On remand from the Court of Appeals for the Third Circuit, a District Court judge in New Jersey has granted a defendant’s motion to compel arbitration after it was accused of violating the Fair Debt Collection Practices Act,
The Background: The case arose from the defendant’s collection letters, which the plaintiff claimed were misleading and deceptive under the FDCPA. The defendant initially filed a collection action in New Jersey Superior Court, to which the plaintiff responded with counterclaims under the FDCPA.
- Central to this case was an arbitration clause in the credit card agreement between the plaintiffs and Citibank, which the defendant sought to enforce. The defendant argued that the arbitration clause in the original credit card agreement with Citibank should apply, while the plaintiff contended that the defendant’s litigation actions constituted a waiver of this right.
The Ruling: Judge Katharine S. Hayden ruled in favor of the defendant, granting their motion to compel arbitration and dismissing the action. The ruling was influenced by the Supreme Court’s decision in Morgan v. Sundance, Inc., which clarified the standard for determining whether a party has waived its right to arbitration.
- Judge Hayden ruled that the defendant had not waived its right to arbitration. The defendant’s actions, including filing a collection lawsuit and engaging in limited discovery, were not inconsistent with an intent to arbitrate. The court noted that the defendant had consistently sought to compel arbitration and had included arbitration arguments in its motions. The defendant’s litigation actions were primarily procedural and did not demonstrate a preference for litigation over arbitration.
