District Court Grants Debt Buyer’s Motion to Compel Arbitration

A California District Court has granted a debt buyer’s motion to compel arbitration of the FDCPA claims brought against it by a consumer.  In James v. Portfolio Recovery Associates, C.A. No. 14-cv-03889 (N.D. Cal. Feb. 20, 2015),  James brought a putative class action suit alleging the debt buyer violated the FDCPA by making deceptive and misleading representations in its collection suit against James.  The debt buyer, Portfolio Recovery Associates (“PRA”), moved to compel arbitration, relying upon the original creditors’ card member services agreement.

 In granting the motion to compel arbitration, the court determined that PRA had standing to enforce the arbitration agreement.  While the covered parties’ provision did not expressly include assignees within the covered parties, the court looked to other provisions of the agreement, as well as the scope of PRA’s purchase, to determine that PRA was indeed covered.  Key considerations for the court were as follows:

·       As part of the sale, PRA received all right, title and interest in the account;

·       The agreement specifically provided that the arbitration clause “shall apply to any Claim…by or against us, or you, or any other Covered Person”

·       The agreement further provided that “[w]e may sell assign or transfer your Agreement and Account or any portion thereof without notice to you…If we assign the Account, the assignee shall have the same rights as we do under this Agreement.”

The court concluded that the assigned rights included the right to arbitrate. 

The court further determined that PRA had not waived its right to arbitrate by bring the prior collection action against James.  “[B]ringing a lawsuit for debt collection may result in defendants’ waiver of arbitration for that case, but it does not bar plaintiffs from compelling arbitration in that action or bar defendants from invoking arbitration in all future separate causes of action that plaintiffs assert against them.”