JEFFREYS v. MIDLAND CREDIT MANAGEMENT, INC.

Filing 22

OPINION fld. Signed by Judge Jose L. Linares on 8/18/16. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

VICKEY JEFFREYS,

CIVIL ACTION NO. 15-8470 (JLL)

Plaintiff,

OPINION

V.

MIDLAND CREDIT
MANAGEMENT, INC.,
Defendant.

LINARES, District Judge
The plaintiff brought this action on behalf of herself and others similarly situated
to recover damages for alleged violations of the Fair Debt Collection Practices Act
(hereinafter, “FDCPA”) by the defendant, Midland Credit Management, Inc. (hereinafter,
“MCM”). (See dkt. 1.) I MCM now moves to dismiss the complaint pursuant to Federal
Rule of Civil Procedure (“Rule”) 1 2(b)(6) and to compel arbitration. (See dkt. 15

—

dkt.

15-11; dkt. 20; dkt. 21.) The plaintiff opposes the motion. (Sçç dkt. 19.)
The Court will resolve the motion upon review of the papers and without oral
argument. See L.Civ.R. 78.1(b). The Court presumes the familiarity of the parties with
the factual context and procedural history of the action. The Court will grant the motion
for the following reasons.

This Court will cite to documents filed on the Electronic Case filing System (“ECf”)
by the docket entry numbers with a ‘dkt.” designation and the page numbers imposed by ECF.

BAC KG ROUND

The plaintiff had a credit card account with an entity known as Credit One Bank,
N.A. (hereinafter, “COBNA”). (See dkt. 1 at 2.) The cardholder agreement for that
account contained provisions under the heading “ARBITRATION” that required that:
(1) “ANY CONTROVERSY OR DISPUTE BE RESOLVED BY BINDING
ARBITRATION”; and (2) “[AJRBITRATION REPLACES THE RIGHT TO GO
TO COURT, INCLUDING THE RIGHT TO A JURY AND THE RIGHT TO
PARTICIPATE IN A CLASS ACTION OR SIMILAR PROCEEDING”. (Dkt. 15-4

at 2; see dkt. 15-4 at 15 (stating same).)
In addition, the cardholder agreement stated that “[a]ny questions about what
Claims are subject to arbitration shall be resolved by interpreting this arbitration
provision in the broadest way the law will allow it to be enforced.” (Dkt. 15-4 at 2; çç
(barring “pursu[it of] the Claim in any litigation, whether as a class action, private
attorney general action, other representative action or otherwise”); see also dkt. 15-4 at
15.)
The cardholder agreement also stated that the “[c]lairns subject to arbitration
include

.

.

.

collections matters relating to your account”. (Dkt. 15-4 at 2; see dkt. 15-4 at

15.) Furthermore, the arbitration provisions stated that they applied to: (1) any entity
“affiliated” with COBNA; and (2) any of COBNA’s predecessors, successors, or assigns.
(Dkt. 15-4 at 2; see dkt. 15-4 at 15.)
All of the aforementioned language was preceded by the following statement:
“IMPORTANT NOTICE: Please read the Arbitration Agreement portion of this

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document for important information about your and our legal rights under this
Agreement.” (Dkt. 15-4 at 2.)
The plaintiff eventually incurred a debt on her account that COBNA detenTlined to
be uncollectable. COBNA then charged off the debt, and sold it to an entity known as
Sherman Originator III, LLC (hereinafter, “SOLLC”). (See dkt. 1 at 3; dkt. 15-5 at 3, 7.)
SOLLC, in turn, sold the debt to Midland Funding, LLC (hereinafter, “MFLLC”), which
in turn referred the matter for collection to its servicer, MCM. (See dkt. 15-1 at 10; dkt.
15-5 at 7; dkt. 15-6 at 2—3; see also dkt. 21 at 2 (featuring portion of MCM’s webpage

describing its affiliation with MFLLC).)2
MCM attempted to collect the debt by mailing a letter seeking payment to the
plaintiff. (See dkt. 1 at 3; dkt. 1-1 at 1—2; dkt. 15-3 at 18—19.) The plaintiff brought this
civil action in response, and alleged that the contents of the letter ran afoul of the
FDCPA. MCM, pursuant to the cardholder agreement, demanded that the dispute be
referred to arbitration. (See dkt. 15-4 at 2.)
ARGUMENT & ANALYSIS
I.

Standards
A.

Dismissal pursuant to Rule 12(b)(6)

The standard for resolving a motion made pursuant to Rule 12(b)(6) is well
settled. See Green v. Coleman, 575 Fed.Appx. 44, 46 (3d Cir. 2014) (citing Ashcroft v.
Igbal, 556 U.S. 662 (2009) in setting forth standard); Mariotti v. Mariotti Bldg. Prods.,

MfLLC’s affiliation with MCM has been recognized previously. See, e.g., Harris v.
Midland Credit Mgmt., Inc., No. 15-4453, 2016 WL 475349, at *2 n.4 (D.N.J. Feb. 8, 2016).
2

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Inc., 714 f.3d 761, 764—65 (3d Cir. 2013) (citing Bell Ati. Corp. v. Twombly, 550 U.s.
544 (2007) in setting forth standard); Am. Corporate Soc’y v. Valley Forge Ins. Co., 424
Fed.Appx. 86, 88—89 (3d Cir. 2011) (citing Igbal and Twombly in setting forth standard);
Fowler v. UPMC Shadyside, 578 F.3d 203, 209—12 (3d Cir. 2009) (citing Igbal and
Twombly in setting forth standard).
B.

Compelling arbitration

A private arbitration agreement is enforceable if it: (1) is valid; and (2) applies to
the dispute in issue. See AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344—45
(2011); Century Indern. Co. v. Certain Underwriters at Lloyd’s, London, 584 F.3d 513,
525 (3d Cir. 2009); see also 9 U.S.C.

§

2 (stating written arbitration agreements are valid

and enforceable pursuant to the Federal Arbitration Act).
II.

Plaintiffs arguments

In response to the defendant’s demand to arbitrate this dispute pursuant to the
terms of the cardholder agreement, the plaintiff raises two arguments in an effort to avoid
arbitration and to proceed with this civil action.
A.

MCM’s standing

The plaintiff argues that MCM lacks the standing to enforce the provisions in issue
because it is a “nonsignatory” to the cardholder agreement. (Dkt. 19 at 8; çç dkt. 19 at

8—12.)
It is true that MCM is not a signatory to the cardholder agreement. But as set forth
in the factual recitation, see supra, COBNA sold the plaintiffs debt to SOLLC, which in
turn sold it to MFLLC, which in turn referred the debt to MCM as MFLLC’s servicer.

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MCM has been assigned the debt, and thus MCM is authorized to invoke the provisions
in issue from the cardholder agreement in order to address the plaintiffs claims here.
Harris v. Midland Credit Mgrnt.. Inc., No. 15-4453, 2016 WL 475349, at *1_3 (D.N.J.
Feb. 8, 2016) (in FDCPA action wherein the same provisions from the instant action were
addressed, MCM’s request to compel arbitration was granted due to its status as the
servicer of MFLLC, which had been assigned a debt originating from COBNA). The
plaintiffs argument here is therefore without merit.
B.

Unconscionable

The plaintiff argues that the arbitration provisions and class action provisions are
unconscionable, reasoning that they “are adhesive agreements” that “presented.

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terms

on a take-it-or-leave-it basis”. (Dkt. 19 at 17.) This argument is without merit. See Ellin
v. Credit One Bank, No. 15-2694, 2015 WL 7069660, at *1 (D.N.J. Nov. 13, 2015)
(holding provisions in COBNA cardholder agreement that were identical to those in issue
here were not unconscionable, because the agreement presented the provisions by using
bold and capital text, explained their ramifications, and merely required the plaintiff to
pursue claims before an arbitrator).
The plaintiff has not argued that she did not agree with the provisions in issue
here, but was unable to open a credit card account elsewhere. Thus, she has not shown
that COBNA placed her in a “take-it-or-leave-it” predicament.

S.cc id.

at *1_4; see also

Dimick v. First USA Bank, N.A., No. 99-2550, 2000 U.S. Dist. LEXIS 20910, at *7_$
(D.N.J. Jan. 14, 2000) (concluding the “[arbitration] provision effectively puts the
cardholder on notice that he/she has relinquished his/her right to litigate claims in court”,

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and that the provision penTlitted an avenue to obtain relief, and thus it was not
unconscionable). As such, the Court finds that the provisions were neither procedurally
nor substantively unconscionable.
CONCLUSION

For the aforementioned reasons, the Court will grant the motion to dismiss and to
compel arbitration. The Court will enter an appropriate order and judgment.

$E L. LINA’kES
1/tJnited States District Judge

Dated: August

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