SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

NICHOLAS VINCENT SERIO, individually and on behalf of all others similarly situated,

Plaintiff,

vs.

PORTFOLIO RECOVERY ASSOCIATES, LLC, a Delaware limited liability company; and DOES 1 through 10, inclusive,

Defendants.

Case No. 19CV348789

TENTATIVE RULING RE: MOTIONS TO COMPEL ARBITRATION AND TO SEAL RECORD

The above-entitled action comes on for hearing before the Honorable Patricia M. Lucas on January 31, 2020 at 9:00 a.m. in Department 3. 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 June 11, 2019, plaintiff Nicholas Vincent Serio (“Plaintiff”) seeks statutory damages against defendant Portfolio Recovery Associates, 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.

Now before the Court is a motion to compel arbitration by Defendant. Defendant also moves to seal certain documents.

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. Objections to Evidence
D.
Plaintiff has filed a number of evidentiary objections to portions of the Declaration of Angel Nayman and the Declaration of Kevin Nguyen. To the extent the Court has relied on any of the evidence to which Plaintiff objects, the objections are discussed below.

E. Discussion
F.
Defendant asserts that Plaintiff entered into a credit card agreement with Synchrony Bank, the predecessor to Defendant, and agreed to a broad arbitration provision. Defendant states that after Plaintiff defaulted on the credit card, the account was charged-off and sold to Defendant, and all rights under the credit card agreement, including the right to arbitrate, were assigned to Defendant. Defendant now moves to compel arbitration.

In opposition, Plaintiff argues that Defendant has failed to prove by a preponderance of the evidence that a valid agreement to arbitrate the claims of this case exists, and Defendant has failed to show a right to compel arbitration was assigned to Defendant.

i. Existence of Agreement to Arbitrate
ii.
Defendant provides evidence in the form of a sample credit card agreement (the “Agreement”) that was sent to Plaintiff. (Declaration of Angel Nayman in Support of Motion to Compel Arbitration (“Nayman Decl.”), Ex. 2.) The agreement contains an arbitration provision. (Ibid.)

Plaintiff argues that Defendant has not established: (1) the Agreement was ever sent to Plaintiff; (2) Plaintiff ever received or agreed to be bound by the Agreement; or (3) the Agreement is the one that governs Plaintiff’s account. Plaintiff contends that the only evidence that the Agreement was sent to Plaintiff is the Nayman Declaration, and that declaration violates the secondary evidence rule by providing hearsay testimony about the contents of a writing.

In reply, Defendant contends that the Nayman Declaration is not hearsay and is instead proper testimony for laying the foundation for the admission of business records.

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).)

Plaintiff argues that for the contents of a writing to be proved by secondary evidence, the secondary evidence must be otherwise admissible. Plaintiff states that, at a minimum, Defendants must show the Agreement was delivered to Plaintiff. Plaintiff contends an opinion from the District Court for the Northern District of Illinois is instructive, where the Court stated:

What Conseco fails to recognize, however, is the method of establishing that proper mailing took place. The presumption of delivery can be invoked either by presenting evidence of actual mailing such as an affidavit from the employee who mailed the letter, or presenting proof of procedures followed in the regular course of operations which give rise to a strong inference that the letter was properly addressed and mailed. Conseco has failed to present evidence of either sort. Vangen does not claim that she was the person who mailed the notice. Nor does she attest to the procedures followed in the regular course of operations to ensure proper addressing and mailing of notices. Instead, she reaches conclusions about the mailing without indicating that she has any personal knowledge of any of the procedures that were followed, and she says nothing about how addresses were selected for use in the mailing, what Conseco’s records showed Kennedy’s address to be at the time, or what procedures were followed to ensure that all cardholders received the notice. Further, Vangen’s declaration does not establish that it was Conseco’s routine practice to note in a cardholder’s file if and when mail was returned unopened or undeliverable or if and when the cardholder sent correspondence to the company. Without such evidence, the Court cannot apply the presumption of delivery.

(Kennedy v. Conseco Finance Corp. (N.D. Ill. 2000) 2000 WL 1760943, at *4, brackets, quotation marks, and citations omitted.)

The problem with Plaintiff’s reliance on this decision is that it does not reflect the circumstances in this case and the actual contents of the Nayman Declaration. Angel Nayman states that she is employed as an Assistant Vice President, Litigation Support by Synchrony Bank. (Nayman Decl., ¶ 1.) She attaches several documents to her declaration, including the Agreement, and states that they are business records created and maintained in the course of regularly conducted business activity and as part of Synchrony’s regular practice of maintaining such records. (Id. at ¶ 5.) She asserts that, as part of Synchrony’s regular account-opening process, on or about June 25, 2017, Synchrony mailed a credit card, together with a copy of the agreement for his account, to Plaintiff at his San Jose address listed on his application. (Id. at ¶ 9.) There is no record that the credit card or account agreement were returned as undeliverable. (Ibid.)

The business records exception to hearsay is set forth in Evidence Code section 1271, which provides:

Evidence of a writing made as a record of an act, condition, or event is not made inadmissible by the hearsay rule when offered to prove the act, condition, or event if:

(a) The writing was made in the regular course of a business;

(b) The writing was made at or near the time of the act, condition, or event;

(c) The custodian or other qualified witness testifies to its identity and the mode of its preparation; and

(d) The sources of information and method and time of preparation were such as to indicate its trustworthiness.

The Nayman Declaration is sufficient to establish the requirements for the business records exception. As stated in a case cited by Defendant, “any ‘qualified witness’ who is knowledgeable about the documents may lay the foundation for introduction of business records—the witness need not be the custodian or the person who created the record.” (Jazayeri v. Mao (2009) 174 Cal.App.4th 301, 324.) Nayman has demonstrated that she is a qualified witness and that the relevant account agreement was sent to Plaintiff’s address in the regular course of business at the time his account was created. Therefore, the Court can rely on the statements made in the Nayman Declaration and the attached exhibits. Plaintiff’s objections to the Nayman Declaration are OVERRULED.

Accordingly, Defendant has established that there is an applicable agreement to arbitrate.

iii. Assignment of Right to Compel Arbitration
iv.
Plaintiff argues that Defendant has failed to show that Defendant was assigned the right to compel arbitration as part of the purchase of Plaintiff’s account. Plaintiff states the “Bill of Sale,” which is attached as Exhibit 4 to the Nayman Declaration, is subject to the terms and conditions of a larger agreement titled “Forward Flow Accounts Purchase Agreement.” This agreement was not filed with the moving papers and Plaintiff contends that, without examining the Forward Flow Accounts Purchase Agreement, it is impossible to know whether Defendant was transferred the right to compel arbitration and whether there were any conditions to asserting the right to compel arbitration.

In reply, Defendant has produced a redacted copy of the Forward Flow Accounts Purchase Agreement. Defendant states the agreement was produced in this action on December 16, 2019. (Declaration of Leanne C. Yu in Support of Motion to Compel Arbitration, ¶ 2.)

Generally, the Court will not consider evidence provided for the first time on reply. In this case, however, the Forward Flow Accounts Purchase Agreement was given to Plaintiff prior to the time Plaintiff’s opposition was due, so there appears to be no prejudice and the Court will consider the document. Nevertheless, the Court will allow Plaintiff to file a supplemental brief addressing the Forward Flow Accounts Purchase Agreement if requested at the hearing.

The Forward Flow Accounts Purchase Agreement provides that Defendant purchased “all right, title and interest in and to the Accounts, without any encumbrances. . . .” (Supplemental Declaration of Kevin Nguyen in Support of Motion to Compel Arbitration, ¶ 4; Forward Flow Accounts Purchase Agreement, ¶ 2.1.) This language supports the proposition that the right to compel arbitration was transferred with the sale to Defendant. (See Mark v. Portfolio Recovery Associates, LLC (N.D. Ill. 2015) 2015 WL 1910527, at *3 [“The plain and ordinary meaning of ‘all of [its] right, title and interest in and to’ provides for an assignment of all of U.S. Bank’s rights under the Cardmember Agreement, including the arbitration provision.”].)

G. Conclusion
H.
Defendant has established the existence of an applicable arbitration agreement and the right to enforce the agreement. Accordingly, Defendant’s motion to compel arbitration is GRANTED. The case is stayed pending completion of the arbitration (Code Civ. Proc., § 1281.4), and the January 31, 2020 Case Management Conference is continued to July 31, 2020.

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 Accounts Purchase Agreement (the “FFA”) between Defendant and Synchrony Bank and portions of its reply that cite to the FFA. Defendant provides evidence that the FFA contains commercially-sensitive information and that placing the FFA in the public record would harm Defendant’s business interests. (Declaration of Kevin Nguyen in Support of Defendant Portfolio Recovery Associates, LLC’s Motion to Submit Forward Flow Accounts Purchase Agreement [PRA 0112-0149] Under Seal Pursuant to Stipulated Protective Order and California Rule of Court 2.551, ¶¶ 3-4.)

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 compete effectively in the marketplace. (Universal City Studios, Inc. v. Superior Court (2003) 110 Cal.App.4th 1273, 1286.) The Court finds that there exists an overriding interest that overcomes the right of public access to the FFA and citations therefrom in the reply; that Defendant’s business interest in protecting commercially sensitive information supports sealing the record; a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; the request is narrowly tailored; and no less restrictive means exist to achieve the overriding interest. Accordingly, the motion to seal is GRANTED.

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