discovery is to be completed by March 24, 2004 and a status
hearing is set for March 31, 2004.

MBNA also contends that the Complaint fails to adequately
allege an FCRA claim. However, until the issue of arbitration is
resolved (and only if it is resolved against granting a stay),
the court declines to consider the merits of plaintiff's claim
against MBNA since those issues would be for the arbitrator if
this is an arbitrable claim. It is noted, however, that a
plaintiff in federal court may plead in the alternative,
including inconsistent alternative factual allegations. See

Alper v. Altheimer & Gray, 257 F.3d 680, 688 (7th Cir. 2001);

Convoy Servicing Co. v. Trailmobile Trailer, ULC, 234 F. Supp. 2d

826, 832 (N.D. Ill. 2002); Anderson v. Cornejo, 1999 WL 35307 *4
(N.D. Ill. Jan. 11, 1999). The motion to dismiss will be denied
without prejudice.

IT IS THEREFORE ORDERED that defendant MBNA's motion to
stay proceedings pending arbitration or, in the alternative, to
dismiss the complaint [16-1,2] is denied without prejudice.

Within two weeks, defendant MBNA shall answer the complaint.

ENTER:

Win 7 bor —

UNITED STATES DISTRICT JUDGE

DATED: JANUARY Z2- , 2004

-13-



place within the federal judicial district that
includes your billing address at the time the
Claim is filed. This arbitration agreement is
made pursuant to a transaction involving
interstate commerce, and shall be governed by the
Federal Arbitration Act, 9 U.S.C. §§ 1-16
" tt

CP )- kok ok

for the purposes of this Arbitration
Section, "you" or "yours" shall mean any person
or entity approved by us to use the account,
including but not limited to all persons or
entities contractually obligated on the Account
and all authorized users of the account.

kk ok

THE RESULT OF THIS ARBITRATION SECTION IS THAT,
EXCEPT AS PROVIDED ABOVE, CLAIMS CANNOT BE
LITIGATED IN COURT, INCLUDING SOME CLAIMS THAT
COULD HAVE BEEN TRIED BEFORE A JURY, AS CLASS
ACTIONS OR AS PRIVATE ATTORNEY GENERAL ACTIONS.

If you do not wish your account to be subject to

the Arbitration Section, you must write to us

at... . You must give notice in writing; it

is not sufficient to telephone us. Send this

notice only to the address in this paragraph; do

not send it with a payment. We must receive you

letter at the above address by January 25, 2000

or your rejection of the Arbitration Section will

not be effective.

The only arbitration-related motion appropriately before
this court is a motion to stay the claim against MBNA pending
arbitration, that is a motion pursuant to 9 U.S.C. § 3. Although
MBNA entitles its motion as one to stay proceedings pending
arbitration, it concludes by also requesting that plaintiff be
compelled to arbitrate her claim against MBNA, which would be a
motion pursuant to 9 U.S.C. § 4. Likewise, plaintiff cites to
§ 4, including its provision of a right to a jury trial.

However, a § 4 motion to compel arbitration may only be brought

in the district in which the arbitration is to be held. Merrill



that went to the enforceability of arbitration itself). The
unconscionability issue raised by plaintiff is one for the court
to decide in the first instance.

Plaintiff also contends that the Arbitration Section is
unenforceable because the cost of arbitration places an undue
burden on bringing her FCRA claim against MBNA. This is a
possible basis for finding an arbitration provision to be
unenforceable and is an issue that would be decided by the court.

See Livingston, 339 F.3d at 557; Popovich v. McDonald's Corp.,

189 F. Supp. 2d 772, 776 (N.D. Ill. 2002).

If the Arbitration Section is found to be enforceable,
there is no contention by plaintiff that the FCRA claim against
MBNA falls outside the scope of subject matter covered by the
Arbitration Section.

The contentions presently before the court indicate
that a factual dispute exists regarding whether plaintiff
telephonically requested to be added as a cardholder, whether she
received a copy of the credit card Agreement, whether she ever
used a credit card for the account which was necessary to
activate the Agreement, and whether she ever received the
amendment adding the Arbitration Section. This precludes the
possibility of presently holding that plaintiff is required to
arbitrate her claim against MBNA. It still must be considered
whether any of the other grounds of unenforceability raised by

plaintiff can presently be resolved.



2458 *2 (D. Minn. Aug. 7, 1985). See also Marshall v. Green
Giant Co., 942 F.2d 539, 547-48 (8th Cir. 1991).
That a claim is subject to arbitration is an affirmative

defense. Wilson Wear, Inc. v. United Merchants & Manufacturers,

Inc., 713 F.2d 324, 326 (7th Cir. 1983); Pierce v. Shearson
Lehman Hutton, Inc., 1990 WL 60751 *1-2 (N.D. Ill. April 26,

1990); In re Crysen/Montenay Energy Co., 226 F.3d 160, 162 (2d

Cir. 2000), cert. denied, 532 U.S. 920 (2001). As with any
affirmative defense, plaintiff was not required to plead facts in
the Complaint that would negate the defense. Alvarado v.
Litscher, 267 F.3d 648, 651-52 (7th Cir. 2001); Tregenza v. Great

American Communications Co., 12 F.3d 717, 718 (7th Cir. 1993),

cert. denied, 511 U.S. 1085 (1994). Although an affirmative
defense, a request to stay arbitration may be raised in a motion
filed prior to answering the complaint. Wilson Wear, supra;

Pierce, supra; Crysen/Montenay, supra. If a motion to stay

arbitration and the response thereto indicate there are no
material factual disputes, the issue of arbitration may be

resolved on the motions. See Commerce Park at DFW Freeport v.

Mardian Construction Co., 729 F.2d 334, 340-41 (5th Cir. 1984);

Brook Mays Music Co. v. National Cash Register Co., 838 F.2d

1396, 1399 (5th Cir. 1988); Great Western Mortgage Corp. v.

Peacock, 110 F.3d 222, 231 n.36 (3d Cir.), cert. denied, 522 U.S.

915 (1997); Bank One Arizona, NA v. Wilton Hurst G.P. Corp.,

2001 WL 276891 *1 (N.D. Tex. March 19, 2001). As to § 4 motions,

there is case law supporting that the party opposing arbitration


Lynch, Pierce, Fenner & Smith, Inc. v. Lauer, 49 F.3d 323, 327-28

(7th Cir. 1995); Continental Casualty Co. v. Hartford Steam Boiler

Inspection & Insurance Co., 270 F. Supp. 2d 1015, 1016-17 (N.D.

Tll. 2003); UAL Corp. v. Mesa Airlines, Inc., 88 F. Supp. 2d 910,

912-13 (N.D. Ill. 2000). This is based on language in § 4
providing: "The hearing and proceedings, under such [arbitration]
agreement, shall be within the district in which the petition for
an order directing such arbitration is filed." MBNA's request to
compel arbitration does not expressly state a location for the
arbitration. However, in arguing that the Arbitration Section is
not unconscionable or cost-prohibitive, MBNA points to the
Arbitration Section's provision that the arbitration is to be held
in the district where the cardholder's billing address is located.
MBNA contends the place of arbitration would be California where
plaintiff now resides. This court cannot compel arbitration in
California. Only the § 3 motion to stay is appropriately before
the court.

A § 3 motion is solely for the court to decide. Unlike a
§ 4 motion to compel arbitration, on a § 3 motion to stay court
proceedings there is no right to a jury trial to resolve any

disputed factual issues. Matterhorn, Inc. v. NCR Corp., 763 F.2d

866, 873-74 (7th Cir. 1985); Jd & R Sportswear & Co. v. Bobbie

Brooks, Inc., 611 F.2d 29, 30 (3d Cir. 1979); Qasis Oil &

Refining Corp. v. Armada Transport & Refining Co., 719 F.2d 124,

126 (Sth Cir. 1983); Quinlan v. Painewebber Inc., 1989 WL 48117

*1-2 (E.D. Pa. May 8, 1989); Marshall v. Green Giant Co., 1985 WL



Questions regarding the existence of an arbitration

agreement are generally for the court to decide. Sphere Drake

Insurance Ltd. v. All American Insurance Co., 256 F.3d 587, 591

(7th Cir. 2001); Matterhorn, 763 F.2d at 868; Viets v. Andersen,
2003 WL 21525062 *7 (S.D. Ind. June 26, 2003); Lee v. Deloitte &
Touche, LLP, 2002 WL 31433421 *2 (N.D. Ill. Oct. 31, 2002). This
includes the question of whether one of the parties actually
entered into the contract. Sphere Drake, 256 F.3d at 590-91;

Chastain v. Robinson-Humphrey Co., 957 F.2d 851, 854-56 (lith

Cir. 1992); Carbajal_v. Household Bank, FSB, 2003 WL 22159473

*6n.6 (N.D. Ill. Sept. 18, 2003). Thus, the issue of whether
plaintiff actually agreed to be added to the MBNA account is for
the court to decide in the first instance. If plaintiff was not
properly added to the account, plaintiff cannot be required to
arbitrate her claim against MBNA.

A contention that an arbitration provision is not
enforceable because unconscionable is generally for the court to

decide in the first instance. See Doctor's Associates, Inc. v.

Casarotto, 517 U.S. 681, 682 (1996); Smith v. Steinkamp, 318 F.3d

775, 778 (7th Cir. 2003); Boomer v. AT & T Corp., 309 F.3d 404,

417 (7th Cir. 2002); We Care Hair Development, Inc. v. Engen,

180 F.3d 838, 842-43 (7th Cir. 1999). Compare Hawkins v. Aid

Association for Lutherans, 338 F.3d 801, 807 (7th Cir. 2003)

(contention that remedy provisions of arbitration agreement

were unconscionable was an issue for the arbitrator, not one


Minute Order Form (66/97)

United States District Court, Northern District of Illinois

N: f Assigned Judy T Sitting Judge if Other
or Magistrate Judge | __ WILLIAM T. HART than Assigned Judge
CASE NUMBER 03 C 3837 pate| JANUARY 2z., 2004
CASE SUNNI BARKER v. TRANS UNION LLC and MBNA
TITLE

[In the following box (a) indicate the party filing the motion, c.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.}

MOTION:
DOCKET ENTRY:
(1) im Filed motion of [ use listing in “Motion” box above.]
(2) a Brief in support of motion due
G) oO Answer brief to motion due___._ Reply to answer brief due
(4) im) Ruling/Hearingon set for at
(5) Oo Status hearing[held/continued to] [set for/re-set for]on__—s set for___— at
(6) Oo Pretrial conference[held/continued to] [set for/re-set for]on___set for at_s
() o Trial[set for/re-set for] on att
(8) oO [Bench/Jury trial] [Hearing] held/continued to at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
CQFRCP4(m) CO Local Rule 41.1 COFRCP41(a)(t) 0 FRCP41(a)(2).
ao) «= {Other docket entry} Defendant MBNA's motion to stay proceedings pending arbitration
or, in the alternative, to dismiss the complaint [16-1,2] is denied without prejudice. Within

two weeks, defendant MBNA shall answer the complaint

wor

(1) ff {For further detail see attached Memorandum Opinion and Order.]
No notices required, advised in open court Document
2
r
No notices required. number of notices ae
¥ | Notices mailed by judge’s staff.
" - =
Notified counsel by telephone. Mocs
Docketing to mail notices,
Mail AO 450 form. Ket tol
Copy 1o judge/magistrate judge. a
Jan %4, 2008
date led potge
courtroom
ew deputy’s ‘nqn
initials
Datc/time received in
central Clerk's Office main nas



she never entered into an agreement to arbitrate. There is no
need or basis for a separate unconscionability contention.

In order to succeed on her contention that the
Arbitration Section is unenforceable because cost-prohibitive,
plaintiff bears the burden of proof and must, at the appropriate
point in the proceeding, provide individualized evidence of both
prohibitive costs and that she is financially incapable of
meeting those costs. Livingston, 339 F.3d at 557. Presently,
plaintiff makes insufficient factual contentions as to either
element. Plaintiff provides absolutely no allegation as to her
personal ability to pay the expenses of an arbitration.
Moreover, the Arbitration Section provides that plaintiff may
require MBNA to advance the costs of arbitration. At the
conclusion of the arbitration, the arbitrator may determine who
will bear the costs. There is nothing in the Arbitration
Agreement, nor apparently NAF procedures, that prohibits
plaintiff, should she be successful on her claim, from recovering
costs and attorney fees as provided in the FCRA. Plaintiff's
contention that the expenses of arbitration are more expensive
than court proceedings is questionable. Plaintiff's contentions
ignore court costs other than the filing fee when comparing her
costs in court to the hearing and administrative costs of a NAF
arbitration. Compare Reyes, 2003 WL 22922190 at *4-5. More
importantly, plaintiff ignores the provision of the Arbitration
Section that she cannot be required to pay more in arbitration

costs than she would have incurred for court costs in a state

-1l1-



Plaintiff's contention regarding unconscionability does
not state a sufficient basis for finding the Arbitration Section
to be unconscionable. Plaintiff contends the Arbitration Section
should be found unconscionable because she did not have the
option of rejecting it; it was a "take it or leave it”
proposition. It need not be decided if that would be a
sufficient basis for finding unconscionability since the
undisputed facts before the court do not show the amendment was a
"take it or leave it" offer. But even if that type of offer had
been made, case law supports that that would not, by itself, make
the Arbitration Section unconscionable. See Boomer, 309 F.3d at

415 & n.5; Hill v. Gateway 2000, Inc., 105 F.3d 1147, 1148-49

(7th Cir.), cert. denied, 522 U.S. 808 (1997); Reyes v. Equifax

Credit Information Services, 2003 WL 22922190 *3 (N.D. Ill. Dec.

10, 2003). Instead, the facts before the court are that, when
the amendment was mailed out, cardholders had an opportunity to
reject the addition of an Arbitration Section without also being
reguired to give up their credit card. Therefore, the factual
basis for plaintiff's unconscionability contention is lacking.
Plaintiff does contend that she actually had no choice because

she never received the amendment. However, if she never received

the amendment,? the Arbitration Section is unenforceable because

2~This assumes she never received the amendment because
she was not a cardholder or it was not mailed out. If she was an
actual cardholder who did not receive the amendment because she
had moved elsewhere and failed to properly notify MBNA of her
address change, the result might be different. See Reyes,
2003 WL 22922190 at *3.


must provide some evidence, not merely allegations, showing that

a factual dispute exists. See Green Tree Financial Corp.-

Alabama v. Randolph, 531 U.S. 79, 92 (2000); Livingston v.

Associates Finance, Inc., 339 F.3d 553, 557 (7th Cir. 2003);

Kreimer v. Delta Faucet Co., 2000 WL 962817 *6-7 (S.D. Ind.

June 2, 2000). Summary judgment type procedures may be employed.

See China Resource Products (U.S.A.) Ltd. v. Fayda International,

Inc., 747 F. Supp. 1101, 1105 (D. Del. 1990). See also Kreimer,
2000 WL 962817 at *7. Here, MBNA did not file any Local Rule
56.1 type statement of facts and there is no clear rule that
plaintiff has to provide evidence at this point in the
proceeding. Instead, at this point in the proceeding, it

is appropriate to simply consider the parties' factual
contentions as stated in their briefs.+ To the extent the
factual contentions indicate possible material disputes, the
parties should proceed with discovery and the arbitration issue
will be appropriately resolved on motions for summary judgment or
an evidentiary hearing (bench trial), depending on whether

genuine factual disputes exist.

plaintiff did provide her own purported affidavit. The
statement contains language that plaintiff was "duly sworn and
under oath" when making the statement, but there is no indication
of a notary or other appropriate authority before whom plaintiff
made the purported sworn statement. See Davis v. Ruby Foods,
Inc., 2002 WL 1285797 *1 (N.D. Til. June 11, 2002); Houston v.
Provident Life & Accident Insurance Co., 2000 WL 1898591 *2 n.2
(N.D. Ill. Dec. 21, 2000). The statement also does not meet the
requirements for a declaration contained in 28 U.S.C. § 1746.



can presently be resolved are: (1) Taking plaintiff's factual
contentions to be true, is plaintiff still required to go to
arbitration? (2) Taking MBNA's factual contentions as true, is
the arbitration agreement unenforceable as a matter of law?

MBNA provides a copy of a January 1997 version of its
account agreement (the "Agreement"), which apparently would have
been the version being mailed out in June 1999. The Agreement
has a provision that it is governed by Delaware law and that the
Agreement may be amended by complying with applicable
notification requirements of Delaware and federal law.

The arbitration provision purportedly added to the
Agreement effective February 1, 2000 (the "Arbitration Section”)
provides in part:

Arbitration: Any claim or dispute ("Claim") by
either you or us against the other, or against
the employees, agents or assigns of the other,
arising from or relating in any way to this
Agreement or any prior Agreement or your account
(whether under a statute, in contract, tort, or
otherwise and whether for money damages,
penalties or declaratory or equitable relief),
including Claims regarding the applicability of
this Arbitration Section or the validity of the
entire Agreement or any prior Agreement, shall be
resolved by binding arbitration. The arbitration
shall be conducted by the National Arbitration
Forum ("NAF"), . . . . At your written request,
we will advance any arbitration filing fee,
administrative and hearing fees which you are
required to pay to pursue a Claim in arbitration.
The arbitrator will decide who will be ultimately
responsible for paying those fees. In no event
will you be required to reimburse us for any
arbitration filing, administrative or hearing
fees in an amount greater than what your court
costs would have been if the claim had been
resolved in a state court with jurisdiction. Any
arbitration hearing at which you appear will take



plaintiff disputed the negative credit information. Count I of
the complaint is an FCRA claim against Trans Union, Count II is a
common law defamation claim against Trans Union, and Count III is
an FCRA claim against MBNA.

MBNA has moved to stay the claim against it based on an
arbitration provision that purportedly was part of the agreement
for the credit card account. Alternatively, MBNA moves to
dismiss Count III on the ground that it fails to adequately state
a basis for relief. MBNA contends that, in June 1999, it
telephonically confirmed plaintiff's addition to the account when
she was first added to the account and thereafter mailed written
confirmation, a credit card, and the account agreement. It also
contends that, in December 1999, it mailed to plaintiff an
amendment to the account agreement that added an arbitration
provision that was to become effective in February 2000 unless,
by January 25, 2000, MBNA received a letter rejecting the
arbitration provision. Neither plaintiff nor her ex-husband sent
such a rejection letter. Plaintiff denies that she participated
in adding her name to the account, denies that she received the
documents or card purportedly mailed to her, and denies ever
using the credit card for the account.

The parties dispute whether plaintiff herself
telephonically requested to be added to the account as well as
whether she actually received any of the documents MBNA contends
were sent to her. The motion before the court is not one on

which these disputes may be resolved. The only questions that



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

SUNNI BARKER,
Plaintiff,
v. No. 03 € 3837

TRANS UNION LLC and
MBNA,

Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiff Sunni Barker brings this lawsuit against
defendants Trans Union LLC and MBNA, alleging violations of the
Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seg.
According to the allegations of the complaint, plaintiff's now
ex-husband had an MBNA credit card account in his own name.
Without her knowledge or agreement, plaintiff was thereafter
added to the account and denominated an authorized user. After
learning in 2003 that negative credit information regarding
plaintiff was being reported regarding this account, plaintiff
informed credit reporting agency Trans Union that she disputed
the report. Trans Union allegedly failed to properly investigate
and respond to plaintiff's dispute and continued to report the
negative credit information. MBNA allegedly failed to properly

investigate and respond following Trans Union informing MBNA that



court proceeding. There is no reason to expect state court costs
to be significantly different from federal court costs. Thus,
there is no possibility that arbitration costs will exceed court
costs. Plaintiff cannot possibly succeed in making a showing
that arbitration costs would be so prohibitive as to make the
Arbitration Section unenforceable.

A disputed issue exists regarding whether the Arbitration
Section is enforceable as against plaintiff. It will not be
resolved until after the parties have had an adequate opportunity
for discovery. The issue of whether plaintiff was actually a
cardholder for her ex~-husband's account is also an issue central
to plaintiff's FCRA claim. Most of the discovery that goes to
the merits of plaintiff's FCRA claim against MBNA also goes to
the issue of the enforceability of the Arbitration Section.
There would be no point in bifurcating discovery in any way.’

Compare Affymetrix, Inc., Inc. v. PE Corp. (N.Y¥.), 219

F. Supp. 2d 390, 398-99 (S.D.N.Y. 2002). At the conclusion of
discovery, if appropriate, either side may move for summary
judgment on the issue of a stay pending arbitration. Otherwise,
if MBNA is still pressing for a stay pending arbitration at that
point, procedures for hearing the arbitrability issue will be
discussed with the parties at the first status hearing following

the close of discovery. Pursuant to a prior order of the court,

*That issues going to the enforceability of the
Arbitration Section also go to the merits of the FCRA claim does
not preclude the court from resolving the issues that go to
arbitrability. See, e.g., Sphere Drake, 256 F.3d at 592.