Mark A. Cronin, Individually and on Behalf of Those Similarly Situated v. Citifinancial Services, Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 09-2310
MARK A. CRONIN, INDIVIDUALLY
AND ON BEHALF OF THOSE SIMILARLY SITUATED,
Appellant
v.
CITIFINANCIAL SERVICES, INC.;
WASHINGTON MUTUAL BANK, N.A.
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 2:08-cv-01523)
District Judge: Honorable Mary A. McLaughlin
Submitted Pursuant to Third Circuit LAR 34.1(a)
September 1, 2009
Before: SLOVITER, AMBRO and GREENBERG, Circuit Judges
(Filed: September 9, 2009 )
OPINION
PER CURIAM
Appellant Mark A. Cronin appeals pro se from an order by the United States
District Court for the Eastern District of Pennsylvania dismissing his claims, entering

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Cronin also raised claims against Appellee Washington Mutual Bank, N.A. Those1
claims were dismissed by stipulation of the parties and the dismissal is not disputed on
appeal.
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judgment against him, and confirming an arbitration award in favor of Appellee
CitiFinancial Services, Inc. (“CitiFinancial”). For the following reasons, we will
affirm the District Court’s decision.
I. Background
On March 27, 2008, Cronin, a licensed attorney proceeding pro se on behalf of
himself and a purported class of similarly situated individuals, filed a complaint against
CitiFinancial in the District Court concerning a loan Cronin had obtained from1
CitiFinancial in the amount of $6,999.91. In the complaint, Cronin claimed, inter alia,
that CitiFinancial violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et
seq., by providing inaccurate loan information to consumer credit reporting agencies.
Specifically, Cronin alleged that CitiFinancial artificially inflated the amount of Cronin’s
loan by reporting an accelerated loan value, including pre-computed interest and finance
charges, of approximately $12,000.00, rather than the current unpaid loan balance of
approximately $7,000.00. Cronin argued that CitiFinancial’s actions adversely affected
his credit reports. In addition, he claimed that CitiFinancial makes a general practice of
providing accelerated loan values to consumer credit reporting agencies, which adversely
impacts a class comprised of borrowers similarly situated to Cronin.
CitiFinancial moved to stay the proceedings and compel arbitration, based upon an

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arbitration agreement executed by the parties at the time Cronin obtained the loan. On
July 24, 2008, the District Court granted CitiFinancial’s motion, concluding that the
arbitration agreement was valid and enforceable and applied to Cronin’s claims. The
parties proceeded to arbitration, where CitiFinancial raised a counterclaim against Cronin
for breach of contract, seeking the loan amount plus accrued interest and attorneys’ fees.
At arbitration, without a hearing, CitiFinancial prevailed in its defense of Cronin’s
claims and obtained an award of $9,668.67 on its breach of contract counterclaim.
CitiFinancial then moved in the District Court for confirmation of the arbitral award and
Cronin cross-moved to vacate it. On April 16, 2009, the District Court entered an order
confirming the arbitration award. The District Court also dismissed all of Cronin’s claims
with prejudice, entered judgment against him, and closed the case.
Cronin filed this timely pro se appeal.
II. Analysis
A.
Cronin argues that the District Court erred by granting CitiFinancial’s motion to
compel arbitration. As a threshold matter, CitiFinancial responds that we lack jurisdiction
to consider Cronin’s claim because he did not specify in his notice of appeal an intent to
appeal the District Court’s July 24, 2008 arbitration order.
Federal Rule of Appellate Procedure 3(c) states that the notice of appeal must
“designate the judgment, order or part thereof appealed from.” Fed. R. App. P. 3(c). We

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liberally construe Rule 3(c)’s requirements. See Pacitti v. Macy’s, 193 F.3d 766, 776 (3d
Cir. 1999); Drinkwater v. Union Carbide Corp., 904 F.2d 853, 858 (3d Cir. 1990). A
failure to refer specifically to earlier orders does not necessarily preclude our review of
those orders, see Shea v. Smith, 966 F.2d 127, 129 (3d Cir. 1992), and an appeal from a
final judgment draws into question all prior non-final orders and rulings. See Drinkwater,
904 F.2d at 858. Generally, we will review orders not specified in the notice of appeal
where: (1) there is a connection between the specified and unspecified order, (2) the
intention to appeal the unspecified order is apparent, and (3) the opposing party is not
prejudiced and has a full opportunity to brief the issues. See Pacitti, 193 F.3d at 777;
Polonski v. Trump Taj Mahal Assocs., 137 F.3d 139, 144 (3d Cir. 1998).
The final judgment rule barred Cronin from earlier appealing the District Court’s
July 24, 2008 arbitration order. See 28 U.S.C. § 1291; see also 9 U.S.C. § 16. The
arbitration order is related to the April 15, 2009 judgment, which, among other things,
confirmed the arbitral award. In addition, CitiFinancial had notice of Cronin’s intent to
appeal the arbitration order, as he raised the issue in the District Court in his opposition to
CitiFinancial’s motion to confirm the arbitral award, and again addressed the issue in his
opening appellate brief. See Polonski, 137 F.3d at 144 (stating that “the appellate
proceedings clearly manifest an intent to appeal”). The issue has now been fully briefed
by both parties on appeal. CitiFinancial has not argued that it will suffer prejudice from
our review of the order, and we discern none. See Pacitti, 193 F.3d at 777. We conclude

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that Cronin’s notice of appeal was sufficient to bring up the District Court’s July 24, 2008
arbitration order for our review.
B.
Cronin argues that the District Court erred in compelling arbitration because the
underlying arbitration agreement is unconscionable and unenforceable under our recent
decision in Homa v. American Express Co., 558 F.3d 225 (3d Cir. 2009). CitiFinancial
contends that Cronin waived this argument because he did not raise it before the District
Court.
Generally, absent special circumstances, only arguments made first to the District
Court may be heard on appeal. See Flick v. Borg-Warner Corp., 892 F.2d 285, 288 (3d
Cir. 1990). CitiFinancial concedes, however, that Cronin argued to the District Court that
the arbitration agreement was unconscionable. In addition, in his cross-motion to vacate
the arbitral award, Cronin expressly asked the District Court to “reconsider its July 24,
2008 Order in light of a recent ruling by the United States Court of Appeals for the Third
Circuit, Homa v. American Express Co.”
CitiFinancial contends that Cronin’s failure to further elaborate upon his argument
for Homa’s application prevented the District Court from reviewing the issue and thereby
effects a waiver. We disagree. Although further support for the argument applying
Homa would have been desirable, it appears to us both that Cronin raised the issue and

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The District Court concluded that “Homa stated that New Jersey state law would2
hold that a waiver of class-arbitrations under an arbitration agreement was
unconscionable. In this case, however, the plaintiff does not discuss the applicability of
any Pennsylvania law beyond that already considered.”
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that the District Court addressed it. The issue has been adequately preserved for our2
review on appeal, and we will proceed to its merits.
C.
We exercise plenary review over questions of law concerning the applicability and
scope of arbitration agreements. Zimmer v. CooperNeff Advisors, Inc., 523 F.3d 224,
228 (3d Cir. 2008).
The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq., establishes “a strong
federal policy in favor of the resolution of disputes through arbitration.” Alexander v.
Anthony Intern, L.P., 341 F.3d 256, 263 (3d Cir. 2003) (citing Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). However, because arbitration
agreements are “enforceable to the same extent as other contracts,” Seus v. John Nuveen
& Co., 146 F.3d 175, 178 (3d Cir.1998), an arbitration agreement may be held invalid
“upon such grounds as exist at law or in equity for the revocation of any contract.” 9
U.S.C. § 2. Thus, under FAA § 2, generally applicable state law contract defenses such
as unconscionability may be applied to nullify arbitration agreements without
contravening the FAA. See Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 686-87
(1996). Accordingly, prior to ordering parties to arbitration, a court must determine
whether the parties entered a valid agreement to arbitrate, see Alexander, 341 F.3d at 264

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The parties agree that the law of Pennsylvania governs their arbitration agreement.3
The agreement’s class-action waiver clause provides:4
No Class Actions/No Joinder of Parties. You agree that any arbitration
proceeding will only consider Your Claims. Claims by and on behalf of other
borrowers will not be arbitrated in any proceeding that is considering Your or
Our Claims. Because You have agreed to arbitrate all Claims, You may not
serve as a class representative or participate as a class member in a putative
class action against any party entitled to compel arbitration under this
Agreement.
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(citing 9 U.S.C. § 2), and the relevant state’s law of contracts guides this determination.
Blair v. Scott Specialty Gases, 283 F.3d 595, 603 (3d Cir. 2002).
Cronin argues that his arbitration agreement with CitiFinancial is unconscionable
under the public policy of the Commonwealth of Pennsylvania. Cronin relies upon3
Homa, in which we held that an arbitration agreement that completely deprived an
individual of the ability to pursue class-wide relief was unconscionable and unenforceable
under the public policy of New Jersey. 558 F.3d at 230 (citing Muhammad v. County
Bank of Rehoboth Beach, Del., 912 A.2d 88, 100-01 (N.J. 2006)). Because New Jersey’s
unconscionability defense applies to all sweeping class-action waivers, and not merely
those that also compel arbitration, we reached our conclusion without contravening the
FAA. Id. Cronin argues that the class action waiver clause in his arbitration agreement
with CitiFinancial similarly deprives him of any recourse to a class action. As a result,4
he argues that the arbitration agreement is unconscionable under Pennsylvania law and
should not be enforced pursuant to FAA § 2.

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CitiFinancial responds that our decision in Gay v. CreditInform, 511 F.3d 369 (3d
Cir. 2007), rather than Homa, controls this case. In Gay, we held that, under Virginia
law, an arbitration agreement prohibiting class action litigation did not meet Virginia’s
“shock the conscience” test for unconscionability, and was therefore enforceable under
the FAA. 511 F.3d at 390. However, because Gay had argued for the application of
Pennsylvania law, we noted that the unconscionability argument in that case had support
under Pennsylvania law. Id. at 392-93 (citing, inter alia, Lytle v. CitiFinancial Servs.,
Inc., 810 A.2d 643 (Pa. Super. Ct. 2002); Thibodeau v. Comcast Corp., 912 A.2d 874 (Pa.
Super. Ct. 2006)). Ultimately, we concluded in dicta that Pennsylvania case law “hold[s]
that an agreement to arbitrate may be unconscionable simply because it is an agreement to
arbitrate.” Id. at 395. As a result, the Pennsylvania courts’ decisions concerning the
unconscionability of class action waivers do not set forth a generally applicable principle
of contract law permitting an arbitration agreement to be invalidated under FAA § 2.
The parties argue that there may be some tension between the holdings of Homa
and Gay concerning the effect of Pennsylvania’s public policy. Specifically, we have not
yet directly addressed whether the Pennsylvania decisions on the unconscionability of
certain class action waivers set forth a public policy unique to arbitration agreements, or a
generally applicable contract defense permitted by FAA § 2. Compare Gay, 511 F.3d at
392-93, with Homa, 558 F.3d at 230. However, we need not resolve that issue today.
Instead, we conclude that the class action waiver provision in the parties’ arbitration

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The Lytle court did not reach a conclusion on the unconscionability of the class5
action waiver in that case, instead remanding to the trial court with instructions to
consider the issue: “the trial court . . . may also receive and consider evidence relevant to
the Lytles’ argument that the cost associated with individual versus class-based litigation
of their claim against CitiFinancial would, in light of the amount of their damages, result
in continuing immunity for CitiFinancial. . . .” Lytle, 810 A.2d at 666.
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agreement is not unconscionable under Pennsylvania law.
The Pennsylvania Superior Court has held that Pennsylvania’s public policy
rejects contracts mandating individual litigation or arbitration in those cases where
“defendant corporations are effectively immunized from redress of grievances.”
Thibodeau, 912 A.2d at 885 (Pa. Super. Ct. 2006). In Thibodeau, for example, the
Superior Court affirmed the trial court’s conclusion that the class action waiver at issue
contravened Pennsylvania’s public policy because the plaintiff in that case would be
entitled to only minimal damages. According to the trial court’s opinion, which the
Superior Court cited with approval, “[e]veryone knows that these claims will never be
arbitrated on an individual basis, . . . [n]o individual will expend the time, fees, costs and
or other expenses necessary for individual litigation or individual arbitration for this small
potential recovery.” Id. at 885-86; see also Lytle, 810 A.2d 643 (indicating that a class
action waiver may be unconscionable if the potential for recovery of individual damages
is insufficient to permit any real ability to pursue legal redress, thereby insulating the
defendant from liability for wrongdoing ). Thus, the Superior Court has made clear that5
Pennsylvania does not deem all arbitration waivers per se unconscionable. Rather, the
critical issue is whether the particular class action waiver effectively ensures that a

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defendant will never face liability for wrongdoing.
In the complaint, Cronin sought actual and punitive damages, costs, and attorneys’
fees – all of which are permitted under the FCRA, see 15 U.S.C. §§ 1681n(a)(1)(A),
(a)(2), (a)(3), and are potentially recoverable in an arbitration under that statute. See
Johnson v. West Suburban Bank, 225 F.3d 366, 373 (3d Cir. 2000) (the full range of
statutory rights remain available in arbitration proceedings). We have noted that the
statutory ability to recover attorneys’ fees helps to preserve an individual’s ability to
pursue claims, even in those situations where the class forum has been foreclosed.
Johnson, 225 F.3d at 374; see also, e.g., Thibodeau, 912 A.2d at 885-86 (indicating that
an individual’s burden to cover costs and fees is a consideration in determining whether
he or she will ever bring an individual claim with a small potential damages recovery).
We conclude that Cronin’s ability to seek actual and punitive damages, costs, and
attorneys’ fees rendered his individual FCRA claim sufficiently valuable so that
CitiFinancial was not completely insulated from liability, even in light of Cronin’s
contractual waiver of the right to pursue a class action. As a result, the class action
waiver is not unconscionable under the public policy of Pennsylvania, see Thibodeau, 912
A.2d 874, 885, Lytle, 810 A.2d 643, and the District Court appropriately enforced the
arbitration agreement. See 9 U.S.C. § 2.
D.
Finally, Cronin argues that the District Court erred by exercising supplemental

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jurisdiction over CitiFinancial’s state-law counterclaim against him. 28 U.S.C. § 1367(a);
United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966). We review the District
Court’s exercise of jurisdiction for abuse of discretion. See De Asencio v. Tyson Foods,
Inc., 342 F.3d 301, 311 (3d Cir. 2003).
Section 1367(a) provides: “in any civil action of which the district courts have
original jurisdiction, the district courts shall have supplemental jurisdiction over all other
claims that are so related to claims in the action within such original jurisdiction that they
form part of the same case or controversy. . . .” 28 U.S.C. § 1367(a). The District Court
need not exercise supplemental jurisdiction in all cases. For instance, a district court may
decline supplemental jurisdiction where it has “dismissed all claims over which it has
original jurisdiction.” 28 U.S.C. § 1367(c)(3). However, where a district court has
chosen to exercise supplemental jurisdiction over a state law claim, the dismissal of the
federal claim generally does not eliminate that jurisdiction. See New Rock Asset
Partners, L.P. v. Preferred Entity Advancements, 101 F.3d 1492, 1505 (3d Cir. 1996);
Lentino v. Fringe Emp. Plans, Inc., 611 F.2d 474, 479 (3d Cir. 1979).
Cronin argues that the dismissal of the federal claim deprived the District Court of
jurisdiction because the state law counterclaim does not share a common nucleus of
operative fact with his federal FCRA claim. Without regard to the merits of Cronin’s
legal argument, we disagree with the premise that the claims are not sufficiently factually
related for the exercise of supplemental jurisdiction. Both the FCRA claim and the

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breach of contract counterclaim share a common nucleus of operative fact because they
both turn on the terms of the written loan agreement between CitiFinancial and Cronin.
Although Cronin argues the claims are unrelated because their legal elements differ, the
legal differences do not affect whether the claims share a common nucleus of fact. See
Gibbs, 383 U.S. at 725. Accordingly, the District Court did not abuse its discretion in
retaining supplemental jurisdiction over CitiFinancial’s state law counterclaim.
III. Conclusion
For the foregoing reasons, we will affirm the judgment of the District Court.

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