Wisconsin State Court Compels Arbitration in Class Action

This FDCPA class action case involves a plaintiff’s claim that a debt buyer’s hardship policy in place to help consumers was truly a facade to obtain consumers’ sensitive financial information.

04/07/2022 2:00 P.M.

3 minute read

By Avanti Bakane and Neha Dagley

Gordon & Rees Scully Mansukhani

The plaintiff in this case alleged a national debt buyer offered her the option of seeking hardship such that she would not have to pay off her delinquent account. The plaintiff further alleged this option was presented to her not as a reprieve but as a scheme to obtain financial information from her such that the defendant could evaluate whether to file a collection lawsuit against her.

To quickly shut down this opportunistic claim, the defendant moved to compel arbitration before discovery commenced. Seeking to keep her class claims alive, the plaintiff vigorously opposed this motion, going to lengths to argue the ambiguity of straightforward purchase documents.

Much like her thin theory of the case, the plaintiff’s position on the arbitration issue lacked merit. The court agreed with the defendant and granted its motion to compel arbitration of the plaintiff’s claims. In doing so, Judge Pedro Colon of the Milwaukee County state court adopted the defendant debt buyer’s position that the Purchase Agreement was unambiguous in its sale of everything pertaining to the accounts, including the account agreements, to Portfolio Recovery Associates (PRA).

Relying upon In re: May 591 B.R. 712 (Bankr. E.D. Ark. 2018), the court stated:

As in May . . . the credit card agreement states “we may sell all or any rights or duties under this agreement or your accounts,” which includes the right to convey the right to arbitration because all means all. There is no indication that Synchrony intended to retain any of its rights or duties in the event of a sale.

The [c]ourt also found the discussion of cases distinguishing receivables from accounts irrelevant to this case, which only dealt with accounts. Finally, the [c]ourt emphasized the “all means all” rationale underlying its ruling as follows:

The purchase agreement, by its clear and express use of the word “all,” . . . makes clear the act of sale was intended to assign the entirety of the account, including the right to arbitrate, and not just the account receivables. The language of the bill of sale also makes clear Synchrony had no intention of retaining any of its ownership in the account. It states that Synchrony “transfers, sells, conveys, grants, and delivers to [PRA], it successors and assigns . . . to the extent of its ownership, the [a]ccounts” (Doc. 55, Ex. A). When Synchrony assigned ownership of the [a]ccount to PRA, the assignment included the right to enforce arbitration.

The ruling comes as a welcome victory for Gordon & Rees and the industry, particularly in light of the growing trend of plaintiffs avoiding Article III standing requirements and selecting state court forums to file class action cases with potentially high exposure.

Case: Cyneisha Hankins v. Portfolio Recovery Associates, LLC, No. 2021CV005172 (Wis. Cir. April 1, 2022).

Bakane is a partner with Gordon & Rees Scully Mansukhani, and Dagley is of counsel with the firm.

Editor’s note: This content is published with permission from Gordon & Rees Scully Mansukhani. This article is provided for informational purposes and is not intended nor should it be taken as legal advice. The views and opinions expressed in this article are those of the author in [his][her] individual capacity and do not reflect the official policy or position of their partners, entities, or clients they represent.

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