## Facts

- Judith Serrano obtained a Credit One credit card in 2003 and provided her cell phone number; the cardholder agreement (governed by Nevada law) included a broad arbitration clause.
- The agreement described procedures and eligibility limits for adding an “Authorized User,” including an age minimum of 15.
- Serrano informally allowed her 14-year-old daughter, A.D., to use the card for small purchases, without completing the agreement’s authorized-user steps.
- In 2010, Serrano called Credit One from A.D.’s cell phone; Credit One captured the caller-ID number and associated A.D.’s number with Serrano’s account.
- After Serrano fell behind on payments, Credit One repeatedly autodialed A.D.’s cell phone to collect Serrano’s debt.
- A.D. (through her mother) brought a putative class action under the Telephone Consumer Protection Act (TCPA) for autodialed calls to a cell phone without the called party’s prior express consent.
- Credit One moved to compel arbitration based on Serrano’s cardholder agreement, asserting A.D. was an authorized user or was equitably estopped because she benefited from the account and the consent defense would rely on the agreement.

## Issues

1. Whether A.D., a minor non-signatory, was an “Authorized User” under the cardholder agreement and therefore bound by its arbitration clause.
2. Whether Nevada’s equitable estoppel (direct benefits estoppel) doctrine bound A.D. to arbitrate her TCPA claims based on her use of the card or the contract’s role in Credit One’s consent defense.

## Decision

- The Seventh Circuit reversed the order compelling arbitration and remanded.
- A.D. was not an “Authorized User” because the agreement’s requirements for adding authorized users were not satisfied and she was below the contract’s age threshold when she used the card.
- Equitable estoppel did not apply because A.D. did not knowingly exploit or directly benefit from the agreement; her purchases were incidental benefits flowing from Serrano’s contractual rights.
- A.D.’s TCPA claim arose from federal statute, and Credit One’s reliance on the agreement to argue “prior express consent” was an affirmative defense that did not convert the claim into one founded on the contract.

## Legal Principles

- Arbitration is contractual; a person cannot be compelled to arbitrate absent agreement or a recognized state-law doctrine binding a non-signatory.
- Under Nevada law, direct benefits estoppel may bind a non-signatory only when the non-signatory knowingly exploits the agreement containing the arbitration clause or receives direct (not merely incidental) benefits from it.
- Contract interpretation must give effect to the agreement as a whole; specific authorized-user procedures and eligibility limits can control whether a non-signatory falls within an arbitration provision.
- A defendant’s intention to rely on a contract as an affirmative defense does not, by itself, make a plaintiff’s statutory claim “intertwined” with the contract for non-signatory arbitration purposes.

## Conclusion

The court held that a minor who neither became an authorized user under the agreement nor directly benefited from it could not be compelled to arbitrate a statutory TCPA claim, even if the defendant’s consent defense referenced the cardholder agreement, and it returned the case to the district court for further proceedings.


A.D. v. Credit One Bank, N.A., 885 F.3d 1054 (7th Cir. 2018)