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Oyola v. Midland Funding, LLC

United States District Court, D. Massachusetts

February 27, 2018

ABIGAIL OYOLA, on behalf of herself and all others similarly situated, Plaintiff,
v.
MIDLAND FUNDING, LLC Defendant.

          DECISION AND ORDER ON DEFENDANTS MOTION TO COMPEL ARBITRATION, DISMISS THE CASE, AND STRIKE CLASS ALLEGATIONS (Doc. No. 19)

          TIMOTHY S. HILLMAN, DISTRICT JUDGE

         Background

         Abigail Oyola (“Plaintiff”) brought this action, on behalf of herself, and all others similarly situated, against Midland Funding, LLC (“Defendant”) after the Defendant purchased an account she opened with Credit One Bank (“Credit One”) in September 2014. She seeks damages for the Defendant's unlawful debt collection in violation of the Fair Debt Collection Practices Act, the Massachusetts Debt Collections Practices Act, M.G.L. c. 93, § 24A(a), and the Massachusetts Consumer Protection Act, M.G.L. c. 93A, § 2. Defendant subsequently filed the instant motion to compel arbitration on an individual basis, strike the class allegations in the Complaint, and dismiss the case.

         Facts

         On September 4, 2014, Plaintiff opened a Credit One credit card account (the “Account”). The Vice President of Credit One and an authorized representative of MHC Receivables, LLC (“MHC”), and FNBM, LLC (“FNBM”), Vicky Scott, states that after an account holder opens an account, Credit One mails their credit card, enclosed with Credit One's VISA/MASTERCARD CARDHOLDER AGREEMENT, DISCLOSURE STATEMENT AND ARBITRATION AGREEMENT (“Cardholder Agreement”). (Doc. No. 20-1 at 14-20). Plaintiff disputes ever receiving the Cardholder Agreement but does not dispute activating the Account or using her credit card. There is no credit card application or copy of the Cardholder Agreement with Plaintiff's signature in the record.

         The Cardholder Agreement states that “[b]y requesting and receiving, signing or using your Card, you agree” to the terms and conditions of the Cardholder Agreement. (Doc. No. 20-1 at 15). Page six of the Cardholder Agreement states the following:

ARBITRATION”:
PLEASE READ THIS PROVISION OF YOUR CARD AGREEMENT CAREFULLY. IT PROVIDES THAT EITHER YOU OR WE CAN REQUIRE THAT ANY CONTROVERSY OR DISPUTE BE RESOLVED BY BINDING ARBITRATION. ARBITRATION REPLACES THE RIGHT TO GO TO COURT, INCLUDING THE RIGHT TO A JURY AND THE RIGHT TO PARTICIPATE IN A CLASS ACTION OR SIMILAR PROCEEDING. IN ARBITRATION, A DISPUTE IS RESOLVED BY AN ARBITRATOR INSTEAD OF A JUDGE OR JURY.

(the “Arbitration Agreement”). (Doc. No. 20-1 at 19). The Arbitration Agreement further explains that claims “relating to your account” are subject to arbitration, including “the application, enforceability or interpretation of this Agreement, including this arbitration provision.” (Doc. No. 20-1 at 15, 19). It also limits class actions or similar proceedings as it notes “Claims subject to arbitration include Claims made as part of a class action or other representative action, and the arbitration of such claims must proceed on an individual basis.” (Id. at 19).

         On September 30, 2015, “Credit One sold, assigned and conveyed all rights, title, and interest to a series of accounts, including the Account, to MHC Receivables, LLC.” (Doc. No. 20-1 at 3, 6). MHC subsequently sold, assigned and conveyed all rights, title, and interest to the Account to Sherman Originator III, LLC (“Sherman”). (Doc. No 20-1 at 3, 9). Plaintiff made a final payment on the Account on January 26, 2015. On September 13, 2015, her card was charged off with an outstanding balance of $600.36. On October 23, 2015, Sherman sold, assigned and conveyed all rights, title, and interest to the Account to Defendant. (Doc. No. 20-2 at 3, 8). The Cardholder Agreement states that it will continue to govern even if the “transfer or assignment of your account, or any amount on your account, to any other person.” (Doc. No. 20-1 at 20).

         Discussion

          There is a strong federal policy in favor of the enforcement of valid arbitration agreements. See CompuCredit Corp. v. Greenwood, 565 U.S. 95, 98 (2012). Pursuant to the Federal Arbitration Act, an agreement to arbitrate is a matter of contract law and “shall be valid, irrevocable, and enforceable.” 9 U.S.C. § 2. If a party challenges an arbitration agreement on “grounds as exist at law or in equity for the revocation of any contract” the arbitration agreement may be found invalid. Bekele v. Lyft, Inc., 199 F.Supp.3d 284, 292 (D. Mass. 2016) (citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (internal citations omitted)). It is the burden of the party seeking to compel arbitration to prove that a valid agreement to arbitrate exists, the movant has a right to enforce it, the other party is bound by it, and that the claim asserted falls within the scope of the arbitration agreement. Bekele, 199 F.Supp.3d at 293. In the event a valid arbitration agreement does exist, the court shall promptly compel arbitration and either stay the action pending arbitration or dismiss it. Id. (citing 9 U.S.C. §§ 3, 4).

         Parties may “clearly and unmistakably agree” to submit threshold and gateway issues to the arbitrator. Awuah v. Coverall North America, Inc., 554 F.3d 7, 10 (1st Cir. 2009) (citing Howsam v. v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002)). In the event a delegation clause submitting gateway issues to arbitration is included in the agreement, such a dispute must be submitted to the arbitrator, unless the party opposing arbitration challenges the arbitration provision specifically. Id. (citing Buckeye Check Cashing v. Cardegna, 546 U.S. 440, 443-45 (2006) (if challenging the contract as a whole and not specifically the arbitration clause, the dispute shall be submitted to the arbitrator).

         The ...


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