We’ve seen some cases go the other way recently, so it feels like this needs to be noted … A District Court judge in Kentucky has granted a defendant’s motion to compel arbitration in a Fair Debt Collection Practices Act class-action lawsuit, disagreeing with the plaintiff that filing a lawsuit to collect on the unpaid debt waived the underlying agreement’s arbitration provision.
The background: The plaintiff defaulted on a credit card debt which was acquired by the defendant. The defendant then filed a collection lawsuit, securing a default judgment.
- The plaintiff later filed suit in federal court, alleging wrongful garnishment of wages in violation of the FDCPA, the Kentucky Consumer Protection Act (KCPA), and Kentucky’s wrongful garnishment statute. The plaintiff also sought to bring the claims on behalf of a proposed class.
- The defendant moved to compel arbitration pursuant to the original cardholder agreement, which contained a broad arbitration clause prohibiting class claims.
The ruling: Judge David J. Hale of the District Court for the Western District of Kentucky sided with the defendant, finding that neither the entry of a state court judgment nor the decision to initially file a collection lawsuit extinguished or waived the right to arbitrate. Citing Sixth Circuit precedent, Judge Hale noted that waiver requires actions “completely inconsistent with any reliance on an arbitration agreement,” which was not the case here.
- The judge also rejected the plaintiff’s argument that the claims fell outside the agreement’s scope, pointing to language covering “any claim, dispute, or controversy” related to the account, including collection efforts. The agreement’s express class action waiver further undermined the plaintiff’s attempt to proceed on a class basis.
- In his opinion, Judge Hale emphasized that “only an express provision excluding a specific dispute, or the most forceful evidence of a purpose to exclude the claim from arbitration, will preclude arbitration,” and no such exclusion applied here.
