Federal Court Sends Putative FDCPA Class Claim To Individual Arbitration
A Virginia federal court recently compelled individual arbitration of a putative class claim under the Fair Debt Collection Practices Act (“FDCPA”) in Garrett v. Margolis, Pritzker, Epstein & Blatt, P.A., Civil Action No. 3:11-cv-00298, 2012 U.S. Dist. LEXIS 43113 (E.D. Va. Mar. 28, 2012). Troutman Sanders represented the Defendants, whose motion to compel arbitration was granted by Judge Gibney of the Richmond Division of the U.S. District Court for the Eastern District of Virginia.
At issue was whether an arbitration provision in credit card agreements between the Plaintiffs and a credit card issuer, Citibank (South Dakota) N.A. (“Citibank”), applied to claims asserted against the Defendants, who were third parties collecting debts on the credit card issuer's behalf. The Plaintiffs had asserted a putative class claim against the Defendant law firm and one of its attorneys for sending collection letters that allegedly violated the FDCPA. The Plaintiffs alleged in their Complaint that the Defendants were attempting to collect debts owed to Citibank, and had defined their putative class as individuals who had received collection letters from the Defendants for debts allegedly owed to Citibank.
Each of the Plaintiffs’ card agreements contained an arbitration provision covering all claims “made by or against anyone connected with us or you or claiming through us or you, such as . . . an employee, agent, [or] representative . . . .” The provision also contained a class action waiver. Despite the allegations in their Complaint tying the Defendants’ debt collection activities to Citibank and the plain language of the card agreements covering claims made against “anyone connected with” Citibank, the Plaintiffs contended that the Defendants were neither parties to nor beneficiaries of the arbitration provision and, therefore, could not take advantage of the provision to compel arbitration.
The Court concluded that the arbitration provision encompassed the class claim asserted against the Defendants. The Court explained that the “key language of the provision is the phrase ‘anyone connected with us or you or claiming through us or you,’ which, when interpreted in a common sense manner, leads to the conclusion that a debt collector plainly acting on behalf of the original creditor may compel arbitration of a dispute.” 2012 U.S. Dist. LEXIS 43113, at *9. Because “the arbitration agreement between the plaintiff and Citibank embraces a dispute of this kind between these specific parties,” the Court concluded that “the necessary consent to arbitration is present” and dismissed the case without prejudice to allow the parties to arbitrate their dispute on an individual basis. Id. at *13.
Troutman Sanders’ attorneys have a wide breadth of experience representing clients facing FDCPA claims, class claims, and claims that may be subject to arbitration. Please feel free to contact David Anthony, Alan Wingfield, or Stephen Piepgrass for more information on this case or Troutman Sanders’ overall experience in related matters.
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