Anglin v. Tower Loan of Mississippi, Inc., Civil Action No. 3:09CV29TSL-JCS.

• Citation: 635 F.Supp.2d 523
• Decision Date: 04 June 2009
• Docket Number: Civil Action No. 3:09CV29TSL-JCS.
• Parties: Glennis M. ANGLIN, Individually and on Behalf of all others Similarly Situated, Plaintiff v. TOWER LOAN OF MISSISSIPPI, INC., Defendant.
• Court: United States District Courts. 5th Circuit. Southern District of Mississippi

635 F.Supp.2d 523

Glennis M. ANGLIN, Individually and on Behalf of all others Similarly Situated, Plaintiff v. TOWER LOAN OF MISSISSIPPI, INC., Defendant.

Civil Action No. 3:09CV29TSL-JCS.

United States District Court, S.D. Mississippi, Jackson Division.

June 4, 2009.

John G. Clark, Kerley & Clark, Pascagoula, MS, Wynn E. Clark, Wynn E. Clark, Attorney, Gulfport, MS, Lisa N. Frascogna, Frascogna & Frascogna, PLLC, Jackson, MS, for Plaintiff.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before the court on the motion of defendant Tower Loan of Mississippi, Inc. (Tower) to compel arbitration pursuant to section 4 of the Federal Arbitration Act, 9 U.S.C. § 4. Plaintiff Glennis M. Anglin, Jr. has responded in opposition to the motion and the court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes that the motion is well taken and should be granted.

Plaintiff, a former customer of Tower, brought this action under the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, 15 U.S.C. § 1681 et seq. (FCRA), alleging that for years after his customer relationship with Tower ended, Tower improperly obtained unauthorized consumer credit reports on plaintiff, falsely representing they were for "account review purposes," notwithstanding that plaintiff did not have an existing account with Tower at the time the reports were obtained. Plaintiff further alleged a "regular marketing practice" on the part of Tower to falsely represent previous borrowers to be current, and sought certification of a class of previous borrowers as to whom within the past five years Tower had obtained a consumer report for "account review" purposes after the consumer relationship between Tower and the borrower had terminated.

Tower has moved to compel arbitration of plaintiff's claims pursuant to an arbitration agreement executed by plaintiff in connection with his 2002 loan from defendant by which the parties agreed to arbitrate "all claims and disputes between" them, including but not limited to

all claims arising out of, in connection with, or relating to:

• The loan Borrower is obtaining from Lender today and any other loans or retail installment contracts with Lender;

....

• All claims or disputes based upon Federal or State laws or regulations; and

• Claims or disputes involving or alleging breach of contract, fraud or misrepresentation (including fraud in the inducement), breach of fiduciary duty, breach of duty of good faith and/or fair dealing, negligence, torts, and demands for punitive damages or attorney's fees.

....

(7) This arbitration provision or agreement applies even if Borrower's loan(s) have been paid in full, have been charged off or discharged in bankruptcy.

....

(11) Borrower and Lender agree that arbitration proceedings between them shall not be combined or consolidated with any disputes or proceedings with other borrowers.¹

Plaintiff has responded, opposing the motion on four bases. He argues that the arbitration agreement, by its terms, does not apply to his claim because it is for less than $5,000; that his claims do not fall within the scope of the arbitration agreement because they do not relate to his loan with Tower and instead rely on duties under the FCRA which exist irrespective of the expired contracts that contain the subject arbitration clause; that in any event, the arbitration agreement is unenforceable due to the class action waiver provision therein, because its enforcement would effectively render the class of plaintiffs without a remedy for their "negative value" claims; and that the arbitration is unconscionable and hence unenforceable. In the court's opinion, none of these arguments has merit.

In considering whether to compel arbitration under the FAA, a court must engage in a two-step analysis. Tittle v. Enron Corp., 463 F.3d 410, 418 (5th Cir. 2006). "First, a court must `determine whether the parties agreed to arbitrate the dispute in question.'" Id. (quoting Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir.1996)). "Second, a court must determine `whether legal constraints external to the parties' agreement foreclose[ ] the arbitration of those claims.'" Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 105 S.Ct. 3346, 3355, 87 L.Ed.2d 444 (1985)).

The parties' arbitration agreement in the case at bar provides that "[n]either party shall be required to arbitrate claims or matters wherein the total amount at issue or in dispute (including punitive damages) is less than $5,000.00." Plaintiff notes that the applicable damages provisions of FCRA allow for actual damages of not more than $1,000, together with attorney's fees and costs, and he argues that in view of this limitation, his claim does not meet the $5,000 threshold minimum for arbitration under the arbitration agreement. Plaintiff acknowledges that the statute allows for the recovery of attorney's fees, but submits that even taking attorney's fees into account, his claim still falls below the $5,000 threshold for arbitration, since only an award of 400 percent of the damages award (assuming a $1,000 award) would bring the amount of plaintiff's potential recovery up to $5,000. The court rejects plaintiff's position.

In his complaint, plaintiff purports to seek an award of "statutory damages as provided by § 1681n(a)." The damages for which the statute provides include not only actual damages of up to $1,000, but also punitive damages, along with attorney's fees and costs. Furthermore, as defendant notes in its reply, a determination of the amount of attorney's fees to be awarded for a successful plaintiff under this section is determined by reference to the Johnson factors, which take into account first and foremost the time reasonably expended and the attorney's customary hourly rate. See Thompson v. San Antonio Retail Merchants Ass'n, 682 F.2d 509 (5th Cir.1982); Johnson v. Georgia Hwy. Express, Inc., 488 F.2d 714 (5th Cir.1974). And significantly, there is no requirement that an award of attorney's fees under the FCRA be proportional to the amount of the plaintiff's recovery. See Yohay v. City of Alexandria Employees Credit Union, Inc., 827 F.2d 967, 974 (4th Cir.1987) ("Proportionality of attorney's fees to the amount recovered is not required in every action brought pursuant to the FCRA. Since there will rarely be extensive damages in an FCRA action, requiring that attorney's fees be proportionate to the amount recovered would discourage vigorous enforcement of the Act.") (citing City of Riverside v. Rivera, 477 U.S. 561, 106 S.Ct. 2686, 2694, 91 L.Ed.2d 466 (1986)). In this case, the court has little doubt that if plaintiff were successful in the prosecution of his claim, his attorneys' fees request would far exceed $4,000. Thus, plaintiff's claim is obviously for more than $5,000.

Plaintiff next argues that the arbitration agreement does not apply to his claim herein because it is not related to his loan with Tower. The Fifth Circuit has mandated a broad reading of the phrase "relating to" in an arbitration context, DeStephano v. Broadwing Communications, Inc., 48 Fed.Appx. 103, 2002 WL 31016599, 6-7 (5th Cir. Aug. 20, 2002) (citing Beiser v. Weyler, 284 F.3d 665, 669 (5th Cir.2002)), and holds that with such a broad arbitration clause, "it is only necessary that the dispute `touch' matters covered by the [contract] to be arbitrable." Pennzoil Exploration & Prod. Co. v. Ramco Energy, Ltd., 139 F.3d 1061, 1067 (5th Cir.1998). Here, plaintiff reasons that the whole point of his claim against Tower in this case is that he had no existing loan agreement or relationship with Tower when it obtained his credit report by falsely representing that it was obtaining the report for "account review" purposes and that consequently, it is apparent that his claim is not "related to" the loan agreement. He acknowledges that his complaint refers to his earlier loan from Tower; but he contends that this reference in the complaint to his loan contract was merely to demonstrate that at the time that Tower unlawfully conducted its account reviews, plaintiff did not have any existing account with Tower to justify the purported "account review." Plaintiff submits that the fact that it would have been unlawful for Tower to obtain an account review consumer report even if it had never had a loan agreement with plaintiff highlights the immateriality of his previous relationship with Tower to his claim in this case. That is to say, he reasons that his claim in this case would be the same if he had never had a loan agreement/customer relationship with Tower, from which it follows that the fact of his previous loan/contractual relationship is unrelated to his claim herein.

Tower's position, however, as the court perceives it, is that the very fact of plaintiff's previous loan with Tower is what gave it the right under the FCRA to obtain plaintiff's credit report. The determinative question in this case would thus seem to be whether the fact that plaintiff had this prior loan agreement with Tower on a loan that has been paid in full and plaintiff's account closed, authorized Tower's subsequent request for plaintiff's credit report. Regardless of what this court's view might be on the correct resolution of this issue, the court recognizes that "[t]here is a difference in opinion on whether ... [the] FCRA contains an absolute prohibition against the sale of credit reports to former creditors whose accounts are closed and paid in full." Levine v. World Fin. Network Nat'l. Bank, 437 F.3d 1118, 1122 (11th Cir.2006) (citing Wilting v. Progressive County Mut. Ins. Co., 227 F.3d 474, 476 (5th Cir.2000)) (per curiam) ("[N]either [FCRA] nor the FTC's commentary on [FCRA] suggests that a report may only be permissibly obtained during particular points in the parties' relationship."). The court also recognizes...