On December 2, Judge Valerie Caproni of the Southern District of New York ruled that a class action suit alleging violations of the Fair Debt Collection Practices Act must be arbitrated. The class plaintiff, Alicia Zambrana, applied for and received a Best Buy-branded credit card from Household Bank N.A. (“HSBC”). While the court could not determine when Zambrana activated the card, it determined that Zambrana entered into a cardholder agreement, at the latest, by 2003. The card agreement contained an arbitration clause.
In May 2010, HSBC allegedly sent Zambrana an amended cardholder agreement partly in response to new requirements imposed by the Credit Card Accountability Responsibility Disclosure Act. This 2010 agreement contained a similar arbitration clause, but allowed cardholders to opt out of arbitration if HSBC received an opt out notice within thirty days. Zambrana did not opt out of the arbitration clause and continued to use the Best Buy card until 2011.
Zambrana’s credit card account was assigned a number of times to different creditors, including Capital One. When Zambrana defaulted on her debt in mid-2012, Capital One charged off the account. After several assignments, Absolute Resolutions VI, LLC filed suit against Zambrana to collect the debt in New York state court through its attorneys, Pressler & Pressler, LLP. The case is currently pending. In response, Zambrana filed the instant action in federal court against a number of defendants, including Pressler & Pressler, individual partners at the firm, and a number of various creditor assignees. Zambrana claims that the state court action is an abusive debt collection practice in violation of the FDCPA because Absolute Resolutions’ complaint contains false statements and omissions.
The various defendants moved to stay the federal court action and to compel arbitration. Zambrana opposed the motion with, as the court termed it, a “heads I win, tails you lose” argument. Zambrana argued that the 2010 agreement superseded the 2003 agreement, but that the defendants had not proven that HSBC sent the agreement to her specifically. Further, Zambrana contended that her failure to opt out of arbitration did not matter, as the defendants had not proven that HSBC sent her the 2010 agreement.
The court accepted Zambrana’s argument that the defendants had not proven that she received notice of the 2010 agreement, but found that the 2003 agreement still obligated Zambrana to arbitrate. “The failure to prove mailing or receipt of the 2010 agreement is of no moment, however, because even if [Zambrana] never received the 2010 Agreement, she continues to be bound by the arbitration provision in the 2003 Agreement.” The court also rejected Zambrana’s argument that the defendants had not proven a complete chain of title establishing ownership of her debt. As a result, the court concluded that the defendants could enforce the arbitration clause, despite their status as assignees or agents of assignees. The court granted the defendants’ motion in full and stayed the case pending arbitration.
The case is Zambrana v. Pressler & Pressler, LLP et al., No. 16-CV-2907 (VEC).