An Illinois state Appeals Court has sided with the consumer in a collection lawsuit, ruling that the consumer should not be required to initiate arbitration by filing the proper paperwork and paying the initiation fees if he wants to arbitrate the collection lawsuit filed against him.
The background: The case began when the defendant allegedly defaulted on a credit card debt that was purchased by the plaintiff. It then filed a lawsuit in 2023 in the Circuit Court of Cook County to collect the outstanding balance of $13,748.62. The defendant responded by filing a motion to dismiss or stay the case and compel arbitration, referencing an arbitration agreement attached to the credit account.
- The arbitration provision in the agreement stated that either party could choose to arbitrate disputes, even if there was a pending lawsuit, as long as no trial had begun or a final judgment entered. However, the agreement also specified that the party requesting arbitration had to submit the necessary forms and pay the required filing fees to the American Arbitration Association (AAA).
- The Circuit Court initially ruled that arbitration should be compelled but overruled the defendant’s request to have LVNV initiate the process. Instead, the court ordered the defendant to file the necessary paperwork and pay the required fees.
The ruling: The defendant appealed, arguing that it was the court’s responsibility to determine if arbitration was applicable, not to direct who should initiate the arbitration or handle the fees.
- The Illinois Appeals Court sided with the defendant, reversing the part of the decision that required him to initiate arbitration and pay the fees. The court emphasized that when compelling arbitration, a court’s role is limited to determining whether there is an agreement to arbitrate and if the dispute falls within its scope.
- The court found that the trial court exceeded its authority by directing the defendant to take steps to initiate the arbitration process.
