In Hoganberry v. Experian, et. al., No. 23 C 3690, 2023 WL 8113393, at *3–5 (N.D. Ill. Nov. 22, 2023), Judge Pallmeyer ordered a trial under the FAA of arbitrability of an identity theft matter based on the factual conflict between the moving party’s authentication of the arbitration clause and the consumer’s argument that he never signed/received it because the credit card was procured by identity theft.
Citibank has met its initial burden of producing a written agreement to arbitrate in the form of the Card Agreement filed in support of its motion. The question now is whether there is a genuine dispute of material fact concerning Plaintiff’s having (1) personally opened the disputed account and (2) accepted the Card Agreement’s arbitration provision by either using the card or failing to cancel the Account.3 In support of its position, Citibank has offered a declaration from its employee stating that an account was opened in Plaintiff’s name in April 2020, presenting the notices and documents associated with this account, and providing a copy of the account statement showing transaction and payment activity in September 2020. (See Booth Decl. ¶ 4; Exs. 1, 2, 3 to Booth Decl.) In a sworn declaration submitted in response, Plaintiff claims never to have opened any such account or having any relationship with Citibank. (See Hoganberry Decl.) That declaration is sufficient, in the court’s view, to satisfy Plaintiff’s evidentiary burden at this stage. The Seventh Circuit held earlier this year in Kass v. PayPal, Inc. that an accountholder’s express denial via written declaration of having received arbitration terms for an online service is enough to raise a triable issue of fact over whether a valid arbitration agreement was formed. 75 F.4th at 704. Citibank argues that Plaintiff’s declaration is “self-serving”4 and that Plaintiff is required to identify “specific evidence in the record,” not just “bare unsupported denials,” in order to meet his burden. (Def.’s Reply at 3.) But Citibank only cites one pre-Kass case in support of this point, Tonkawa Tribe of Indians of Oklahoma v. Scientific Games Corp., No. 21-cv-04626, 2022 WL 1591719 (N.D. Ill. 2022). The cited portion of Tonkawa merely reiterates the general standard for factual disputes over arbitration agreements that the Seventh Circuit announced in Tinder v. Pinkerton Security and later applied in Kass, and the case is otherwise factually inapposite. See id. at *3 (quoting Tinder, 305 F.3d at 735). Multiple pre-Kass district courts in this circuit have reached the same conclusion. Indeed, only last year, another judge of this court denied a motion by Citibank to enforce the very same arbitration clause at issue in this case. See Collins v. Citibank, N.A., No. 21-CV-00008, 2022 WL 683661 (N.D. Ill. Mar. 8, 2022).7 Collins involved a factual dispute over whether a new Citibank cardholder had validly received the terms and conditions of his account—including the arbitration clause—in the mail. That case also pitted Citibank’s word (via another declaration from Kelly Booth, plus accompanying business records) against the plaintiff’s (via his own declaration denying that he had received the mailed terms). The Collins court weighed these competing declarations and found that “Plaintiff’s sworn denial … raises a genuine dispute such that the Court cannot compel arbitration at this time.” Id. at *3. While most of these cases address factual disputes over whether a plaintiff received arbitration terms after voluntarily initiating a contractual relationship with a defendant, their logic applies with at least equal force to disputes over whether the plaintiff ever initiated such a relationship at all. Multiple courts outside the Seventh Circuit have also held that “allegations of identity fraud in the formation of an arbitration agreement may create a dispute of material fact as to whether the parties agreed to arbitrate their claims.” Haynes v. TransUnion, LLC, No. 19-CV-7157(JS)(ARL), 2021 WL 7906567, at *7 (E.D.N.Y. Sept. 30, 2021), adhered to on reconsideration, No. 19-CV-7157(JS)(ARL), 2022 WL 1228927 (E.D.N.Y. Apr. 25, 2022).8 Haynes involved an attempt by Citibank to enforce its form arbitration agreement against an alleged customer, under facts highly similar to this case: the plaintiff alleged that her identity had been stolen and used to sign up for a number of fraudulent accounts, including a disputed Citibank account. The court rejected Citibank’s motion to compel arbitration in light of (1) the plaintiff’s affidavit stating as much and (2) Citibank’s failure to produce evidence that she had actually used the account after its creation. Id. at *6. The issue here is slightly closer than in Haynes, both because Plaintiff has not provided as much detail in the pleadings or declaration to support a claim of identity fraud, and because Citibank has produced evidence showing that transactions and payments were made on the disputed account in September 2020. (See Ex. 3 to Booth Decl.) The court also acknowledges Citibank’s point that it is curious that Plaintiff failed to discover the purportedly fraudulent account for over two years after its creation.
Nonetheless, Plaintiff’s unequivocal declaration precludes granting Citibank’s motion to compel arbitration at this stage. As in summary judgment, the court must draw all reasonable inferences in Plaintiff’s favor and avoid making credibility determinations when weighing his evidence against Citibank’s. To this end, while Citibank’s records do show purchases and payments made on the disputed account, there is at this stage no evidence that Plaintiff was responsible for these transactions, since Citibank’s redacted exhibit gives no indication of their source. See Gonzalez, 2019 WL 5596800, at *7–8 (denying motion to compel arbitration on sole basis of plaintiff’s declaration, even though defendant provided evidence of purchase and payment activity on the disputed account). Further, because Plaintiff has not yet had the benefit of discovery, it would be unfair at this point to expect production of evidence beyond Plaintiff’s own word to rebut Citibank’s records. See Hudson, 2015 WL 1780879, at *2 (denying motion to compel arbitration where plaintiffs only provided affidavit in support of their claims of identity fraud, since they “had little chance to carry out discovery before the … defendants filed the motion to compel”); see also Bradley, 2023 WL 3042984, at *3 (since “there is no record without discovery[,] [i]t is only fair … that courts afford a party denying the existence of an arbitration agreement some opportunity to bolster their denial through targeted discovery”); Burks, 2013 WL 4777358, at *2 (“[E]ven if the responding party has a good faith basis to claim that the arbitration agreement is unenforceable, he may need additional evidence to meet the burden described above.”). If Plaintiff is able to prove identity theft, it would be “contrary to logic and common sense” to enforce “terms of a credit application agreement for an account that was opened by Defendant at the request of a defrauder.” Maranto, 2005 WL 3369948, at *2. The only remaining question is what procedure the court should employ to determine whether Plaintiff actually opened the disputed account and accepted its arbitration terms. The FAA states that if a genuine issue concerning formation is identified, “the court shall proceed summarily to the trial thereof,” and that the court may “hear and determine such issue” without a jury if the nonmoving party does not request one. 9 U.S.C. § 4. Citibank requests that, in the event the court finds a genuine issue of material fact, the court should schedule a “summary evidentiary hearing” to resolve the issue. (Def.’s Reply at 5.) Plaintiff requests “a trial on that issue, after both parties have had a chance to take discovery on that issue,” but does not specify whether he demands that this trial be by jury. (Pl.’s Br. at 7.) In keeping with the approach that past district courts have taken, the court will first allow the parties to conduct limited discovery and will then conduct a status conference to determine if either a jury or bench trial is required. See Collins, 2022 WL 683661, at *4; see also Cannon, 2019 WL 568581, at *3 (listing approaches taken in other circuits).