A federal judge in Illinois has dismissed a class-action lawsuit and compelled arbitration in a Fair Debt Collection Practices Act case even though there was no bill of sale to prove the debt was sold.
The plaintiff, Janis Fuller, had taken out a credit card and subsequently defaulted on the unpaid debt. The creditor, Credit One Bank, sold the charged-off debt to LVNV Funding. Frontline Asset Strategies agreed to collect on the unpaid debt through Resurgent Capital Services and attempted to do so by sending a collection letter to the plaintiff, which threatened legal action that could not be taken.
Fuller then filed a class-action lawsuit against the companies, alleging violations of the FDCPA. The defendants then moved to force arbitration in the case, according to the terms of the cardholder agreement between the plaintiff and Credit One.
A copy of the ruling in the case of Janis Fuller v. Frontline Asset Strategies, LLC, LVNV Funding LLC, and Resurgent Capital Services, L.P., can be accessed here.
The plaintiff’s first mistake in trying to convince the judge that a bill of sale was important was to include the following language in the complaint: “LVNV subsequently purchased the alleged debt, and through its servicer Resurgent began collecting the alleged debt from Plaintiff.” Saying that constitutes a binding admission, according to the court.
Judge Ronald Guzman did not buy that argument nor any of the other arguments put forth by the plaintiff, including that the alleged FDCPA violation was outside the scope of the arbitration agreement, which was between the plaintiff and the creditor, not the collection agency.
Here is some perspective from Jonathan Hoffmann and Jason Tompkins at Balch & Bingham:
Compelling arbitration remains a powerful tool for dispelling class actions and individual suits in unfavorable forums or with onerous discovery on the horizon. Though some courts have set high hurdles for debt buyers to compel arbitration based on a credit card agreement, Fuller shows that not all courts find bills of sale talismanic and that debt collectors may yet find a way to enforce arbitration provisions governing their debts.
