George v. Midland Funding, LLC

          OPINION

          WILLIAM J. MARTINI, U.S.D.J.

         THIS MATTER comes before the Court on a Motion to Compel Arbitration filed by Defendants Midland Funding, LLC and Midland Credit Management (together, “Midland”). ECF No. [14]. There was no oral argument pursuant to Federal Rule of Civil Procedure 78(b). For the reasons set forth below the Motion is GRANTED.

         I. BACKGROUND

         A. Allegations in the Amended Complaint

         Plaintiff Alison George (“Plaintiff”) brings this putative class action against Midland for alleged violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692- 1692p. ECF No. [1]. ¶ 1. Plaintiff allegedly incurred personal debts on a Citibank Sears credit card that became past due and in default. Id. ¶¶ 22-24. The debts were subsequently “assigned, placed, transferred or sold” to Midland for collection. Id. ¶ 25. To collect the debts, Midland sent two letters to Plaintiff which allegedly contained a “false threat of interest” accruing on the amount of the stale debt. Id. ¶¶ 28-31. Plaintiff alleges that these letters stated that she had a “current balance” of $6, 483.88 and deceptively created the false impression that interest and fees she agreed to under the Terms and Conditions of her Citibank Sears credit card agreement (“Agreement”) were accruing on the “balance.” In reality, Plaintiff's debt had been purchased from Citibank by Midland and no further interest or fees were accruing.

         Plaintiff alleges that these letters were deceptive given “Plaintiff's understanding and belief that, under the terms and conditions applicable to her use of the Account, interest, late charges, and other charges and fees (such as annual fees) could accrue.” Id. ¶ 30. In addition, Plaintiff also alleges that the letters contained additional violations of the FDCPA because they failed to disclose that Plaintiff had no legal liability as to the stale debt because any legal action would be barred by the statute of limitations. Id. ¶¶ 44-49. Plaintiff attaches to her complaint copies of the letters she received, but she does not attach a copy of the credit card agreement with Citibank or any documents related to Defendants' eventual purchase of her stale debt.

         Based on these allegations, Plaintiff asserts a single claim for violation of the FDCPA and proposes to represent two subclasses of New Jersey residents receiving similar collection letters from Midland. Id. ¶ 74.

         B. Arguments of the Parties

         Defendants move to compel arbitration and dismiss this action. ECF No. [14]. The Agreement contains an arbitration clause, and Defendants assert that Plaintiff's claims arise from debts incurred pursuant to the Agreement. ECF No. [14-7] at 9-12. In support of that contention, Defendants submit a declaration from Sean Mulcahy, an employee of Midland, which attaches several documents related to Midland's purchase of Plaintiff's delinquent account. ECF Nos. [14-2] & [14-3]. Defendants also attach a second declaration of William Peck, a Citibank employee, who avers that “a notice of change and amended card agreement, setting forth new applicable terms and conditions for the account, was mailed to Plaintiff” and that he “believes that [certain handling and quality control procedures] were in effect and being followed, at all relevant times. ECF No. [14-6] ¶ 11. Peck's declaration attaches a “true and correct copy of the new card agreement mailed to Plaintiff in connection with the Account.” Id.; see also ECF No. [14-7] (“Agreement”). The Agreement's arbitration clause reads, in relevant part:

PLEASE READ THIS PROVISION OF THE AGREEMENT CAREFULLY. IT PROVIDES THAT ANY DISPUTE MAY BE RESOLVED BY BINDING ARBITRATION. ARBITRATION REPLACES THE RIGHT TO GO TO COURT, INCLUDING THE RIGHT TO A JURY AND THE RIGHT TO PARTICIPATE IN A CLASS ACTION OR SIMILAR PROCEEDING. IN ARBITRATION, A DISPUTE IS RESOLVED BY AN ARBITRATOR INSTEAD OF A JUDGE OR JURY. ARBITRATION PROCEDURES ARE SIMPLER AND MORE LIMITED THAN COURT PROCEDURES.

What Claims are subject to arbitration? All Claims relating to your account, a prior related account, or our relationship are subject to arbitration, including claims regarding the application, enforceability, or interpretation of this Agreement and this arbitration provision. All Claims are subject to arbitration, no mater what legal theory they are based on or what remedy . . . they seek. . . . Claims and remedies sought as part of a class action, private attorney general or other representative action are subject to arbitration on an individual (non-class, non-representative) basis, and the arbitrator may award relief only on an individual (non-class, non-representative) basis.

Whose claims are subject to arbitration? Not only ours and yours, but also Claims made by or against anyone connected with us or you or claiming through us or such as . . . [an] affiliated company, predecessor or successor, heir, [or] assignee . . . .”

What about debt collections? We and anyone to whom we assign your debt will not initiate an arbitration proceeding to collect a debt from you unless you assert a Claim against us or our assignee. We and any assignee may seek arbitration on an individual basis of any Claim asserted by you, whether in arbitration or any proceeding, including in a proceeding to collect a debt . . . .”

Who can be a party? Claims must be brought in the name of an individual person or entity and must proceed on an individual (non-class, non-representative) basis. The arbitrator will not award relief for or against anyone who is not a party. If you or we require arbitration of a Claim, neither you, we, nor any other person may pursue the Claim in arbitration as a class action, private attorney general action or other representative action, nor may such Claim be pursued on your or our behalf in any litigation in any court. ...