A federal judge in Wisconsin has ruled that a collection law firm can not compel a plaintiff into mandatory arbitration after the plaintiff filed a lawsuit alleging violations of the Fair Debt Collection Practices Act.
The plaintiff, Sash Rizzo, is suing because Discover Bank and the defendant, Kohn Law Firm, sued her for an unpaid credit card bill. Attached the original complaint was a monthly statement for the credit card, which included the plaintiff’s credit score, which was not redacted. Rizzo sued, alleging that publishing her credit score violated the FDCPA and the Fair Credit Reporting Act.
A copy of the ruling can be accessed here.
Kohn filed a motion to compel mandatory arbitration, which was part of the agreement between Rizzo and Discover. Kohn is alleging it is a third-party beneficiary of the agreement.
The language in the agreement does provide some cover to third-party co-defendants, but while Discover was originally a named defendant in Rizzo’s lawsuit, the company was since dismissed from the case, leaving Kohn as the only named defendant.
“Taken to its logical conclusion, Kohn’s “once a co-defendant, always a co-defendant” view could allow Kohn to invoke the arbitration clause even if Kohn and Discover had been co-defendants in an earlier case,” Judge James D. Peterson wrote in his ruling.
