Efficacy of Creditor Declarations Lead to Different Rulings in Appeals Court FDCPA Case

The Court of Appeals for the Eleventh Circuit has partially affirmed and partially overturned a case against a debt collector that was sued for violating the Fair Debt Collection Practices Act by allegedly filing lawsuits to collect on unpaid debts even though it knew the debts were “uncollectable.” The crux of the case has to do with whether the plaintiffs were properly provided a copy of a cardholder agreement by the original creditor which included a mandatory arbitration clause. The Appeals Court hinged its ruling on different declarations from representatives of the original creditors, with one being more complete and definitive than the other.

A copy of the ruling in the case of Mason & Burnett v. Midland Funding can be accessed by clicking here.

The plaintiffs obtained credit cards from different creditors, each of which were ultimately sold to the defendant. The defendant filed lawsuits against each of the plaintiffs. The plaintiffs turned around and sued the defendant, claiming that attorneys for the defendant file “scattershot consumer debt collection lawsuits in state courts . . . to mislead consumers into believing that Encore [ ] actually has admissible evidence, and that it intends to take its claims to trial.”

The defendant filed a motion to dismiss, which was denied by a District Court judge. The defendant then filed a motion to compel arbitration, which was also denied. That led to the defendant filing the interlocutory appeal with the Eleventh Circuit.

For one of the plaintiffs, the original creditor filed a declaration that the form that the plaintiff would have had to fill out when applying for the card was “substantially similar” to the form that it provided as evidence. But the form that was provided as evidence did not include the full set of terms and conditions, which included the arbitration provision. Thus, the Appeals Court had no evidence that the plaintiff saw and was required to agree to the arbitration provision when applying.

The agreement was also mailed to the plaintiff, but again, the Appeals Court determined that the declaration from the creditor lacked the necessary “evidentiary support” to prove it knew that the agreement had been mailed. Thus, the Appeals Court affirmed the lower court’s denial of the defendant’s motion to compel arbitration.

The other defendant, meanwhile, provided a much more definitive declaration, which allowed the Appeals Court to overturn the District Court’s denial of the motion to compel arbitration.

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