when the claim is filed, except where those rules conflict with this Agreement. If we choose the organization, you may select the other within 30 days after receiving notice of our selection. Contact JAMS or AAA to begin an arbitration or for other information. Claims also may be referred to another arbitration organization if you and we agree in writing or to an arbitrator appointed pursuant to section 5 of the Federal Arbitration Act, 9 U.S.C. sec. 1-16 (FAA).”

“This Arbitration provision is governed by the FAA. The arbitrator will apply applicable substantive law, statutes of limitations and privileges. The arbitrator will not apply any federal or state rules of civil procedure or evidence in matters relating to evidence or discovery. Subject to the Limitations on Arbitration, the arbitrator may otherwise award any relief available in court.”

“You may reject this Arbitration provision by sending a written rejection notice to us at: American Express, P.O. Box 981556, El Paso, TX 79998. Go to americanexpress.com/reject for a sample rejection notice. Your rejection notice must be mailed within 45 days after your first card purchase. Your rejection notice must state that you reject the Arbitration provision and include your name, address, Account number and personal signature.”

AMEX has met its initial burden of establishing the existence of the arbitration agreement. The agreement is conspicuous, clear, and in plain language that clearly sets out its terms.

In the absence of a substantial relationship to interstate commerce “the language of the Agreement, not an analysis of interstate commerce, dictates the applicable law.” (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 179.)

Here, the parties entered into an agreement that any disputes will be determined by arbitration under the FAA. This agreement is sufficient to determine that the FAA applies. Thus, the present motion will be analyzed under the law as it applies to the FAA.

As noted above, Rowland solely argues that the arbitration agreement is procedurally and substantively unconscionable. It is not.

“Unconscionable arbitration agreements are not enforceable.” (Wherry v. Award, Inc. (2011) 192 Cal.App.4th 1242, 1245.) “To be voided on this ground, the agreement must be both procedurally and substantively unconscionable.” (Ibid.) Procedural unconscionability focuses on oppression or surprise due to unequal bargaining power: substantive unconscionability on overly harsh or one-sided results. (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal. 4th 1109.) “But they need not be present to the same degree.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) Rather, the court invokes a “sliding scale” to determine unconscionability: “The more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Ibid.) The burden of proving unconscionability rests upon the party asserting it.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126.) Unconscionability is a question of law. (Malone v. Superior Court (2014) 226 Cal.App.4th 1551, 1562.)

“If the offeree has a meaningful opportunity to freely opt out of a term after assenting to the contract, and the terms of the contract are clear, then the contract is not being offered on a take-it-or-leave-it basis. [Citations.]” (Guadagno v. E*Trade Bank (2008) 592 F. Supp.2d 1263, 1270.) “Because the Arbitration clause containing the waiver was not presented on a take-it-or-leave-it basis, but gave [plaintiff] sixty days to opt out, it was not unconscionable.” (Ibid.)

The arbitration agreement here, by its very terms, is a voluntary agreement. It is not a “take-it-or-leave-it” requirement. Likewise, the arbitration agreement is binding on both Rowland and AMEX equally. None of the arguments advanced by Rowland tend to show that there is any unconscionability, and the court finds that none exists.

The motion to compel arbitration will be granted and this action will be stayed pending completion of the arbitration.