Arbitration is all the rage these days. This time, it is the Court of Appeals for the Fourth Circuit weighing in, overturning a district court ruling denying a defendant’s motion to compel in a Fair Credit Reporting Act case after the plaintiff complained the defendant failed to ensure the accuracy of what it was reporting and for not conducting a reasonable investigation into his dispute.
The background: The plaintiff went through Chapter 13 bankruptcy and believed his discharged debts were improperly being reported as delinquent.
- After obtaining copies of his credit report, the plaintiff enrolled in CreditWorks, a free credit monitoring tool operated by the defendant’s affiliate. Enrollment in CreditWorks included terms of use with an arbitration clause.
- The plaintiff filed suit, alleging the defendant was not furnishing the information about his discharge accurately and did not investigate his dispute properly.
- The defendant moved to compel arbitration, arguing that the plaintiff agreed to these terms when he created his account.
- The district court denied the motion and excluded a key declaration from a corporate officer supporting the arbitration agreement, ruling the officer lacked personal knowledge of the situation and the declaration was inadmissible hearsay.
The ruling: The Fourth Circuit found this was an abuse of discretion and reversed both decisions. The panel ruled the officer’s declaration met the standards of personal knowledge and admissibility, noting that “[i]t would be a stretch in logic” to say an officer overseeing business governance lacked awareness of customer enrollments and the accompanying terms of use.
- The court also determined that the plaintiff had clear and conspicuous notice of the arbitration agreement. The enrollment page clearly stated that clicking “Create Your Account” constituted agreement to the terms of use, which included arbitration.
- In rejecting the lower court’s comparison to a prior Seventh Circuit case, the Fourth Circuit noted: the plaintiff “did not need to ‘scroll down’ or ‘go exploring’ to find out there were terms of use in the first place.”
