Brown v. Midland Credit Management, Inc.

Background

Shyrine Brown brought a putative class action against Midland Credit Management, Inc. under the Fair Debt Collection Practices Act, a federal law regulating debt-collection practices. Midland moved under the Federal Arbitration Act to compel arbitration. Brown did not dispute that the credit-card account agreement required arbitration of any dispute or claim relating to her account.

The parties’ arguments

Brown argued that Midland could not enforce the arbitration provision because Midland was not a party to the original account agreement. She also argued that her Fair Debt Collection Practices Act claim did not relate to the account. Midland sought an order compelling arbitration and dismissing the complaint in its entirety.

Court’s analysis

The court rejected Brown’s argument about enforcement. The agreement allowed Synchrony Bank, the original counterparty, to sell, assign, or transfer its rights or duties under the agreement or Brown’s account. The court found that Synchrony Bank assigned its rights under the agreement to Midland on or about February 26, 2019, before the events underlying the lawsuit. Applying Utah law, which the parties agreed governed the agreement, the court concluded that Midland stood in Synchrony Bank’s place and could enforce the arbitration provision.

The court also rejected Brown’s argument that her claim fell outside the arbitration clause. The clause broadly covered any dispute or claim relating to the account. The court held that Brown’s claim plainly related to the agreement because it arose from Midland’s efforts to collect a debt incurred in connection with that agreement. The court declined to follow a decision that had refused to compel arbitration of a similar Fair Debt Collection Practices Act claim, concluding that the decision conflicted with binding Supreme Court precedent recognizing that statutory claims may be arbitrated when the claimant can effectively pursue the claim in arbitration.

Ruling and disposition

Judge Jesse M. Furman granted Midland’s motion to compel arbitration. The court stated that it would have stayed the case pending arbitration if Midland had requested a stay, but Midland expressly requested dismissal and Brown did not oppose dismissal. The court therefore dismissed the case, directed the Clerk of Court to terminate the specified docket entries and close the case, and canceled all conferences. The opinion does not state that the dismissal was with or without prejudice.