The Court of Appeals for the Ninth Circuit has upheld a lower court’s order compelling arbitration in a Fair Debt Collection Practices Act class-action case, ruling that the defendant purchased the rights of the contract governing the underlying debt as well as purchasing the debt itself.
The Background: The defendant purchased the underlying debt from the original creditor in 2015 and initiated a collection lawsuit against the plaintiff to recover the balance. After that case was closed, the plaintiff filed a class-action lawsuit against the defendant, alleging that it violated the FDCPA by prosecuting the state court case against him. The defendant moved to compel arbitration, which a District Court judge granted.
- The plaintiff appealed the ruling to compel arbitration. The plaintiff argued that for an arbitration agreement to be considered to be “in writing” all parties must agree in writing and that the defendant only purchased the debt and was not entitled to the contract rights associated with the account. The plaintiff also alleged the defendant committed unfair debt collection practices by providing him with false information.
The Ruling: Not so on either front, the Appeals Court ruled.
- The Federal Arbitration Act does not require that all parties agree in writing. Simply by using the credit card, the plaintiff indicated his assent to the agreement, including the arbitration clause it contained.
- In the agreement selling the debt to the defendant, the original creditor assigned all rights, title, and interest to the defendant. “This broad language encompasses the right to enforce agreements associated with the account, including the arbitration clause,” the Appeals Court wrote.
