Defense Did Not Waive Arbitration Right By Answering FDCPA Suit, Judge Rules

A District Court judge in Illinois has ruled that a group of defendants did not waive their right to compel arbitration because they spent four months defending themselves against a lawsuit that alleged they violated the Fair Debt Collection Practices Act by trying to collect on a debt that had already been settled.

A copy of the ruling in the case of Castle v. Global Credit & Collection Corp., can be accessed by clicking here.

The plaintiff incurred a credit card debt that she stopped repaying. She was sued for not repaying the debt and reached a settlement. After the suit was settled, the defendants were hired to collect on the discharged debt. The defendants sent two collection letters to the plaintiff, one of which offered to settle the account for 50% of what was owed, when what was owed was actually nothing.

The plaintiff filed a class-action suit, alleging the letters violated the FDCPA by attempting to lure an unsuspecting individual into making a payment to restart the statute of limitations.

The defendants answered the suit, each referencing that arbitration was a likely outcome of the case. The two sides then began discovery. Four months later, the defendants announced they were seeking to compel arbitration. The plaintiff fought back, arguing that the defendants had waived their right to arbitration because they waited too long to file their motion to compel arbitration.

Because the defendants never filed any motions after answering the suits and because they invoked arbitration in their responses — even if the language was boilerplate — there was nothing that Judge Steven Seeger of the District Court for the Northern District of Illinois, Eastern Division, could do.

“Congress created a strong federal policy in favor of arbitration, and courts must respect the policy decisions of the political branches,” Judge Seeker wrote in agreeing to the motion to compel arbitration. “Plaintiff agreed to arbitration in the contract, and she has not met her burden of establishing a waiver.”

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