Wexler v. LVNV Funding, LLC

Background

Wexler alleged that LVNV Funding, LLC and Resurgent Capital Services LP violated the Fair Debt Collection Practices Act through debt-collection conduct involving a Citibank credit-card debt. The defendants moved to compel arbitration, arguing that Wexler’s agreement with Citibank contained an arbitration provision that applied to his claim against them. They relied on alleged transfers of Wexler’s debt from Citibank through several entities to LVNV, along with LVNV’s agreement with Resurgent.

The defendants submitted the Citibank agreement and other materials concerning the alleged transfers. Wexler disputed that LVNV purchased the debt or that Resurgent received any interest or collection rights. He sought four agreements: the agreements for the alleged transfers from Citibank to Sherman Originator III, LLC, from Sherman Originator III, LLC to Sherman Originator LLC, and from Sherman Originator LLC to LVNV, plus the agreement between LVNV and Resurgent concerning collection of the debt.

Legal standard

Federal Rule of Civil Procedure 56(d) allows a court to permit discovery when a party opposing a motion shows by affidavit or declaration that it cannot yet present facts needed to oppose the motion. Courts evaluate motions to compel arbitration under a standard similar to summary judgment, considering relevant evidence beyond the pleadings. The party seeking discovery must show that the requested material is relevant to the defense, not cumulative, and not merely speculative.

Court’s analysis

The court found that the requested agreements were centrally relevant to the arbitration motion. The defendants argued that they were connected with Citibank, were assignees, or were third-party beneficiaries of the Citibank agreement and therefore could enforce its arbitration provision. Wexler needed the agreements to examine those alleged transfers and argue that the arbitration provision did not apply to the defendants.

The court also found that the defendants exclusively possessed the relevant contractual evidence, that no discovery had previously occurred, and that Wexler requested four specific documents rather than making a speculative demand. The agreements could affect the arbitration motion because the defendants might be unable to produce them, or their contents might undermine the defendants’ claimed right to enforce the arbitration provision. The court rejected the defendants’ unsupported argument that Wexler’s single payment through LVNV’s online portal established that the defendants were Citibank’s contractual assignees.

Disposition

The court granted Wexler’s motion to compel discovery. It ordered the defendants to file the four agreements on the docket by November 23, 2022. The defendants’ renewed motion to compel arbitration was due December 2, 2022; Wexler’s opposition was due December 9, 2022; and the defendants’ reply was due December 14, 2022. The court did not decide whether arbitration was required and directed the clerk to terminate the discovery motion and the arbitration motion that had been held in abeyance.