In early March, several banks and debt collectors filed a brief in the
Second Circuit that asked the court to dismiss a case brought by consumers
in a debt collection proposed class action on the grounds that the plaintiffs
did not go to arbitration as mandated by the District Court. The case
was dismissed by United States District Court previously. The consumers
appealed the District Courts Decision seeking to overturn orders that
were entered against them before the arbitration order was put in place.
The defendants argue that allowing the plaintiffs to continue their appeal
would set a bad precedent and send a bad message to the debt collection market.
The case began in September 2012, when claims from 15 named plaintiffs
were brought in the United States District Court for the Southern District
of New York. These claims were brought against banks including American
Express Co., GE Capital Consumer Lending Inc., JPMorgan Chase, and Citibank.
The plaintiffs alleged that these banks had worked with several debt collection
firms and debt buyers, including Midland Funding LLC, Asset Acceptance
LLC, and Portfolio Recovery Associates LLC, to unlawfully obtain thousands
of judgments. The plaintiffs also alleged that the debt buyers used false
affidavits, misleading evidence, and improper litigation tactics while
attempting to collect on these delinquent debts.
The plaintiffs alleged that these banks and debt collection firms violated
the Fair Debt Collection Practices Act, the Racketeer Influenced and Corrupt
Organizations Act, and their due process rights. The plaintiffs’
claims were rejected in 2013 because the claims asserted were disallowed
under law, time-barred, insufficiently backed, or unclear. The plaintiffs
were permitted to refile their case. However, the parties were ordered
to attend arbitration and the plaintiffs refused to attend. The defendants
defense to the appeal is that this refusal of arbitration should be enough
to warrant a dismissal.