A District Court judge in Washington has denied a plaintiff’s motion to lift an arbitration stay in a Fair Credit Reporting Act case in which both sides say it was the other’s responsibility to initiate the arbitration in the first place.
The background: The plaintiff, proceeding without legal counsel, filed suit in state court alleging breach of contract, conversion, and violations of the FCRA tied to an auto finance agreement. The case was later removed to federal court based on the FCRA claims.
- The defendant moved to compel arbitration, pointing to a provision in the underlying sales contract. The judge granted that motion, finding that the arbitration agreement was valid and that the claims fell within its scope. The case was then stayed pending arbitration, with instructions that the parties report back after arbitration concluded.
- Months later, the plaintiff sought to lift the stay, arguing that the defendant had failed to initiate arbitration and had therefore forfeited its right to arbitrate. The plaintiff also claimed the delay was prejudicial and left him without a forum to pursue his claims.
The ruling: Judge David G. Estudillo of the District Court for the Western District of Washington rejected the plaintiff’s arguments and kept the stay in place, focusing heavily on who bore responsibility for initiating arbitration. The judge noted that under the Federal Arbitration Act, a stay can be lifted if a party is in default in proceeding with arbitration, but emphasized that determining default depends on which party caused the delay.
- Here, the judge concluded that the plaintiff was responsible for initiating arbitration. Even though the agreement allowed either party to elect arbitration, the court reasoned that the plaintiff, as the party who brought the claims in court rather than arbitration, was effectively being directed to pursue those claims in the proper forum.
- Judge Estudillo also pointed to the incorporation of American Arbitration Association rules and the procedural posture of the case, noting that compelling arbitration “course-corrects” a plaintiff who filed in the wrong forum.
- The plaintiff’s attempt to argue that certain FCRA and FDCPA claims fell outside the arbitration agreement also failed. The judge found those claims were either not properly asserted against the defendant or would likely fall within the broad scope of the arbitration clause even if they had been.
- Ultimately, the court denied the motion and ordered the plaintiff to initiate arbitration by a set deadline, while directing both parties to proceed in good faith and provide a status update.
