SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

PAMELA SHEREÉ CHAMBERS, individually and on behalf of all others similarly situated,

Plaintiff,

vs.

CROWN ASSET MANAGEMENT, LLC, a Georgia limited liability company; and DOES 1 through 10, inclusive,

Defendants.

Case No. 2018-1-CV-338800

TENTATIVE RULING RE: MOTION TO STAY CASE AND COMPEL ARBITRATION; MOTION TO SEAL

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on August 16, 2019, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION
II.
This is a putative consumer class action brought pursuant to the California Fair Debt Buying Practices Act, Civil Code sections 1788.50-1788.64 (“CFDBPA”). According to the Class Action Complaint for Statutory Damages (“Complaint”), filed on December 4, 2018, plaintiff Pamela Shereé Chambers (“Plaintiff”) seeks statutory damages against defendant Crown Asset Management, LLC (“Defendant”) arising from its routine practice of sending initial written communications in smaller than 12-point type. (Complaint, ¶ 1.) The Complaint sets forth a single cause of action under the CFDBPA.

III. MOTION TO COMPEL ARBITRATION
IV.
A. Legal Standard
B.
“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.) “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: [¶] (a) The right to compel arbitration has been waived by the petitioner; or [¶] (b) Grounds exist for the revocation of the agreement.” (Code Civ. Proc., § 1281.2, subds. (a), (b).)

C. DISCUSSION
D.
Defendant states Plaintiff’s claims arise out of a debt she incurred on a credit card with Synchrony Bank. Defendant asserts the debt was subsequently sold and assigned to Defendant, which forwarded the debt to a debt collector, McCarthy Burgess & Wolff, Inc. Defendant contends the agreement for Plaintiff’s credit card account (the “Agreement”) contains the following arbitration provision: “If either you or we make a demand for arbitration, you and we must arbitrate any dispute or claim between you or any other user of your account, and us, our affiliates, agents and/or PayPal, Inc., if it relates to your account. . . .” (Affidavit of Jodi Anderson in Support of Defendant’s Motion to Compel Arbitration (“Anderson Affidavit”), Ex. A at 5; Ex. B at 5.) Based on that provision, Defendant moves to compel arbitration. Additionally, Defendant argues the arbitration should be on an individual basis only because the agreement contains a class action waiver.

Plaintiff argues in opposition that Defendant has not provided admissible evidence regarding the agreement Defendant contends governs Plaintiff’s account. Plaintiff argues that statements in the Anderson Affidavit lack foundation and violate the secondary evidence rule. Plaintiff argues further that even if the existence of a valid arbitration agreement can be proven, Defendant has not shown the right to compel arbitration was assigned to Defendant. Plaintiff makes no substantive arguments regarding whether the arbitration provision in the agreement submitted by Defendant is enforceable. Therefore, whether arbitration can be compelled turns on a question of evidence.

Defendant has the burden of proving a valid arbitration agreement exists and that all parties agreed to it. In establishing the existence and terms of, and the parties’ assent to, the arbitration agreement, Defendant relies on the Anderson Affidavit. Anderson states she is employed by Synchrony Bank as a litigation analyst. (Anderson Affidavit, ¶ 3.) She asserts she has personal knowledge of the business records of Synchrony Bank. (Id. at ¶ 5.) Anderson states that on December 13, 2012, the subject credit card and a copy of the Agreement were mailed to Plaintiff at the address of record on her account. (Id. at ¶ 6.) Synchrony Bank has no record the card or the Agreement was returned as undeliverable. (Ibid.) Synchrony Bank’s records reflect purchases and payments that were posted to the account. (Id. at ¶ 8.)

Plaintiff argues Anderson’s statements in her affidavit lack foundation and are hearsay. Plaintiff contends the Anderson Affidavit violates the secondary evidence rule by providing hearsay testimony about the contents of a writing. The secondary evidence rule states, in relevant part:

(a) The content of a writing may be proved by otherwise admissible secondary evidence. The court shall exclude secondary evidence of the content of writing if the court determines either of the following:

(1) A genuine dispute exists concerning material terms of the writing and justice requires the exclusion.

(2) Admission of the secondary evidence would be unfair.

(Evid. Code, § 1521, subd. (a).)

Unlike many motions to compel arbitration, Defendant relies on testimony – not documents – to show Plaintiff’s assent to arbitration. Anderson relies solely on what “Synchrony’s records show” to prove Synchrony mailed the arbitration agreement to Plaintiff. (See Anderson Affidavit, ¶ 6.) Anderson does not describe what those records looked like (e.g., whether they were electronic or paper records) and does not testify regarding their reliability or why she is testifying as to the contents of those records rather than attaching the records to her affidavit. Further, Anderson does not testify she has any personal knowledge regarding the mailing of the arbitration agreement outside what the “records show.” Anderson provides no information regarding the regular business practices or procedures of Synchrony Bank with regard to the mailing of credit card agreements. She also does not describe the procedures for recording when credit card agreements are returned as “undeliverable.” Defendant argues that courts have been satisfied when a party clicks on a “check box” or a “sign up” button. Anderson, however, does not testify about the mechanics of how Synchrony opens new accounts, including if customers click on certain buttons. All she says is that “Synchrony approved an application” and then, based on unspecified records, Synchrony mailed the credit agreement to Plaintiff.

The Court finds the Anderson Affidavit lacks foundation and violates the secondary evidence rule and therefore does not provide admissible evidence showing the Agreement was mailed to Plaintiff. Consequently, Defendant has not met its burden to show the existence of an arbitration agreement between the parties to which Plaintiff assented. Defendant’s motion to compel arbitration is DENIED.

V. MOTION TO SEAL
VI.
A. Legal Standard
B.
“Unless confidentiality is required by law, court records are presumed to be open.” (Cal. Rules of Court, rule 2.550(c).) “A record must not be filed under seal without a court order. The court must not permit a record to be filed under seal based solely on the agreement or stipulation of the parties.” (Cal. Rules of Court, rule 2.551(a).) The court may order that a record be filed under seal only if it expressly finds facts that establish:

(1) There exists an overriding interest that overcomes the right of public access to the record;
(2)

(3) The overriding interest supports sealing the record;
(4)

(5) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed;
(6)

(7) The proposed sealing is narrowly tailored; and
(8)

(9) No less restrictive means exist to achieve the overriding interest.
(10)

(Cal. Rules of Court, rule 2.550(d).)

A party moving to seal a record must file a memorandum and a declaration containing facts sufficient to justify the sealing. (Cal. Rules of Court, rule 2.551(b)(1).) A declaration supporting a motion to seal should be specific, not conclusory, as to the facts supporting the overriding interest. If the court finds that the supporting declarations are conclusory or otherwise unpersuasive, it may conclude that the moving party has failed to demonstrate an overriding interest that overcomes the right of public access. (See In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 305.)

Further, where some material within a document warrants sealing but other material does not, the document should be edited or redacted if possible, to accommodate the moving party’s overriding interest and the strong presumption in favor of public access. (See Cal. Rules of Court, rule 2.550(e)(1)(B); see also In re Providian Credit Card Cases, supra, 96 Cal.App.4th at p. 309.) In such a case, the moving party should take a line-by-line approach to the information in the document, rather than framing the issue to the court on an all-or-nothing basis. (In re Providian Credit Card Cases, supra, 96 Cal.App.4th at p. 309.)

C. Discussion
D.
Defendant moves to seal the Forward Flow Purchase & Sales Agreement (the “Purchase Agreement”) between Defendant and Synchrony Bank. Defendant provides evidence the Purchase Agreement contains proprietary and trade secret information relating to the structure and pricing of the transaction that transferred the rights, title, and interest of Plaintiff’s account to Defendant. (Declaration of Jessica Kagansky in Support of Motion to File Records Under Seal, ¶ 3.) The Purchase Agreement also contains a confidentiality provision that is designed to protect the trade secrets. (Ibid.) Defendant provides evidence that the information in the Purchase Agreement is not public and great harm to Defendant would result if competitors were able to access the information regarding the structure of the transaction. (Ibid.)

Plaintiff opposes the motion to seal. Plaintiff argues public policy favors the openness of courts and Defendant has not met the requirements for sealing.

Defendant initially sought to have a heavily redacted copy of the Purchase Agreement filed under seal. On August 7, 2019, the Court ordered Defendant to submit a less redacted Purchase Agreement – one on which redactions were made line-by-line and not wholesale. Later on August 7, 2019, Defendant submitted a Purchase Agreement in which only two sections involving financial information were redacted.

Generally, financial information involving confidential matters relating to the business operations of a party is subject to sealing when public revelation of these matters would interfere with the parties’ ability to effectively compete in the marketplace. (Universal City Studios, Inc. v. Superior Court (2003) 110 Cal.App.4th 1273, 1286.) Here, financial information involving confidential matters relating to Defendant’s business operations is redacted, and those redactions are narrowly tailored. Defendant has sufficiently justified its request for sealing. The motion to seal is GRANTED.

The Court will prepare the final order if this tentative ruling is not contested.

NOTICE: The Court does not provide court reporters for proceedings in the complex civil litigation departments. Parties may arrange for a private court reporter to provide services, but those arrangements must be consistent with the local rules and policies posted on the Court’s website.