Wolin et al v. Midland Credit Management, Inc. et al

Filing 28

MEMORANDUM AND ORDER granting in part and denying in part 20 Motion to Compel. For the reasons stated herein, Defendants' motion to compel arbitration, DE 20 , is granted in part and denied in part. The motion to compel arbitration of Greenwald's claims is granted, and those claims are dismissed. The motion to compel arbitration of Wolin's claims is denied.(Ordered by Judge Leonard D. Wexler on 8/24/2017.) (Fagan, Linda)

FILED
IN CLERK'S OFFICE
U.S. DISTRICT COURT E.D.N.Y.

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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TARA WOLIN and ROBERT GREENWALD,
individually and on behalf of all others
similarly situated,

*

AUG 24 2017

*

LONG ISLAND OFFICE

MEMORANDUM & ORDER
Plaintiffs,

cv 15-6996

-against-

(Wexler, J.)
MIDLAND CREDIT MANAGEMENT, INC.,
and MIDLAND FUNDING, LLC,
Defendants.

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APPEARANCES:

THE MUHLSTOCK LAW FIRM, PC
BY: Todd D. Muhlstock, Esq.
100 Garden City Plaza, Suite 500
Garden City, New York 11530
Attorney for Plaintiffs
MARSHALL DENNEHEY WARNER COLEMAN & GOGGIN, P.C ..
BY: Joseph A. Hess, Esq.
88 Pine Street, 2P' Floor
New York, New York 10005
Attorney for Defendants

WE){LER, District Judge:
Plaintiffs Tara Wolin ("Wolin") and Robert Greenwald ("Greenwald") (collectively
"plaintiffs") commenced this action against defendants Midland Credit Management, Inc.
("MCM") and Midland Funding LLC ("Midland Funding") (collectively, "defendants") alleging
violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq.
Presently before the Court is defendants' motion to compel arbitration pursuant to the Federal
Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., and agreements between the parties. See Motion,

Docket Entry ("DE") [20]. Plaintiffs have opposed the motion. For the reasons set forth herein,
the motion to compel arbitration is granted in part and denied in part.

I. BACKGROUND
Tolin and Greenwald are apparently unrelated individuals who each allegedly incurred a
separate debt. Wolin's account was with Synchrony Bank/PC Richard and Greenwald's debt
originated with Synchrony Bank/JCPenney. Both accounts were sold to defendant Midland
Funding and the collection letters were sent by defendant MCM, a debt collection company
purportedly collecting on and servicing the accounts on behalf of Midland Funding. The
particulars of the accounts prior to their purchase by defendants are germane to the current
motion and are provided in affidavits and supporting documents from (1) Jodi Anderson, a Lead
Litigation Analyst with non-party Synchrony Bank ("Synchrony"), formerly known as GE
Capital Retail Bank, regarding the origination of the accounts, and (2) Michael Burger, Director
of Legal Collections Operations at defendant MCM regarding the acquisition of the accounts by
defendants.

A.

Wolin Account
On or about February 28, 2003, a PC Richard account was applied for in the name of

Tara Wolin and was approved that same day by Synchrony Bank ("Synchrony"). Affidavit of
Jodi Anderson re: Wolin account ("Anderson Aff: Wolin"), ~5, DE [25]. The application has
not been provided. Anderson avers that a PC Richard credit card was mailed to Wolin on or
about February 28, 2003.
According to Synchrony's records, Wolin made her last payment on the account on
November 20, 2014. The account was charged off by Synchrony on June 28, 2015, and
subsequently sold to Midland Funding in July 2015.

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Synchrony has provided a copy of the Credit Card Account Agreement that was
purportedly in effect at the time of the charge off in June 2015. Anderson Aff.: Wolin, Ex. A.
That agreement includes an arbitration provision that will apply if the recipient "does not reject
it." The arbitration provision also contains language whereby the debtor agrees to not participate
in a class action or bring suit on behalf of other account holders. The agreement does not show
any indication on its face that it was sent to Wolin, and Anderson does not expressly claim that
the agreement was sent to her. Although Synchrony claims that a "change of terms" was sent to
Wolin in February 2015, the supporting document attached only contains a reference to a change
in the late fee, does not contain an arbitration provision, and does not indicate that a complete
agreement was provided to Wolin. Synchrony states that there is no record of Wolin rejecting
the arbitration provision.
The Wolin account was assigned to defendant Midland Funding when it purchased her
charged-off debt as part of a portfolio of such debts from Synchrony in July 2015. See Affidavit
of Michael Burger re: Wolin account ("Burger Aff:

Wolin"),~~

3, 6, DE [22]. Defendants

provide documents evidencing the purchase. Id

B. Greenwald Account
Synchrony acquired Greenwald's JC Penney credit card account as part of a portfolio in
December 1999. That same month, Synchrony sent a notice to Greenwald enclosing the credit
card agreement effective at that time. Affidavit of Jodi Anderson re: Greenwald account
("Anderson Aff: Greenwald"), ~6, DE [24]. Change in term notices were sent to Greenwald in
Apri12008, July 2009, and June 2012. The agreement sent in December 1999 and the
subsequent notices sent in 2008 and 2012 each contained arbitration provisions. The most recent
agreement sent to Greenwald in June 2012 contains an arbitration provision stating that absent

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rejection, certain claims are subject to arbitration and the debtor agrees not to participate in class
actions or bring claims on behalf of others." Anderson Aff: Greenwald, Ex. B. Synchrony states
that there is no record of Greenwald rejecting the arbitration provision.
Greenwald made his last payment on July 29,2014. The account was charged off by
Synchrony on March 11,2015, and subsequently sold to Midland Funding LLC that same
month. The Greenwald account, which had an outstanding balance of $7,081.73 at charge-off,
was part of a portfolio of charge-off debts purchased from Synchrony by defendant Midland
Funding. See Affidavit of Michael Burger re: Greenwald account ("Burger Aff: Greenwald"),

~~

6, 11, Exs. 1-3, DE [23].

C. The Complaint
After the sale of the accounts, MCM commenced collection efforts against plaintiffs.
The facts, as set forth in the boilerplate, eight page complaint, are straightforward. Additional
facts are drawn from the collection letters attached to the complaint and incorporated by
reference therein.
Tolin and Greenwald each received a collection letter containing bolded language that

"Communications concerning disputed debts, including an instrument tendered as full
satisfaction of a debt, are to be sent" to a specified address. Complaint, Ex. 1 (emphasis in
originals). Plaintiffs allege that there is no requirement that a debt be disputed in writing and that
it is a violation of the FDCPA to require a dispute in writing. Thus, plaintiffs' allege, the
language regarding communications in writing, when viewed from the perspective of the least
sophisticated consumer, "overshadows" or contradicts the FDCPA, constituting violations of that
statute.

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Defendants claim that the credit card agreements in effect for the accounts held by both
plaintiffs contain an arbitration provision. They now move to compel arbitration pursuant to
those provisions.

II. DISCUSSION
A. Admissibility of Evidence
As a threshold matter, plaintiffs attack the admissibility of the evidence submitted by
defendants in support of their motion. Specifically, plaintiffs suggest that the affidavits attaching
certain documents do not satisfy Rule 803 (6) (A), (C), & (D) of the Federal Rules ofEvidence. ·
The Court disagrees.
Jodi Anderson, non-party Synchronity's employee, submitted two affidavits in which she
asserted that she is a Lead Litigation Analyst with Synchrony and has job responsibilities
including reviewing and analyzing account records and transaction histories for credit card
accounts held by Synchrony. She further asserts that the documents attached to her affidavits
"were kept in the course of the regularly conducted business activity of Synchrony" and were
made "as a regular practice during its regularly conducted business activity." Michael Burger's
affidavits contain similar statements. The Court finds that these averments satisfy the
requirements of Rule 803 (6). In addition, plaintiffs have failed to carry their burden of
demonstrating that the documents indicate a lack of trustworthiness. See FED. R. EVID. 803
(6)(E). For purposes of this motion, the affidavits and attached documents comply with Rule
803 and will be considered.
Plaintiffs further claim that defendants do not have standing to compel arbitration under
the agreements because defendants have not demonstrated that they are the actual assignees of
the accounts at issue. The Court finds that the affidavits and attachments submitted in support of

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the motion adequately establish the "chain of custody" of the accounts and defendants' rights to
proceed.

B. Applicability of Arbitration Provisions
Under the Federal Arbitration Act ("FAA"), "[a] written provision in ... a contract ... to
settle by arbitration a controversy thereafter arising out of such contract ... shall be valid,
irrevocable, and enforceable." 9 U.S.C. § 2. The FAA mirrors the "strong federal policy
favoring arbitration as an alternative means of dispute resolution," Ragone v. At/. Video of
Manhattan Ctr., 595 F.3d 115, 121 (2d Cir. 2010) (internal quotation and citation omitted), and

serves to "ensure judicial enforcement of privately made agreements to arbitrate," Dean Witter
Reynolds Inc. v. Byrd, 470 U.S. 213, 219, 105 S. Ct. 1238 (1985). The FAA "leaves no place for

the exercise of discretion by a district court, but instead mandates that district courts shall direct
the parties to proceed to arbitration on issues as to which an arbitration agreement has been
signed." Id at 218 (emphasis in original). The rigorous enforcement of arbitration agreements
"holds true for claims that allege a violation of a federal statute, unless the FAA's mandate has
been 'overridden by a contrary congressional command."' Am. Exp. Co. v. Italian Colors Rest.,
133 S. Ct. 2304,2309, 186 L. Ed. 2d 417 (2013) (quoting CompuCredit Corp. v. Greenwood,
565 U.S._, 132 S. Ct. 665, 669-69, 181 L.Ed.2d 586 (2012) (internal quotation and citation
omitted)). Courts analyzing arbitration agreements in FDCP A cases have found those claims to
be appropriate for arbitration. See, e.g., Shetiwy v. Midland Credit Mgmt., 959 F. Supp. 2d 469,
475 (S.D.N.Y. 2013); Fedotov v. Peter T. Roach & Assocs., P.C., No. 03 CIV. 8823,2006 WL
692002, at *3 (S.D.N.Y. Mar. 16, 2006) (citing cases).
Courts deciding motions to compel arbitration apply a "standard similar to that applicable
for a motion for summary judgment." Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir.

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2003). The court considers all relevant admissible evidence and draws all reasonable inferences
in favor of the non-moving party. Nicosia v. Amazon. com, Inc., 834 F.3d 220,229 (2d Cir.
2016) (citations omitted). Typically, the court is called upon to decide whether the parties
agreed to arbitrate and whether the claims at issue fall within the scope of the parties' agreement.

See Holick v. Cellular Sales ofN. Y., LLC, 802 F.3d 391, 394 (2d Cir. 2015).
1. Wolin Account
Defendants' arguments regarding arbitrability of Wolin's claims fail because they do not
provide evidence that Wolin was ever on notice of, much less assented to, the arbitration
provisions. The Anderson affidavit attaches a credit card agreement containing an arbitration
provision that purportedly "governed the Account at the time of the charge-off on June 28,
2015." Absent from the affidavit, however, is any statement or demonstration that that
agreement was ever actually sent to Wolin. Although Anderson states that a change of terms
was sent to Wolin in February 2015, there is no mention within that document of any arbitration
requirements. On this record, the Court cannot conclude that Wolin agreed to arbitrate any
dispute. Accordingly, the motion to compel arbitration of Wolin's claims is denied.
2. Greenwald Account
Defendants' submissions establish that Greenwald was sent written copies of agreements
containing the arbitration provision on several occasions. The agreements contained instructions
for opting out of that provision, but Greenwald did not do so. In addition, the 2012 credit card
agreement specified that as to New York residents, the agreement would not be effective "unless
or until you or an authorized user signs a sales slip or memorandum evidencing a purchase."
Burger Aff: Greenwald, Ex. B. As Greenwald subsequently used the card as late as January 6,
2015, he assented to the terms of the agreement. Based on this record, the Court finds that

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Greenwald agreed to the arbitration provision. Having found that the parties agreed to arbitrate,
the Court turns to the question of whether the claims in this case fall within the scope of the
arbitration clause.
The arbitration provision contained in the agreement states that arbitration is required for
"any dispute or claim between you or any other user of your account, and us, our affiliates,
and/or J.C. Penney Corporation, Inc. if it relates to your account." Where the arbitration clause
is broad, as in this case, "there arises a presumption of arbitrability and arbitration of even a
collateral matter will be ordered if the claim alleged implicates issues of contract construction or
the parties' rights and obligations under it , Louis Dreyfus Negoce S.A. v. Blystad Shipping &
Trading, Inc., 252 F.3d 218, 224 (2d Cir. 2001) (internal quotation marks and citation omitted).
Plaintiff has not put forth any argument warranting a conclusion that the presumption of
arbitrability has been overcome. As Greenwald's claim clearly arises out of defendants' efforts
to recover amounts owed as a result of charges made by him on the credit card, that claim is
covered by the arbitration provision. Defendants' motion to compel arbitration of Greenwald's
claim is granted.

III. DISMISSAL OF CLAIMS OR STAY
Defendants seek dismissal of the arbitrable claims rather than a stay. Plaintiffs have not
addressed this issue. The Court finds dismissal appropriate for the following reasons.
Plaintiffs Wolin and Greenwald jointly commenced this action against defendants
alleging violations of the FDCPA. Although the same defendant sent the letters at issue, the
plaintiffs are unrelated and the letters seek to collect different debts from different transactions
arising under different underlying agreements. Multiple persons may join in a single action as
plaintiffs if"(A) they assert any right to relief jointly, severally, or in the alternative with respect

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to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and
(B) any question of law or fact common to all plaintiffs will arise in the action." FED. R. Civ.P.
20(a)(1). Both elements are required for a proper joinder of plaintiffs. See Moore's Federal
Practice § 21.02[1] (3d ed. 2009) ("Failure to satisfy either prerequisite for permissive joinder
constitutes misjoinder of parties."). The Court may sua sponte sever a party or claim. See FED.
R. Civ.P. 21; Prospect Capital Corp. v. Bender, No. 09 CIV. 826,2009 WL 4907121, at *7, n.9
(S.D.N.Y. Dec. 21, 2009).
As discussed above, there are disparate issues of fact pertaining to the two plaintiffs that
may warrant severance. As the Court questions whether these plaintiffs were properly joined in
the first instance, it concludes that dismissal of Greenwald's claims is appropriate.

IV. CONCLUSION
Defendants' motion to compel arbitration, DE [20], is granted in part and denied in part.
The motion to compel arbitration of Greenwald's claims is granted, and those claims are
dismissed. The motion to compel

arbit~ation

of Wolin's claims is denied.

SO ORDERED.

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ONARD D. WEXLER \...
UNITED STATES DISTRICT JUDGE

Dated: Central Islip, New York
August 24, 2017

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