TABITHA LYNN NEWSOM, individually and on behalf of all others similarly situated,

Plaintiff,

vs.

CAVALRY SPV I, LLC, a Delaware limited liability company; and DOES 1 through 10, inclusive,

Defendants.

Case No. 2016-1-CV-299973

TENTATIVE RULING RE: MOTION TO COMPEL ARBITRATION; MOTION FOR ORDER DESIGNATING CERTAIN INFORMATION “CONFIDENTIAL” PURSUANT TO PROTECTIVE ORDER

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on July 28, 2017, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION

This is a putative class action brought by plaintiff Tabitha Newsom (“Plaintiff”) pursuant to the California Fair Debt Buying Act. According to the Complaint, filed on September 15, 2016, Plaintiff is alleged to have incurred a financial obligation in the form of a consumer credit account issued by Citibank, N.A. (Complaint, ¶ 12.) Plaintiff denies any debt is owed. (Ibid.) On June 27, 2016, the alleged debt was sold to defendant Cavalry SPV I, LLC (“Defendant”) for collection purposes. (Id. at ¶ 14.)

Defendant hired Cawley & Bergmann, LLC (“Cawley”) to collect the debt from Plaintiff on Cavalry’s behalf. (Complaint, ¶ 16.) On July 5, 2016, Cawley sent a written communication to Plaintiff on Cavalry’s behalf. (Id. at ¶ 18.) The communication failed to include a notice required by the California Fair Debt Buying Practices Act. (Id. at ¶ 20.)

There are now two motions before the Court: (1) Defendant’s motion to compel arbitration; and (2) Defendant’s motion to designate certain information “confidential.”

II. MOTION TO COMPEL ARBITRATION

“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).)

In addition to the normal motion papers, Plaintiff filed a supplemental opposition on July 10, 2017, and Defendant filed a supplemental reply on July 14, 2017. Defendant argues the Court should strike Plaintiff’s supplemental opposition. Defendant asserts this Court’s June 29 order included a deadline of July 10, but Plaintiff served the supplemental opposition by mail rather than electronic service, so Defendant did not receive the supplemental opposition until the next business day. Defendant filed a substantive supplemental reply and there appears to be no prejudice to Defendant from the method of service used by Plaintiff. Accordingly, the Court will exercise its discretion to consider the supplemental opposition.

Defendant argues in its motion that Newsom’s credit card account with Citibank, N.A. was subject to a card agreement that included an assignment provision and an arbitration provision. Defendant contends Plaintiff’s claim is subject to the arbitration provision and that, as the assignee of Citibank’s interest in the credit card account, Cavalry can enforce the arbitration provision to proceed to arbitration on an individual, non-class basis.

Plaintiff makes several arguments in opposition, but one in particular is dispositive. In Plaintiff’s supplemental opposition, Plaintiff asserts it received additional discovery documents in early May and the card agreement that was produced includes a provision that states: “The Fact Sheet shows whether your account is subject to arbitration. If it is, the following “Arbitration” provision is a part of this Agreement.” (Declaration of Fred W. Schwinn in Opposition to Cavalry SPV I, LLC’s Motion to Compel Arbitration (“Schwinn Decl.”), Ex. A.)
The provision in the card agreement referencing the fact sheet indicates that not all accounts are subject to arbitration. However, Citibank’s person most knowledgeable, Brian Billings, testified in his deposition on June 1, 2017, that the fact sheet is unavailable. (Schwinn Decl., Ex. A.) Therefore, it cannot be confirmed whether Plaintiff’s card agreement incorporates the arbitration provision.
Defendant argues the fact sheet is not needed because Billings testified that, based on his time with the bank and his training, all Citibank card agreements have contained arbitration clauses since 2003 and he has never seen a fact sheet that nullified an arbitration clause. Defendant is correct that Billings testified to this effect in his deposition. (Supplemental Reply Declaration of Liana Mayilyan in Support of Defendant Cavalry SPV I, LLC’s Motion to Compel Arbitration, Ex. C, pp. 107:9-108:2, 109:17-110:3.) However, Billings also testified he does not know the purpose of the provision regarding the fact sheet. (Id. at p. 109:17-21.)

To the extent Defendant contends Billings’s testimony leads to the conclusion that Plaintiff’s card agreement incorporates the arbitration agreement regardless of the fact sheet provision, such a contention contradicts the language of the agreement itself and would render the fact sheet provision meaningless. Moreover, Billings did not testify that no fact sheets exist that prevent the arbitration provision from becoming part of a Citibank credit card agreement; he testified that he has never seen such a fact sheet and he does not know the purpose of the fact sheet provision. Consequently, Billings’s testimony cannot be relied on as conclusive proof regarding all fact sheets.

“The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity.” (Civ. Code, § 1638.) The language of the card agreement indicates the incorporation of the arbitration provision into the agreement depends on the fact sheet. Billings’s testimony notwithstanding, the language of the agreement at issue leaves open the question of whether the arbitration provision applies. Defendant has the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) In light of the card agreement’s express language indicating arbitration may or may not be required, and the failure of Defendant to provide the specific fact sheet that would answer this question, Defendant has failed to meet its burden of proof. Accordingly, Defendant’s motion to compel arbitration is DENIED.

The Court declines to rule on Plaintiff’s objections to evidence, which are not material to the decision.

III. PROTECTIVE ORDER MOTION

Defendant moves to designate certain information “confidential” under the protective order entered in this action. As an initial matter, Defendant argues the Court should strike Plaintiff’s opposition as untimely. Defendant asserts Plaintiff had until July 10, 2017 to electronically file and serve the opposition, but instead Plaintiff placed the opposition in the mail on July 10 and Defendant did not receive it until the next day. Defendant filed a substantive supplemental reply and there appears to be no prejudice to Defendant from the method of service used by Plaintiff. Accordingly, the Court will exercise its discretion to consider Plaintiff’s opposition.
Pursuant to the stipulated protective order in this action, Defendant produced a redacted copy of the purchase and sale agreement (the “PSA”) negotiated between Defendant and Citibank and designated the PSA “confidential.” Defendant states the PSA contains several pieces of confidential, commercially-sensitive information about the sale of accounts from Citibank to Defendant, including the price Defendant paid, the types of accounts purchased, how the accounts were selected, and the parties’ respective obligations regarding the accounts. Defendant contends the redactions made are minimal and protect confidential information not relevant to this action, such as the price Defendant paid for the accounts.

Plaintiff concedes some aspect of the PSA may be sufficiently confidential so as to require redaction or a “confidential” designation pursuant to the stipulated protective order, such as pricing information. Plaintiff argues, however, that a designation of the entire document as confidential is overbroad. Plaintiff contends the PSA does not qualify as a trade secret because Defendant has not shown the PSA derives independent economic value from not generally being known to the public and because the PSA is not secret. In reply, Defendant argues the PSA qualifies as a trade secret because Defendant derives independent economic value from keeping it confidential and Defendant works diligently to keep the PSA secret.

The Court notes that even if the PSA is not considered a trade secret, the stipulated protective order allows a party to designate as confidential information documents containing confidential business or financial information. (Declaration of Liana Mayilyan in Support of Defendant’s [sic] Cavalry SPV I, LLC’s Motion for Order Designating Certain Information “Confidential” Pursuant to Protective Order, Ex. B, ¶ 1.) Designating information as confidential restricts its use solely for the purpose of this case, but otherwise does not prevent Plaintiff from access to and use of the information. (See id. at ¶¶ 3-4.)

Defendant provides evidence the PSA is subject to a confidentiality provision and contains confidential, commercially sensitive information. (Declaration of Roxanne Jackson in Support of Defendant’s [sic] Cavalry SPV I, LLC’s Motion for Order Designating Certain Information “Confidential” Pursuant to Protective Order, ¶ 3.) The PSA includes privately negotiated deal points reflecting Defendant’s internal business strategy and is kept confidential by Defendant. (Ibid.) Defendant asserts that if its confidential information is not protected from public disclosure, it will place Defendant at a competitive disadvantage. (Id. at ¶ 4.)

The Court finds Defendant has sufficiently met its burden to establish the PSA is entitled to protection pursuant to the stipulated protective order. Accordingly, Defendant’s motion for an order designating certain information “confidential” pursuant to protective order is GRANTED.

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