                                                      NOT PRECEDENTIAL

          UNITED STATES COURT OF APPEALS
               FOR THE THIRD CIRCUIT


                           No. 16-3960



              SHEILA HORTON, Individually and
             on behalf of all others similarly situated


                                 v.

              FEDCHOICE FEDERAL CREDIT UNION;
                  DOES 1 THROUGH 10

                  Fedchoice Federal Credit Union,
                                            Appellant



         On Appeal from the United States District Court
             for the Eastern District of Pennsylvania
               (District Court No.: 2-16-cv-00318)
         District Judge: Honorable J. William Ditter, Jr.


          Submitted under Third Circuit L.A.R. 34.1(a)
                      on April 25, 2017


Before: SMITH, Chief Judge, MCKEE and RENDELL Circuit Judges



                  (Opinion filed: May 2, 2017)
                                      O P I N I O N*


RENDELL, Circuit Judge:

       Appellant FedChoice appeals from an Order of the District Court denying its

motion to stay or dismiss Appellee Horton’s Complaint in favor of binding arbitration.

We will affirm.

                                            I.

       Sheila Horton sued FedChoice Federal Credit Union individually and on behalf of

those similarly situated claiming that FedChoice’s overdraft protection program,

Courtesy Pay, breached the terms of her Account Agreement and violated certain other

federal laws.1 Under the terms of Courtesy Pay, FedChoice agrees to pay debits to an

account holder’s checking account even if the checking account would become

overdrawn by the transaction. Upon paying the debit, FedChoice in turn charges the

account holder a fee. Account holders must affirmatively opt in to Courtesy Pay.

       At the center of the dispute is FedChoice’s formula for calculating whether there

are sufficient funds in the checking account to cover a given transaction. Rather than

using an account holder’s “actual balance” to make this determination, FedChoice looks

to an account holder’s “available balance”—the “actual balance” minus anticipated debits



       *
        This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
      1
        In particular, she claims that FedChoice’s practices violated the Electronic Fund
Transfer Act, 15 U.S.C. § 1693, and Regulation E, 12 C.F.R. § 1005.17 (2016).

                                             2
which may or may not post to the account later on. J21a–J22a. Horton alleges that use of

this “artificial internal calculation” results in frequent overdraft fees in situations where

there is actually money in the account and is contrary to the Account Agreement, Opt-In

Agreement, and other marketing materials.2 J21a. Horton’s Account Agreement was

attached to the Complaint, but does not contain an arbitration provision. Horton’s Opt-in

Agreement does not appear in the record beyond being mentioned in the Complaint.

       In response to the Complaint, FedChoice moved to stay or dismiss the Complaint

in favor of binding arbitration (the “Motion”). In support of that Motion, it filed the

declaration of FedChoice employee Phyllis Mauck, who confirmed that Horton had a

checking account at FedChoice and had opted into Courtesy Pay via an online Opt-In

Agreement in 2004. Mauck also stated that Horton had entered into a third contract,

called a Service Agreement in 2015. The Service Agreement contains terms governing

“Account-to-Account linking,” which allows FedChoice account holders to transfer

money electronically between their accounts at FedChoice and other financial

institutions. J53a. The Service Agreement also contains an arbitration provision that

states: “You agree that any dispute between us, including any dispute concerning your

accounts, the Service, and these Terms and Condition [sic] be resolved by binding

arbitration.” J64a. Attached to the Mauck Declaration, in addition to the Service

Agreement itself, are a computer print-out that purports to show that Horton accepted the



       2
        The Account Agreement, in particular, provides that FedChoice will charge an
overdraft fee when “the funds in [the account holder’s] share account are not sufficient to
cover drafts, fees or other items posted to [the] account.” J20a.

                                               3
Service Agreement using FedChoice’s website, and screenshots of the website where the

terms of the Service Agreement supposedly appeared to the online user.

          Horton opposed FedChoice’s Motion, and, in support, filed a declaration of her

own. She averred that she “ha[d] no recollection of seeing the screenshots of this

[S]ervice [A]greement, reading this [S]ervice [A]greement, reading any arbitration

provision, and agreeing to the terms of this agreement.” J134a. She did not believe that

she had ever used Account-to-Account linking to transfer funds between her accounts

either.

          The District Court denied FedChoice’s Motion to compel arbitration. In relevant

part, after characterizing the Service Agreement as a “contract of adhesion” that

“invite[s] an inquiry into whether [it is] procedurally and substantively unconscionable,”

the District Court “conclude[d] that the validity of the Service Agreement is a disputed

issue.” J7a–8a. “It follow[ed],” the District Court continued, “that the parties are entitled

to discovery on the question of arbitrability.” J8a (citing Guidotti v. Legal Helpers Debt

Resolution, LLC, 716 F.3d 764 (3d Cir. 2013)). The District Court then entered an Order

denying FedChoice’s Motion, permitting discovery on the “issue of arbitrability,” and

stating that, after discovery, it would entertain a “renewed motion to compel arbitration,

if necessary.” J5a.

          FedChoice then appealed.




                                              4
                                             II.3

       “[Q]uestions of arbitrability, including challenges to an arbitration agreement’s

validity, are presumed to be questions for judicial determination.” Quilloin v. Tenet

HealthSystem Phila., Inc., 673 F.3d 221, 228 (3d Cir. 2012). We exercise plenary review

over such questions. See Puleo v. Chase Bank USA, N.A., 605 F.3d 172, 177 (3d Cir.

2010) (en banc).

       When faced with a motion to compel arbitration, we must first determine which

standard to apply to the motion. See Guidotti v. Legal Helpers Debt Resolution, LLC, 716

F.3d 764, 776 (3d Cir. 2013). If it is “apparent, based on the face of a complaint, and

documents relied upon in the complaint, that certain of 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’s delay.” Id. (internal quotation marks

omitted). “But if the complaint and its supporting documents are unclear regarding the

agreement to arbitrate, or if the plaintiff has responded to a motion to compel arbitration

with additional facts sufficient to place the agreement to arbitrate in issue,” then we apply

Rule 56’s summary judgment procedures. Id. (emphasis added). Under either scenario,

“the non-movant must be given the opportunity to conduct limited discovery on the

narrow issue concerning the validity of the arbitration agreement.” Id. at 774 (internal

quotation marks omitted).



       3
        The District Court had subject matter jurisdiction under 28 U.S.C. §§ 1331,
1367. We have appellate jurisdiction over FedChoice’s interlocutory appeal pursuant to 9
U.S.C. §16(a). See Guidotti, 716 F.3d at 771 n.3.

                                              5
       Before we turn to this issue, we address some of FedChoice’s arguments on appeal

that the District Court exceeded its authority in denying its Motion. First, FedChoice

argues that because questions over the validity of the entire contract are for the arbitrator,

see S. Jersey Sanitation Co. v. Applied Underwriters Captive Risk Assurance Co., 840

F.3d 138, 143 (3d Cir. 2016), the District Court “usurped the role of the arbitrator” when

it stated that “the validity of the Service Agreement is a disputed issue,” FedChoice Br.

10–11 (citing J8a). Second, FedChoice contends that the District Court should have

ordered arbitration because the arbitration provision in the Service Agreement “expressly

delegates” the question of arbitrability to the arbitrator. FedChoice Br. 13 (citing AT&T

Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643 (1986)).

       These arguments, however, misconstrue the District Court’s Order. The District

Court did not hold that the entire Service Agreement was unconscionable (although it did

express that it was a “disputed issue” and, therefore, that it might be). It did not take a

position on whether the Service Agreement’s language reserves the question of

arbitrability to the arbitrator either. The District Court merely declined to compel

arbitration based on the pleadings alone, instead choosing to permit limited discovery on

“the issue of arbitrability” before entertaining a “renewed motion to compel arbitration,”

as the text of its Order makes clear.4 J5a. The only question before us, therefore, is




       4
        We note that the District Court did not explicitly cite Rule 12(b)(6) or Rule 56.
But we think it clear from its citation to Guidotti that the District Court treated the
Motion as having been brought under Rule 12(b)(6) and denied it in favor of applying
Rule 56 procedures after discovery.
                                               6
whether the District Court erred by declining to compel arbitration on the pleadings under

Guidotti. We conclude that it did not.

       Guidotti provides two pathways to reach summary judgment on the issue of

arbitrability: either the parties’ agreement to arbitrate the dispute is not clear on the face

of the complaint (or incorporated documents), or the non-movant comes forward with

additional facts that put an otherwise facially-apparent agreement to arbitrate at issue.

Here, we find that the Motion should be considered under summary judgment procedures

per the first pathway. It is not “apparent” on the face of the Complaint that Horton’s

contract claim alleging breach of Courtesy Pay’s terms in the Account Agreement is

subject to arbitration. While the Complaint explicitly mentions and incorporates the

Account Agreement, that document does not contain any agreement to arbitrate. The

Complaint also implicates the 2004 Opt-in Agreement, but it is not in the record. At this

stage, we presume that it does not contain an arbitration provision either.

       Conversely, the Service Agreement, which Horton allegedly entered into eleven

years after she opted in to Courtesy Pay, is not attached to or referenced in her

Complaint. The Service Agreement is not specifically implicated by the pleadings either

because the Service Agreement does not involve the Courtesy Pay policies at issue in this

case; it provides the general terms of FedChoice’s fund transfer service. Cf. CardioNet,

Inc. v. Cigna Health Corp., 751 F.3d 165, 168 n.2 (3d Cir. 2014) (analyzing whether, and

ultimately applying motion to dismiss standard where, contracts “not appended to the

[c]omplaint” were “integral to, and referenced in, the [c]omplaint.”). Under Guidotti’s

first pathway, therefore, “the affirmative defense of arbitrability of [Horton’s] claims is

                                               7
[not] apparent on the face of [the] complaint,” making application of Rule 12(b)(6)

inappropriate in this case. Guidotti, 716 F.3d at 773–74. In light of this, FedChoice’s

argument that Horton “did not unequivocally deny accepting the Service Agreement,”

FedChoice Br. 14, is unavailing because it overlooks that Guidotti’s rule-selecting

framework is disjunctive. See id. at 776 (“But if the complaint . . . [is] unclear . . . , or if

the plaintiff has responded . . . with additional facts to place the agreement to arbitrate at

issue . . . .” (emphasis added)). Summary judgment procedures are appropriate.

       On this latter point, we acknowledge that FedChoice has proffered additional

evidence, attached to the Mauck Declaration, that purports to show that Horton

manifested assent to the Service Agreement, and, thus, the arbitration provision therein.

FedChoice also contends that Horton’s declaration that she “does not believe” she has

ever seen the Service Agreement would be insufficient to survive summary judgment

under our case law. See Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 55

(3d Cir. 1980) (“A naked assertion . . . by a party to a contract that it did not intend to be

bound by the terms thereof is insufficient to place in issue the making of the arbitration

agreement.” (internal quotation marks omitted)). On this evidence, FedChoice urges us to

reach the merits of the arbitrability dispute.

       We take no position on these arguments. Guidotti is unequivocal: if the complaint

and incorporated documents are not clear on their face as to an agreement to arbitrate,

“the non-movant must be given the opportunity to conduct limited discovery on the

narrow issue concerning the validity of the arbitration agreement.” Guidotti, 716 F.3d at

774; see also id. (“Under the first scenario, arbitrability not being apparent on the face of

                                                 8
the complaint, the motion to compel arbitration must be denied pending further

development of the factual record.”). Without the benefit of a developed factual record,

we cannot assess whether the authenticity or import of the computer printouts, offered by

FedChoice’s own employee, are factual matters beyond reasonable dispute. We also note

that there are questions remaining under state law as to whether the agreement would be

unconscionable or should be read to cover contract disputes over terms that appear in

documents that pre-date the Service Agreement. We decline to address the arbitrability

dispute at this stage, and leave it for the District Court to do so in the first instance under

Rule 56, after discovery on this issue.

                                              III.

       Accordingly, we will affirm the Order of the District Court.




                                               9
