A District Court judge in Kansas has denied a defendant’s motion to compel arbitration in a Fair Credit Reporting Act case, ruling the defendant failed to show that the plaintiff was the same person who signed the underlying auto financing contract under a different name.
The background: The case stems from a contract the plaintiff says he never signed.
- Several years ago, an individual entered into a retail installment contract with an online used car retailer to finance the purchase of a used Nissan, borrowing about $11,700 at an annual percentage rate of more than 22%. The defendant, an auto lender, serviced the contract.
- The contract included an arbitration agreement covering nearly any dispute between the signer and the defendant, with a 30-day window to opt out that the signer did not use. Notably, the individual who signed the contract shared the plaintiff’s first name but had a different last name.
- Late last year, the plaintiff filed suit alleging that someone had stolen his identity and opened several accounts without his knowledge or authorization, including the car financing account. He alleged the defendant violated the FCRA by failing to conduct a reasonable investigation and continuing to report the account after he disputed the debt with a credit reporting agency.
- The defendant moved to compel arbitration based on the agreement attached to the contract.
The ruling: Judge Eric F. Melgren of the District Court for the District of Kansas denied the motion, ruling the defendant did not meet its burden of showing an enforceable arbitration agreement existed between it and the plaintiff.
- Judge Melgren first determined that the Federal Arbitration Act governed the agreement, since a lender in one state financing a car purchase for a consumer in another state is a transaction in interstate commerce. He also concluded the court, not an arbitrator, could decide whether the parties had agreed to arbitrate, because the agreement itself carved that question out for the courts.
- Because the plaintiff alleged identity theft, the judge held that the defendant needed to offer some evidence that the person who signed the contract and the plaintiff were the same individual. “Aside from pointing to [the signer’s] signatures as evidence of [the plaintiff’s] agreement, [the defendant] fails to put forth evidence that they are the same person,” Judge Melgren wrote.
- Because the defendant did not show the plaintiff had agreed to arbitrate anything, the judge declined to stay the proceedings, and the case will move forward in court, even though the plaintiff never responded to the motion.
