United States District Court, E.D. Arkansas, Western Division
LAURA K. CAMPBELL, on behalf of herself and all others similarly situated, Plaintiff
MICHAEL A. JACOB, II; JACOB LAW GROUP, PLLC; JEFFERSON CAPITAL SYSTEMS, LLC, Defendants JEANNETTE WELCH, on behalf of herself and all others similarly situated, Plaintiff
MICHAEL A. JACOB, II; JACOB LAW GROUP, PLLC; MIDLAND FUNDING, LLC; MIDLAND CREDIT MANAGEMENT, INC. Defendants LILLIE BROWNLEE, on behalf of herself and all others similarly situated, Plaintiff
MICHAEL A. JACOB, II; JACOB LAW GROUP, PLLC; MIDLAND FUNDING, LLC; MIDLAND CREDIT MANAGEMENT, INC. Defendants BETTY JOHNSON, on behalf of herself and all others similarly situated, Plaintiff
MICHAEL A. JACOB, II; JACOB LAW GROUP, PLLC; MIDLAND FUNDING, LLC; MIDLAND CREDIT MANAGEMENT, INC. Defendants.
M. Moody Jr, United States District Judge.
is the motion to compel arbitration and to strike class
allegations of Plaintiff Betty Johnson filed on behalf of
Defendants Midland Funding LLC and Midland Credit Management,
Inc. (collectively “Midland”). (Docket # 76).
Defendants Michael A. Jacob, II and Jacob Law Group, PLLC
(collectively “JLG”) have joined the motion and
filed a supporting brief. (Docket # 84 and 85). Plaintiff has
filed a response and Defendants have filed replies. For the
reasons stated herein, the motion is GRANTED.
Johnson filed this action alleging that Defendants Michael A.
Jacob, II, Jacob Law Group, PLLC (“JLG”), Midland
Funding, LLC (“Midland Funding”) and Midland
Credit Management, Inc. (“MCM”) attempted to
collect consumer debts from her and putative class members
through standardized, form debt collection complaints filed
in Arkansas state courts that fraudulently and falsely
averred that Midland Funding LLC “holds in due course a
claim. . . pursuant to a defaulted Citibank N.A. (Citibank)
credit card account.” Plaintiff asserts that Midland is
not a holder in due course of Citibank accounts and that this
representation violates the Fair Debt Collection Practices
Act (“FDCPA”), 15 U.S.C §1692 et seq. and
the Arkansas Fair Debt Collection Practices Act
(“AFDCA”), Ark. Code Ann. §17-24-501 et seq.
about July 30, 2014, Plaintiff Johnson opened a Citibank
Sears credit card account with an account number ending in
876 (“the Account”). In 2016, the card agreement
governing Plaintiff's account was amended and a copy was
mailed to her. Plaintiff made purchases using the credit
card. Plaintiff failed to make the required payments on the
Account and on February 6, 2017, the account was charged-off.
Cardholder Agreement is governed by South Dakota law and
contains the following arbitration provision ("the
You or we may arbitrate any claim, dispute or controversy
between you and us arising out of or related to your account,
a previous related account or our relationship (called
If arbitration is chosen by any party, neither you
nor we will have the right to litigate that Claim in court or
have a jury trial on that Claim.
Except as stated below, all Claims are subject to
arbitration. . . . This also includes Claims made by or
against anyone connected with us or you or claiming through
us or you, or by someone making a claim through us or you,
such as a co-applicant, authorized user, employee, agent,
representative or an affiliated/parent/subsidiary company.
(ECF 76-4, p. 17).
Arbitration Provision also contains the following language in
bold and all capital letters: “PLEASE READ THIS
PROVISION OF THE AGREEMENT CAREFULLY. THIS SECTION PROVIDES
THAT DISPUTES MAY BE RESOLVED BY BINDING ARBITRATION.
ARBITRATION REPLACES THE RIGHT TO GO TO COURT, HAVE A JURY
TRIAL OR INITIATE OR PARTICIPATE IN A CLASS ACTION. IN
ARBITRATION, DISPUTES ARE RESOLVED BY AN ARBITRATOR, NOT A
JUDGE OR JURY. ARBITRATION PROCEDURES ARE SIMPLER AND MORE
LIMITED THAN IN COURT. THIS ARBITRATION PROVISION IS GOVERNED
BY THE FEDERAL ARBITRATION ACT (FAA), AND SHALL BE
INTERPRETED IN THE BROADEST WAY THE LAW WILL ALLOW.”
(ECF 76-4, p. 17). Plaintiff does not claim to have rejected
the Arbitration Provision. However, Plaintiff argues that the
2016 Cardholder Agreement, from which the above language is
quoted, is more narrowly written than the 2012 Cardholder
Agreement and specifically excludes the references to claims
made by predecessors, successors or assignees in the
definition of claims subject to arbitration. Plaintiff
contends that the omission of assignees, successors and their
agents from the arbitration provision precludes those persons
from enforcing the arbitration agreement.
April 2017, Midland Funding LLC purchased the Account from
Citibank as part of a portfolio of charged-off debts.
Citibank sold and Midland acquired all “rights title
and interest of the Bank in and to the Account.” (ECF
#81, p. 4). Defendants argue that the assignment of
Citibank's right, title, and interest in the Account was
expressly contemplated by the Cardholder Agreement which
states: "Assignment. We may assign any
or all of our rights and obligations under this Agreement to
a third party.” (ECF #76-4, p. 19). Defendants argue
this assignment included the assignment of the right to
arbitration. Defendants move to compel arbitration and to
strike the class allegations. Plaintiff disputes that the
right to arbitration was transferred to Midland and opposes
2 of the Federal Arbitration Act (FAA) states that an
agreement to arbitrate “shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C.
§ 2. This provision reflects a liberal federal policy
favoring arbitration. AT & T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 (2011). Because
“arbitration is a matter of contract, ....courts must
rigorously enforce arbitration agreements according to their
terms, ” American Exp. Co. v. Italian Colors
Rest., 570 U.S. 228, 233 (2013) (internal quotations and
citation omitted), including requirements to pursue claims
through individual arbitration. Epic Systems Corp. v.
Lewis, 138 S.Ct. 1612, 1621 (2018). Any doubts
concerning the scope of arbitrable issues should be resolved
in favor of arbitration. Moses H. Cone Mem'l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).
presented with matters outside the pleadings, the Eighth
Circuit Court of Appeals has concluded that a motion to
compel arbitration can be properly analyzed under Rule 56 of
the Federal Rules of Civil Procedure. City of Benkelman,
Nebraska v. Baseline Eng'g Corp., 867 F.3d 875, 881
(8th Cir. 2017). The Eighth Circuit set out the burden of the
parties in ...