Meghan Young v. Experian Information Solutions Inc

                                        PRECEDENTIAL

       UNITED STATES COURT OF APPEALS
            FOR THE THIRD CIRCUIT
                _______________

                     No. 23-2953
                   _______________

MEGHAN YOUNG, individually and on behalf of all others
              similarly situated

                           v.

   EXPERIAN INFORMATION SOLUTIONS, INC.,
                               Appellant
               _______________

     On Appeal from the United States District Court
              For the District of New Jersey
                (D.C. No. 3-23-cv-03312)
      District Judge: Honorable Michael A. Shipp
                    _______________

                        Argued
                     June 24, 2024

Before: JORDAN, McKEE, and AMBRO, Circuit Judges

                (Filed: October 17, 2024)
                    _______________
Caleb P. Redmond
Jacob M. Roth [ARGUED]
Jones Day
51 Louisiana Avenue NW
Washington, DC 20001
      Counsel for Appellant

Yitzchak Zelman [ARGUED]
Marcus & Zelman
701 Cookman Avenue
Suite 300
Asbury Park, NJ 07712
      Counsel for Appellee
                    _______________

                 OPINION OF THE COURT
                     _______________

JORDAN, Circuit Judge.

        After being denied a mortgage loan because of an
erroneous credit report prepared by Experian Information
Solutions, Inc. (“Experian”), Meghan Young sued Experian for
violations of the Fair Credit Reporting Act. In response,
Experian filed a motion to compel arbitration based on a later-
signed agreement that Young had with CreditWorks, an
Experian affiliate. Applying our precedent in Guidotti v. Legal
Helpers Debt Resolution, L.L.C., 

 (3d Cir. 2013),
the District Court denied the motion to compel without
prejudice and granted leave for Experian to re-file a motion to
compel arbitration after a short period of discovery on the issue
of arbitrability. Experian argues, however, that such discovery
is not required when, as in this case, the existence and validity




                               2
of the arbitration agreement are not at issue and any disputes
over enforceability or arbitrability are themselves delegated to
the arbitrator. We agree and take this opportunity to clarify our
ruling in Guidotti for application in circumstances such as this.
Accordingly, we will vacate and remand the District Court’s
order.

I.     BACKGROUND

       A.     Factual Background

       In February 2023, Young contacted a mortgage broker
for a loan. The broker denied Young’s application because
Experian inaccurately reported that mortgage foreclosure
proceedings had been initiated against her in March 2023,
when in fact she had paid her home loan in full in June 2021.
Sometime after her 2023 mortgage loan application was
denied, Young downloaded her credit reports from Experian
and another credit agency, Equifax. Both reports showed that
the mortgage on her house was satisfied. Experian, however,
flagged its report with an “FS,” which stands for “[f]oreclosure
proceedings started.” (J.A. at 13.) Because Young was not in
foreclosure proceedings, and her mortgage was paid off, the
Experian report was false.

        Whether as a matter of coincidence or in response to
Experian’s false credit report, in April 2023, Young enrolled
in a credit monitoring service called CreditWorks, which, as it
turns out, is related to Experian. CreditWorks is operated by
Experian Consumer Services (“ECS”), doing business as
Consumerinfo.com, and Experian is a subsidiary of ECS.




                               3
        To sign up for her CreditWorks account, Young
completed a “single webform” that “required [her] to enter her
personal information,” including “her name, address, phone
number, and e-mail address,” and to click the “Create Your
Account” button. (J.A. at 50.) Below the boxes for entering
an email address and password was a disclosure that said: “By
clicking ‘Create Your Account’: I accept and agree to [the]
Terms of Use Agreement, as well as acknowledge receipt of
[the] Privacy Policy and Ad Targeting Policy.” (J.A. at 50-51.)
Thus, by creating a CreditWorks account, Young arguably
agreed to CreditWorks’ Terms of Use, which included an
arbitration agreement.1

        The arbitration agreement states that Young and ECS,
or its affiliates, “including but, not limited to[] Experian[,]”
“agree to arbitrate all disputes and claims between [them] that
arise out of or relate to [the] Agreement, which includes any




       1
         The phrase “Terms of Use” in the disclosure was
linked to a pop-up window containing the entire text of the
agreement. We have no occasion now to consider the binding
effect of this type of pop-up and click-through contract, as
Young acknowledges the contract exists. See infra at pp. 15.




                               4
Information[2] [Young] obtain[s] through the Services[3] or
Websites[.]” (J.A. at 56, 63.) Additionally, the agreement
declares that it should “be broadly interpreted” to make

      2
          The term “Information” in the Terms of Use means:
               [A]ny credit, personal, financial or other
               information delivered to you as part of, or
               in conjunction with, the Services,
               including any such information that may
               be archived to the extent made available
               on the Websites, including (i) for your
               purchase of non-membership based
               Services such as the 3 Bureau Credit
               Report and FICO® Scores, the FICO
               Industry or other Base FICO Scores
               and/or an Experian Credit Report and
               FICO Score, (ii) enrollment and use of
               free Services (such as EXPERIAN
               CREDITWORKS            Basic),      and/or
               enrollment, purchase and use of
               membership based Services (such as
               EXPERIAN CREDITWORKS Premium,
               Experian IdentityWorks, or Experian
               Credit Tracker); and (iii) your access to
               and use of calculators, credit resources,
               text, pictures, graphics, logos, button
               items, icons, images, works of authorship
               and other information and all revisions,
               modifications, and enhancements thereto
               contained in the Websites.
      (J.A. at 63.)




                                5
arbitrable “all disputes and claims between [Young and ECS]
relating to, or arising out of, [the] Agreement, any Service
and/or Website, including any Information [Young] obtained
through the Services or Websites, … to the fullest extent
permitted by law.” (J.A. at 63.) By its terms, the arbitration
provision covers “claims arising out of or relating to any aspect
of the relationship between [ECS and Young,]” including those
brought under the Fair Credit Reporting Act, and “claims that
arose before this or any prior Agreement … and … that may
arise after the termination of this Agreement.” (J.A. at 63.)

       The arbitration agreement also includes a delegation
clause, which provides that “[a]ll issues are for the arbitrator to

       3
           The term “Service” in the Terms of Use,
                includes, but is not limited to, the
                provision of any of [ECS’s] products and
                services, including credit report(s), credit
                risk score(s), credit monitoring, credit
                score monitoring and credit score tracking
                … , the receipt of any alerts notifying
                [Young] of changes to the information
                contained in [Young’s] credit report(s),
                regardless of the manner in which
                [Young] receive[s] the Services, whether
                by email or mail, through a website or
                mobile application, by telephone, or
                through any other mechanism by which a
                Service is delivered or provided to
                [Young].
       (J.A. at 56.)




                                 6
decide” and specifically grants to the arbitrator “exclusive
authority to resolve” the following:

       (i) all issues regarding arbitrability, (ii) the scope
       and enforceability of [the] arbitration provision
       as well as the Agreement’s other terms and
       conditions, (iii) whether [Young] or ECS,
       through litigation conduct or otherwise, waived
       the right to arbitrate, [and] (iv) whether all or any
       part of [the] arbitration provision or Agreement
       is unenforceable, void or voidable including, but
       not limited to, on grounds of unconscionability[.]

(J.A. at 64.) And, lest any consumer try to escape Experian’s
wide net, the click-to-enroll terms-of-use agreement further
provides that its arbitration provision “survive[s] termination”
of the agreement. (J.A. at 64.)

       B.     Procedural History

        In June 2023, Young sued Experian in the District of
New Jersey for violations of the Fair Credit Reporting Act, 

 et seq. Experian promptly moved to compel
arbitration. Young opposed the motion and requested an
opportunity to take limited discovery before the District Court
considered the motion, arguing that “none of the claims in this
case ha[d] anything … to do with [her] CreditWorks
membership, or the agreement relating to that membership.”
(J.A. at 109.) The Court denied Experian’s motion without
prejudice and gave the parties fifty-three days to engage in
limited discovery on the issue of arbitrability. Under the
Court’s order, “[u]pon the completion of discovery, Experian
[would] be permitted to file a renewed motion, which th[e]




                                 7
Court w[ould] assess under a [Federal Rule of Civil Procedure]
56 summary judgment standard.”4 (J.A. at 3.)

        In denying the motion to compel and allowing
discovery, the District Court relied on our decision in Guidotti,

. There, we outlined two possible standards for
district courts to use when considering motions to compel
arbitration. Under the first, which is applicable when
“the existence of a valid agreement to arbitrate between the
parties is apparent from the face of the complaint[,]” courts
must “accept as true the facts established by the pleadings[.]”
Singh v. Uber Techs. Inc., 

 (3d Cir. 2019)
(emphasis omitted) (citing Guidotti, 

). It
is, in other words, essentially the standard applicable to
motions to dismiss under Federal Rule of Civil Procedure
12(b)(6).5 Guidotti, 

. The second standard

       4
         Under Rule 56, a “court shall grant summary judgment
if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a). Applying that standard to a
motion to compel arbitration, a “district court should only grant
[the] motion … if there is no genuine dispute as to any material
fact and, after viewing facts and drawing inferences in favor of
the non-moving party, the party moving to compel is entitled
to judgment as a matter of law.” Jaludi v. Citigroup, 

, 251 n.7 (3d Cir. 2019) (internal quotation marks omitted).
       5
          Under Rule 12(b)(6), “[w]e will affirm a district
court’s dismissal for failure to state a claim only if, accepting
all factual allegations as true and construing the complaint in
the light most favorable to the plaintiff, we determine that the
plaintiff is not entitled to relief under any reasonable reading




                               8
applies when the agreement to arbitrate is “unclear” “or if the
plaintiff has responded to [the] motion to compel arbitration
with additional facts sufficient to place the agreement” in
dispute. 

 In that circumstance, “we require the party
opposing the motion to submit evidence, which is typically
obtained through discovery.” Singh, 

 (citing
Guidotti, 

). The motion to compel arbitration
is then judged under the summary judgment standard of Rule
56.6 Guidotti, 

.

        The District Court held that the Rule 56 summary
judgment standard applied to the claims at issue because
“[Young]’s Complaint ma[de] no reference to the CreditWorks
arbitration agreement; [she] d[id] not attach the agreement as
an exhibit; and [she] d[id] not base the claims on the existence
of the agreement.” (J.A. at 7-8.) The Court further held that
because no valid arbitration agreement was shown on the face
of the complaint, “the non-movant must be given a limited
opportunity to conduct discovery on the narrow issue of
whether an arbitration agreement exists.” (J.A. at 7 (citing



of the complaint.” Guidotti v. Legal Helpers Debt Resol.,
L.L.C., 

 (3d Cir. 2013) (internal quotation
marks omitted). Thus, for a motion to compel arbitration, “we
look to the complaint and the documents on which it relies and
will compel arbitration only if it is clear, when read in the light
most favorable to the respondents, that the parties agreed to
arbitrate.” Robert D. Mabe, Inc. v. OptumRX, 

 (3d Cir. 2022).
       6
           See supra note 4.




                                9
Guidotti, 

).) Experian did not participate in
discovery and chose, instead, to file this appeal.

II.    DISCUSSION7

       Experian argues that the District Court erred in
mandating limited discovery on the issue of arbitrability, rather
than granting the motion to compel arbitration on the record
before it. In these particular circumstances, we agree.

        The Federal Arbitration Act (the “FAA”), 

et seq., enables judicial enforcement of a contract to arbitrate
after the court “hear[s] the parties” and is “satisfied that the


       7
         The District Court had jurisdiction under 

 and 15 U.S.C. § 1681p. We have jurisdiction pursuant
to 

(a)(1)(A)-(C). See Bacon v. Avis Budget Grp.,
Inc., 

 (3d Cir. 2020) (“We have jurisdiction
over orders refusing to compel arbitration irrespective of the
fact that the [motion] was denied without prejudice[.]”
(internal quotation marks omitted)).
       We exercise plenary review over the District Court’s
order denying a motion to compel arbitration. Singh v. Uber
Techs. Inc., 

 (3d Cir. 2019). Applying the
same standard as below, we review the Court’s order under the
summary judgment standard set out in Federal Rule of Civil
Procedure 56(a). 

 That standard directs that a “district court
should only grant a motion to compel arbitration if there is no
genuine dispute as to any material fact and, after viewing facts
and drawing inferences in favor of the non-moving party, the
party moving to compel is entitled to judgment as a matter of
law.” Jaludi, 

 n.7 (internal quotation marks
omitted).




                               10
making of the agreement for arbitration … is not in issue[.]”

 § 4. Thus, before compelling arbitration, a court will
typically determine that “(1) a valid agreement to arbitrate
exists, and (2) the particular dispute falls within the scope of
the agreement.” Kirleis v. Dickie, McCamey & Chilcote, P.C.,

 (3d Cir. 2009); see also Sandvik AB v.
Advent Int’l Corp., 

 (3d Cir. 2000) (holding
that “when the very existence of … an [arbitration] agreement
is disputed, a district court is correct to refuse to compel
arbitration until it resolves the threshold question of whether
the arbitration agreement exists”).

        As mentioned above, we laid out in Guidotti two
distinct paths for district courts to follow in making that
determination. 

. To reiterate, “when it is
apparent, based on the face of a complaint, and documents
relied upon in the complaint, that … a party’s claims are
subject to an enforceable arbitration clause, a motion to compel
arbitration should be considered under a Rule 12(b)(6)
standard without discovery[.]” 

 (internal quotation
marks omitted). But, we continued, “if the complaint and its
supporting documents are unclear regarding the agreement to
arbitrate, or if the plaintiff has responded … with additional
facts sufficient to place the agreement to arbitrate in issue, then
the parties should be entitled to discovery on the question of
arbitrability before” the motion to compel arbitration proceeds
to decision. 

 (internal quotation marks omitted).

       Thus, if a complaint does not set forth clearly that the
claims are subject to an arbitration agreement, or if the plaintiff
rebuts the motion to compel “with reliable evidence that is
more than a naked assertion … that it did not intend to be
bound by the arbitration agreement,” then the court should




                                11
apply the Rule 56 standard. 

 (internal quotation
marks omitted). In this regard, however, some language in
Guidotti is more prescriptive than is helpful or accurate. We
said that, under the Rule 56 standard, “‘restricted inquiry into
factual issues’ will be necessary to properly evaluate whether
there was a meeting of the minds on the agreement to
arbitrate,” 

 (emphasis added) (quoting Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 

 (1983)),
and, accordingly, the non-movant “should” get discovery, id.
at 776 (emphasis added) (internal quotation marks omitted),
and, with greater emphasis, “must be given the opportunity to
conduct limited discovery on the narrow issue concerning the
validity of the arbitration agreement[,]” id. at 774 (emphasis
added) (internal quotation marks omitted). Elsewhere in the
opinion, however, we more accurately noted that, “any time the
court must make a finding to determine arbitrability, pre-
arbitration discovery may be warranted.” Id. at 774 n.5
(emphasis added). Then, “[a]fter limited discovery, the court
may entertain a renewed motion to compel arbitration … under
a summary judgment standard.” Id. at 776 (emphasis added).

        Here, the District Court correctly determined, and the
parties do not dispute, that the Rule 56 summary judgment
standard applies to the claims at issue because “[Young]’s
Complaint ma[de] no reference to the CreditWorks arbitration
agreement; it d[id] not attach the agreement as an exhibit; and
it d[id] not base the claims on the existence of the agreement.”
(J.A. at 7-8.) The Court therefore applied Guidotti and, hewing
to the mandatory language of the opinion, held that “the motion
to compel arbitration must be denied pending further
development of the factual record.” (J.A. at 9 (quoting
Guidotti, 

).) That was a misstep we caused.




                              12
       It was not wrong to apply Guidotti and hold that the
Rule 56 standard applies here. But Guidotti’s call for limited
discovery into arbitrability is best understood as being itself
limited. It should be read as encouraging factual discovery
when such discovery is warranted, which will often be the case
but not always. In the absence of a factual dispute, there is
nothing to discover and thus no need to delay a decision on the
motion to compel.8 In Guidotti, there was a genuine dispute of
material fact as to whether a meeting of the minds occurred on
the agreement to arbitrate. 

. Because the
record was insufficient for the district court to make that
threshold determination before compelling arbitration, we
remanded the case for further fact discovery. 

.

       Similarly, in Singh, 

, we affirmed
Guidotti’s directive that limited discovery take place when a
factual dispute arises. Singh presented a threshold factual
question of whether Uber drivers fell within the FAA’s
exemption from compelled arbitration for “workers engaged in

       8
         District courts in our circuit have already recognized
this point. See, e.g., Matczak v. Compass Grp. USA, Inc., No.
1:21-CV-20415, 

, at *3-4 (D.N.J. Feb. 24,
2022) (holding that because “there [was] no factual dispute that
Plaintiff executed the Arbitration Agreement[,] … no further
discovery on this question [was] required” and applying the
Rule 56 standard); Triola v. Dolgencorp, LLC, No. CV 22-840,

, at *5 (D.N.J. Nov. 9, 2022) (granting the
motion to compel under the Rule 56 standard without
discovery because the plaintiff “assented to the [a]greement”
and “[t]here [was] no disputed issue of material fact related to
the [a]greement’s validity”).




                              13
foreign or interstate commerce.” 

 at 214 (quoting 

). “Since neither the … [c]omplaint nor incorporated
documents suffice[d] for determining whether Singh
belong[ed] to [the relevant] class of workers[,]” we “ultimately
remand[ed] for the District Court to examine the issue, with
instruction to permit limited discovery before entertaining
further briefing.” 

. In both cases, factual disputes
existed, necessitating additional discovery to resolve the
question of arbitrability. Id.; Guidotti, 

;
see also Robert D. Mabe, Inc. v. OptumRX, 

, 329-
30 (3d Cir. 2022) (remanding to the district court “to allow the
parties to conduct discovery limited to the issue of
arbitrability” because plaintiffs “brought forth sufficient facts
to place the agreement to arbitrate in issue” (internal quotation
marks omitted)).

        The logic of those decisions flows from Rule 56 itself.
It provides that, when a nonmovant needs more discovery
before responding to a summary judgment motion, the
nonmovant can seek that relief under subsection (d): “If a
nonmovant shows … that … it cannot present facts essential to
justify its opposition, the court may: … defer considering the
motion or deny it … [or] allow time … to take discovery[.]”
The provision for discovery in subsection (d) is thus tightly
related to the requirement that the movant show “there is no
genuine dispute as to any material fact” before the court can
grant summary judgment. Fed. R. Civ. P. 56(a). In short,
discovery addressing a motion to compel arbitration is
unnecessary when no factual dispute exists as to the existence
or scope of the arbitration agreement. Cf. Guidotti, 

 (“[A]n additional brake on the FAA’s speed impulse” is
“[t]he significant role courts play in interpreting the validity
and scope of contract provisions[.]”).




                               14
        Guidotti’s mandate that when “arbitrability [is] not …
apparent on the face of the complaint, the motion to compel
arbitration must be denied pending further development of the
factual record” assumes that the factual record needs to be
developed. 

. In Young’s case, that is not so. There
is no factual dispute about the existence of the agreement to
arbitrate. No one denies that the parties entered into the
agreement or that it is valid. In fact, Young freely
acknowledges that “[i]n the CreditWorks agreement, [she] and
ConsumerInfo.com, Inc. agreed to arbitrate disputes ‘that arise
out of, or relate to, th[e] [CreditWorks] agreement.’”
(Answering Br. at 6 (fourth alteration in original).)

       What is in dispute here is the scope and enforceability
of the agreement, but the decision on those issues is explicitly
delegated, by the terms of the agreement, to an arbitrator. In
Rent-A-Center, West, Inc. v. Jackson, the Supreme Court held
that, due to severability of arbitration provisions from the
remainder of a contract, unless a party challenges a “delegation
provision specifically, [the court] must treat [the delegation] as
valid under § 2, and must enforce it under §§ 3 and 4 [of the
FAA], leaving any challenge to the validity of the [a]greement
… for the arbitrator.” Rent-A-Center, 

 (2010).
And, as more recently articulated in Henry Schein, Inc. v.
Archer & White Sales, Inc., “parties may delegate threshold
arbitrability questions to the arbitrator, so long as the parties’
agreement does so by ‘clear and unmistakable’ evidence.” 

 (2019) (quoting First Options of Chi., Inc. v.
Kaplan, 

 (1995)). If so, “a court possesses
no power to decide the arbitrability issue.” Id. at 68. That rule
on delegability applies even to form contracts like the one here.
Coinbase, Inc. v. Suski, 

, 1191, 1194 (2024)




                               15
(applying to an online “User Agreement that [users] agreed to
when they created their accounts” the rule that, “absent a
successful challenge to the delegation provision, courts must
send all arbitrability disputes to arbitration”). Thus, “a party
seeking to avoid arbitration must directly challenge the
arbitration or delegation clause, not just the contract as a
whole.” 

.

       Young did not do so, and that is fatal to her argument.
She says that “Experian didn’t even try to demonstrate that
th[e] … arbitration agreement applied in any way to the claims
at issue in this case.” (Answering Br. at 4.) Yet, that is a
challenge to the scope of the agreement, which the arbitrator is
empowered to decide.9 Again, under CreditWorks’ Terms of
Use, the arbitrator has “exclusive authority to resolve” “all
issues regarding arbitrability, [and] the scope and
enforceability of th[e] arbitration provision as well as the
Agreement’s other terms[.]” (J.A. at 64.) Therefore, since
Young did not directly challenge the delegation clause in the
District Court, we cannot properly consider the present
argument regarding the arbitration agreement’s scope.10 Since


       9
         Young seems to concede this argument, at least in part.
(See J.A. at 114 (“If Experian had [met its burden of
demonstrating that her claims fell within the agreement], the
arbitrator could then be asked to determine whether [the]
requisite connection actually exists and is sufficient.”).)
       10
         See also Dennis v. City of Philadelphia, 

 (3d Cir. 2021) (“To preserve an argument, a party must
unequivocally put its position before the trial court[.]”
(footnote and internal quotation marks omitted)).




                              16
there is no challenge to the agreement’s formation, Young
presents no judicially resolvable challenge to the motion to
compel. See 

 (“[U]pon being satisfied that the
making of the agreement for arbitration … is not in issue, the
court shall make an order directing the parties to proceed to
arbitration[.]”); Henry Schein, Inc., 

 (“[B]efore
referring a dispute to an arbitrator, the court determines
whether a valid arbitration agreement exists. But if a valid
agreement exists, and if the agreement delegates the
arbitrability issue to an arbitrator, a court may not decide the
arbitrability issue.” (citation omitted)).

        In sum, since Young challenged only the arbitration
agreement’s scope – rather than its existence or validity – and
since arbitrability determinations, including scope, have been
delegated to an arbitrator, nothing is left for the District Court
to decide pursuant to the FAA. See Guidotti, 

(only when “the complaint and its supporting documents are
unclear regarding the agreement to arbitrate, or if the plaintiff
… respond[s] … with additional facts sufficient to place the
agreement to arbitrate in issue, then the parties should be
entitled to discovery on the question of arbitrability” (internal
quotation marks omitted)). The Court should therefore have
granted the motion to compel arbitration without discovery, in
keeping with the FAA’s instruction to order arbitration if
“satisfied that the making of the agreement for arbitration … is
not in issue.” 

; see also BOSC, Inc. v. Bd. of Cnty.
Comm’rs. Of Bernalillo, 

 (10th Cir. 2017)
(“The object of § 4 is to decide quickly – summarily – the
proper venue for the case … so the parties can get on with the
merits of their dispute.” (internal quotation marks omitted)).




                               17
III.   CONCLUSION

       For the foregoing reasons, we will vacate the District
Court’s order and remand for further proceedings consistent
with this opinion.




                             18