Huser v. Midland Funding, LLC
| Decision Date | 13 September 2019 |
| Docket Number | Case No. 17-cv-04490 |
| Parties | JONATHAN HUSER, and STEPHEN WELCH on behalf of themselves and the class members described below, Plaintiffs, v. MIDLAND FUNDING, LLC; MIDLAND CREDIT MANAGEMENT, INC. and ENCORE CAPITAL GROUP, INC., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Defendants Midland Credit Management, Inc., Midland Funding LLC, and Encore Capital Group, Inc., move to compel arbitration of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., claims of one of the two plaintiffs in this putative class action, Jonathan Huser ("Huser"). Huser and Welch respond that defendants have waived their right to compel arbitration by participating in this case and that his claims are outside the scope of the applicable arbitration clause. For the following reasons, the court grants the motion to compel.
Defendants seek to enforce an arbitration clause in a credit card member agreement ("agreement") between Huser and Juniper Bank Delaware ("Juniper"). See "Agreement 1," ECF No. 96-2 Ex. 3 to Mulcahy Aff. at 11-12. The paragraph beneath the heading "Arbitration" reads1:
Any claim, dispute or controversy ("Claim") by either you or us against the other, or against the employees, agents or assigns of the other, arising from or relating in any way to this Agreement or your Account, or any transaction on your Account including (without limitation) Claims based on contract, tort (including intentional torts), fraud, agency, negligence, statutory or regulatory provisions or any other source of law and Claims regarding the applicability of this arbitration clause or the validity of the entire Agreement, shall be resolved exclusively and finally by binding arbitration under the rules and procedures of the arbitration Administrator selected at the time the Claim is filed. The Administrator selection process is set forth below For purposes of this provision, "you" includes any authorized user on the Account, agents, beneficiaries or assign of you; and "we" or "us" includes our employees, parents, subsidiaries, affiliates, beneficiaries, agents and assigns. Claims made and remedies sought as part of a class action, private attorney general or other representative action are subject to arbitration on an individual basis, not on a class or representative basis.
ECF No. 96-2 at 12 () (emphasis in original); ECF No. 102-1 Ex. 1 at 5 (same); see also ECF No. 103-1 Ex. 7 at 9 ().
Except where otherwise noted, Huser does not dispute the following facts. Huser opened the consumer credit card account at issue here with Juniper on February 7, 2006. Aff. of Sean Mulcahy ¶ 14, ECF No. 96-2; Aff. of Matt Hadfield ¶ 5, ECF No. 96-4. Juniper renamed itself Barclay's on May 25, 2006. ECF No. 96-1 Ex. A at 1. Barclay's sold Huser's account to defendants as one of a group of allegedly delinquent accounts on December 14, 2012. Mulcahy Aff. ¶ 8; Hadfield Aff. ¶¶ 7, 9; Aff. of Keith Walch ¶ 4, ECF No. 96-3 Ex. C.
The plaintiffs here allege that the defendants sent them misleading form dunning letters seeking to collect credit card debts. See 2d Am. Compl. ("SAC") ¶¶ 24-35, ECF No. 59. Huser's claims stem from a collection letter dated March 8, 2017. SAC Ex. A., ECF No. 59-1.
The original complaint filed June 14, 2017, named Mary T. Janetos ("Janetos") as the sole plaintiff. ECF No. 1. Defendants did not answer the original complaint before it was amended on July 20, 2017 ("First Amended Complaint" or "FAC"). The FAC added Huser as a plaintiff, see ECF No. 22 at 1.
Defendants answered the FAC on August 30, 2017. ECF No. 40. They asserted as an affirmative defense that "[u]pon information and belief" the plaintiffs' claims "may be" subject to a binding arbitration clause. Id. at 16. Janetos voluntarily dismissed her claims that same day, August 30, 2017, leaving Huser as the sole plaintiff. The period of court-authorized discovery began in September 2017. See Minute Entry, Sept. 8, 2017, ECF No. 46. In pre-discovery correspondence, defendants' lawyer agreed to begin discovery so long as it was clear that defendants' claim of arbitrability was not waived. See ECF No. 103-2, Ex. B. As the parties proposed, the court set August 31, 2018, as the deadline to complete fact discovery. Id. Huser served written discovery requests in October 2017, and defendants responded on December 8, 2017. Resp. to Mot. to Compel Arb. 2, ECF No. 102; Reply 10, ECF No. 103. For their part, defendants represent (this appears to be undisputed) that they have not "initiated any discovery." Mot. to Compel Arb. 4, ECF No. 96.
Defendants have been negotiating with Huser about the arbitration of his claims since at least April 2018. Mot. to Compel. Arb. 4 (citing ECF No. 90 at 4). Correspondence between counsel confirm this. See ECF No. 102-1 Ex. 5 at 15-18 . Plaintiffs' lawyer expressed confusion about the fact that the agreement involved Juniper rather than Barclay's, responding that defendants would need to provide an affidavit before Huser would agree to arbitrate his claims. See id. at 2. One was immediately provided.
Instead the parties attempted to settle this and three other cases pending in this court from July-September 2018. Plaintiffs filed a motion in Pierre v. Midland Credit Management, Inc., No. 16-CV-2895, ECF No. 127 (N.D. Ill. July 5, 2018), to reassign this and three other cases for the purpose of holding a settlement conference before a magistrate judge. Judge Leinenweber entered and continued the motion but ordered the parties in the four cases to attend the settlement conference. In anticipation of that conference, the parties here jointly moved this court to "set a new discovery schedule after settlement negotiations conclude." ECF No. 73 at 4. This court granted that motion. ECF No. 76.
Conferences were held in July and September 2018, but they did not produce a settlement, see Minute Entry, Sept. 27, 2018, ECF No. 88. Plaintiffs withdrew their motion to reassign this case on October 3, 2018. Minute Entry, Pierre, No. 16-CV-2895, ECF No. 138. The record shows that two things happened while settlement efforts were ongoing. First, defendants sent Huser an offer of judgment, see Fed. R. Civ. P. 68, on July 30, 2018. ECF No. 102-1 Ex. 6 at 20. Second, Huser sought and obtained leave to filed his second amended complaint ("SAC") on July 12, 2018. The SAC added Stephen Welch ("Welch") as a named plaintiff. See ECF No. 59 at 1. Defendants answered the SAC, ECF No. 80, on August 23, 2018. For the first time in this case, the answer demanded a jury trial.
Plaintiffs moved to strike defendants' jury demand on September 5, 2018. This court granted the motion on November 2, 2018, ECF No. 91. See Order 3-11, ECF No. 91.Defendants then filed the pending motion to compel arbitration in December 2018. ECF No. 96 (Dec. 17, 2018).
The Federal Arbitration Act (FAA) provides that "[a] written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA "places arbitration contracts 'on equal footing with all other contracts[;]'" no more, no less. DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463, 468 (2015) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006)); AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 340 (2011) (quoting same source). Once the court is "satisfied that issue the involved in [a] suit or proceeding is referable to arbitration," the court must, "on application of one of the parties stay the trial of the action until such arbitration has been had." 9 U.S.C. § 3; accord Achey v. BMO Harris Bank, N.A., 64 F. Supp. 3d 1170, 1175 (N.D. Ill. 2014) (citing Van Tassell v. United Mktg. Grp., LLC, 795 F. Supp. 2d 770, 786 (N.D. Ill. 2011)).
Three elements must be present before a court can compel arbitration: "[1] a written agreement to arbitrate, [2] a dispute within the scope of the arbitration agreement, and [3] a refusal to arbitrate." Pearson v. United Debt Holdings, LLC, 123 F. Supp. 3d 1070, 1073 (N.D. Ill. 2015) (quoting Zurich Am. Ins. Co. v. Watts Indus., Inc., 417 F.3d 682, 687 (7th Cir. 2005)) (brackets in original). Analysis of whether these elements exist "mirrors summary judgment analysis." Id. (citing Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002)); see also 9 U.S.C. § 4; Johnson v. Orkin, LLC, 928 F. Supp. 2d 989, 1001 (N.D. Ill. 2013) .
In opposing defendants' motion, Huser effectively concedes that the three requirements of compelling arbitration are present . Huser of course refuses to arbitrate, satisfying the third element, and he does not suggest that the credit agreement is unenforceable.2 Neither does he deny that defendants, as successors by assignment, can enforce the agreement.
That leaves the question whether the dispute falls within the arbitration clause's scope. Huser's scope argument merges with his waiver arguments. He points to this language in the agreement: "This arbitration agreement applies to all Claims now in existence or that may arise in the future except for Claims by or against any unaffiliated third party to whom ownership of your account may be assigned, in which case this arbitration agreement...
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