Judge Denies Motion to Compel Arbitration in FDCPA, TCPA Class Action

A District Court judge in Hawaii has denied a defendant’s motion to compel arbitration in a class-action suit accusing it of violating the Telephone Consumer Protection Act and Fair Debt Collection Practices Act because the defendant did not show that the plaintiff must rely on the terms of his customer agreement with the original creditor in asserting claims against the defendant.

A copy of the ruling in the case of Ioane v. MRS BPO can be accessed by clicking here.

The creditor placed the past-due cell phone account with the defendant. The plaintiff claims the defendant sent text messages without first obtaining the plaintiff’s prior consent on five occasions using an automated telephone dialing system, as required under the TCPA and then failed to provide him with a notice that he had a right to dispute the debt, as required under the FDCPA.

The defendant sought to invoke the customer agreement the plaintiff made with the original creditor, which included the following provisions:

YOU AND VERIZON WIRELESS BOTH AGREE TO RESOLVE DISPUTES ONLY BY ARBITRATION OR IN SMALL CLAIMS COURT. YOU UNDERSTAND THAT BY THIS AGREEMENT YOU ARE GIVING UP THE RIGHT TO BRING A CLAIM IN COURT OR IN FRONT OF A JURY. . . .

and

You consent to allow Verizon Wireless and anyone who collects on our behalf to contact you about your account status, including past due or current charges, using prerecorded calls, email and calls or messages delivered by an automatic telephone dialing system to any wireless phone number or email address you provide.

But Judge Jill Otake of the District Court for the District of Hawaii, when applying a state law detailing the ability to invoke an arbitration agreement, ruled that the defendant’s claim that the agreement provided express consent to contact the plaintiff does not hold up because express consent is an affirmative defense for which the defendant bears the burden of proof.

“Here, Plaintiff’s TCPA and FDCPA claims rely on and are founded in federal consumer protection statutes, not his Customer Agreement with Verizon,” Judge Otake wrote. “The allegations in the Complaint object to receiving text messages from Defendant and not receiving information regarding how to dispute an alleged debt; they do not reference any term of the Customer Agreement, allege any violation of it, or seek to enforce or benefit from any of its terms. Defendant thus has not shown that Plaintiff must rely on the terms of the Customer Agreement in asserting his claims against Defendant.”

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