I think, and please correct me if I am wrong, that this is a case the speaks to the importance of having your agreements reviewed not only to make sure that the language makes sense, but to make sure that if there is something that refers to someone or something else, that the language lines up with those other things, too. The Court of Appeals for the Third Circuit has denied an appeal from a defendant seeking to compel arbitration in a Fair Credit Reporting Act case because the plaintiff did everything she was supposed to do and the arbitrator dismissed the case after asking the defendant waive language in its underlying agreement with the plaintiff. Confused? Read on.
The Background: The plaintiff applied for a loan and was turned down. Her application was denied because the product the lender used to verify the plaintiff’s identity included information about someone else with the same name, who just happened to be a on a government watch list.
- The plaintiff filed suit, claiming the defendant violated the FCRA. The defendant sought to invoke the mandatory arbitration clause that was in the agreement the plaintiff consented to when she applied for the loan.
- The plaintiff filed for arbitration. The arbitrator noted that the defendant had a clause in its agreement with the plaintiff that limited the damages that could be recovered, which conflicted with the arbitrator’s protocol that allowed it to grant whatever relief would be allowed under law. The arbitrator asked the defendant to waive the clause, which it declined to do. The arbitrator then declined to administer arbitration.
- The defendant asked the plaintiff to use a different arbitrator, but she declined and instead sought a hearing before a District Court judge, who reinstated the original FCRA complaint.
The Ruling: The Appeals Court really only needs part of one sentence to relay what it thinks of the defendant’s chance of winning on appeal… “MicroBilt seeks to dodge this straightforward reading of the arbitration provision with a barrage of arguments…” including that the arbitrator improperly resolved an issue, that the arbitration provision conflicts with the plaintiff’s return to court, and that the arbitrator’s application of its own protocol was unreasonable. To the surprise of nobody, the Appeals Court rejected each of those arguments.