District Court (Cal.) Orders FCRA Claim Against Automobile Lender to Arbitration

In Camarillo v. Balboa Thrift & Loan Ass’n, No. 3:20-cv-00913-BEN-BLM, 2021 U.S. Dist. LEXIS 22351 (S.D. Cal. Feb. 4, 2021), Judge Benitez ordered an FCRA claim to arbitration.

In the present case, Plaintiff never argues that the terms of the RISC were substantively or procedurally unconscionable. Reply at 13:11-12. To the extent she may try to advance such arguments now, the Court would likely view them as waived as having not been raised in Plaintiff’s Opposition. See, e.g., Pac. Dawn LLC v. Pritzker, 831 F.3d 1166, 1178 n.7 (9th Cir. 2016) (noting that “the plaintiffs did not raise that argument to the district court in their . . . opposition to the defendants’ motion for summary judgment, so the argument was waived.”). Rather, Plaintiff argues that expanding the scope of the Arbitration Provision to include the FCRA claims that arose after the account was closed and the Vehicle was surrendered would be unconscionable. Oppo. at 20:24-28. Plaintiff argues that “[e]ven if Defendant seeks to argue that the hard pull of Plaintiff’s credit somehow related to the parties’ relationship, where parties no longer had a relationship and the vehicle was surrendered, allowing Defendant to always arbitrate all claims between the parties from now on until the end of times was never the goal of the contract.” Oppo. at 22:10-14. Thus, Plaintiff argues that it would be the Court’s act of “expanding the arbitration clause to encompass unrelated claims [that] would render the clause unconscionable.” Id. at 22:17-18. However, as Defendant points out “the arbitration provision makes clear that ‘[t]his Arbitration Provision shall survive any termination, payoff or transfer of this contract.” Reply at 13:19-21 (citing Mot. at 21, 23). Further, the Court need not “expand” the provision as the provision already requires, at a minimum, arbitration of the gateway issue of whether Plaintiff’s claims are subject to arbitration. . .

The RISC’s Arbitration Provision covers “[a]ny claim or dispute, whether in contract, tort, statute (including the interpretation and scope of this arbitration provision, and the arbitrability of the claim or dispute), between you and us or our . . . or assigns, which arises out of or relates to your credit application, purchase, or condition of this vehicle,  this contract or any resulting transaction or relationship (including any relationship with third parties who do not sign this contract).” Thus, the Arbitration Provision did not just cover “the sale of the vehicle, vehicle condition, and the original credit application,” as Plaintiff contends. Camarillo Decl. at 3, ¶¶ 15-16. Plaintiff’s current FCRA claim relates to (1) outstanding amounts owed resulting from her purchase of the Vehicle, (2) amounts owed under the RISC, and (3) the resulting creditor-debtor relationship between her and Defendant, as the assignor of the seller of the Vehicle. This is because by Plaintiff’s own admission,8 residual amounts owed defeat her entire FCRA claim. See, e.g., Compl. at 5, ¶ 24 (“Under the FCRA, companies are permitted to pull their customers credit reports with account9 review inquiries if the customer has an account with that company”); see also id. at 5, ¶ 25 (“In or around February 2015, Plaintiff obtained an automobile loan from Defendant”). However, as analyzed below, although the Court finds Plaintiff’s FCRA claim involves interstate commerce, it lacks the ability to determine whether the FCRA falls within the scope of the Arbitration Provision as the Arbitration Provision vests the arbitrator with the authority to make that determination.

The District Court held that the RISC’s delegation clause required referral to arbitration.

Thus, Defendant urges that “the Court here should follow the reasoning found in the foregoing cases and find that the arbitration provision here ‘clearly and unmistakably’ provides that the arbitrator, not the Court, should decide whether plaintiff’s FCRA claim is covered by the arbitration provision.” Reply at 7:22-26. Plaintiff responds that because she does “not seek to enforce or challenge the terms, duties, or obligations” of the RISC in her lawsuit, “there can be no finding that the arbitration clause it contains applies to the FCRA claim against Defendant.” Oppo. at 13:19-21. However, the RISC plainly contemplates that it would cover more than a simple breach of contract dispute directly pertaining to the RISC by expressly stating it extends to claims brought by statute. Mot. at 23. Further, the Arbitration Provision explicitly states that “the arbitrability of the claim or dispute . . . shall . . . be resolved by neutral, binding arbitration and not by a court.” Mot. at 23. Thus, the facts (e.g., the Arbitration Provision) as well as the law warrant having the arbitrator decide the issue of arbitrability.