Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—WDWash: Citi Credit Card Holder Required to Arbitrate Claims Concerning Debt Collection Calls , (Mar 25, 2013)

By Jody Coultas, J.D.

A credit card holder was required to arbitrate Telephone Consumer Protection Act (TCPA), Fair Debt Collection Practices Act (FDCPA), and Washington Consumer Protection Act (WCPA) claims against CitiGroup, Inc., the federal district court in Seattle has held (Coppock v. CitiGroup, Inc., March 22, 2013, Coughenour, J.).The court denied the holder’s motion to compel full responses to all of the discovery, and for leave to file a supplemental brief in support of her opposition to Citi‘s motion to compel arbitration.

The holder alleged that Citi called her using automatic telephone dialing equipment on multiple occasions in order to collect a debt allegedly owed on her Citi credit card. Citi moved to compel arbitration under the terms of the credit card agreement.

The card agreement governing the account authorized Citi to change the terms of the agreement at any time. Billing statements in 2001, seven years after the holder was issued a credit card, included messages in all-capital letters alerting card holders to the addition of an arbitration agreement allowing either party to demand individual (non-class) arbitration. The holder continued to use the card and never disputed the change in terms.

South Dakota law applied based on the terms of the agreement, and the court dismissed the holder’s argument that Washington law applied. In order for Washington law to apply, South Dakota law would have to contravene a fundamental policy of Washington, and Washington would have to have a materially greater interest than South Dakota in determining whether the holder agreed to the arbitration provisions.

The arbitration agreement was valid and enforceable, according to the court. Under South Dakota law, an agreement to arbitrate exists if the card holder continued to use the credit account after receiving the change in terms notice. The notice in this case was effective and the holder’s continued use of the credit card bound her to the terms.

The arbitration terms encompassed the holder’s claims, according to the court. The agreement covered all claims relating to the card holder’s account, no matter what legal theory or remedy, including claims based on contract, tort, fraud, agency, negligence, statutory or regulatory provisions, or any other sources of law. The card holder’s claims were based on issue concerning an account with Citi as the calls were to collect a debt owed. Therefore, they were covered by the arbitration agreement. The holder’s argument that the arbitration agreement was unconscionably unlimited was dismissed because it applies only to claims relating to an account, a prior related account, or the relationship between the holder and Citi.

The card holder also failed to prove that the arbitration clause prevented her from vindicating her rights, according to the court. There was no evidence that arbitrating the claims would not vindicate her rights. The arbitration agreement here requires Citi to reimburse the initial filing fee if the claimant prevails, to pay the fees and costs for the first day of the hearing, to advance or reimburse the filing and other fees under certain circumstances, and to pay attorneys’ fees and expenses if allowed by applicable law.

Finally, the court held that the arbitration agreement was not unconscionable. The holder’s procedural unconscionability argument was based on a false premise that standardized, adhesive contracts drafted by the stronger party are procedurally unconscionable. Coppock has not shown a lack of meaningful choice here. The notice of change in terms provided an opt out provision. However, the holder did not opt out, and nothing stopped her from closing her account at any time.

The case is No.C11-1984-JCC.

Attorneys: Duane M. Dawson (Dawson Law) for Gloria I. Coppock. John R Bachofner (Jordan Rammis PC) for CitiGroup, Inc.

Company: CitiGroup, Inc.

Cases: ConsumerProtection WashingtonNews