United States District Court, D. Massachusetts
ABIGAIL OYOLA, on behalf of herself and all others similarly situated, Plaintiff,
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
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
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.
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
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
(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).
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).
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).
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).