United States District Court, N.D. Illinois, Eastern Division
DONALD JOSEPH SOUCY, JR., on behalf of himself and others similarly situated, Plaintiff,
CAPITAL MANAGEMENT SERVICES, L.P. and WORLDWIDE ASSET PURCHASING II, LLC, Defendants.
MEMORANDUM OPINION AND ORDER
JAMES F. HOLDERMAN, District Judge.
On August 4, 2014, plaintiff Donald Joseph Soucy, Jr. ("Soucy") filed this putative class action against defendants Capital Management Services, L.P. ("CMS") and Worldwide Asset Purchasing II, LLC ("WAP II") (collectively, "Defendants"), alleging that Defendants violated various provisions of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., when Defendants "implied" they had a legal right to collect and share nonpublic information about Soucy without his prior consent, including information about a debt Soucy currently owes to WAP II. (Dkt. No. 1 ("Compl.") ¶¶ 45-60.) Defendants have moved (Dkt. No. 23) to compel arbitration pursuant to an agreement between Soucy and the debt's originator, Bank of America ("BOA"). Defendants' memorandum further requests an order dismissing Soucy's lawsuit (Dkt. No. 24 ("Defs.' Mem.") at 10), which the court construes as a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(3) for improper venue. For the reasons explained below, Defendants' motion (Dkt. No. 23) is granted and the case is dismissed.
The debt giving rise to this lawsuit originates from a credit card Soucy obtained from BOA on June 10, 2004. (Compl. ¶ 13; Dkt. No. 24-1 ("Kaminski Decl.") ¶ 6.) When BOA sent Soucy his new card in 2004, the mailing envelope contained a cardholder agreement (Kaminski Decl. Ex. A ("Cardholder Agreement")) setting forth the terms of Soucy's account. The Cardholder Agreement warned that any use of the credit card or failure to cancel the card within three days constituted acceptance of the terms, (Cardholder Agreement § 1.1.), and further warned that BOA reserved the right to change, add, or delete any term condition, service or feature of Soucy's account ( Id. § 7.14). Soucy accepted the terms of the Cardholder Agreement by using his credit card to accumulate a $41, 596.11 balance, which he subsequently failed to repay. (Compl. ¶¶ 12-14.) On March 19, 2007, BOA "charged off [Soucy's account] for non-payment" and sold it to WAP II. (Kaminski Decl. ¶ 11; Dkt. No. 24-2 ("Lundberg Decl.") ¶ 6.)
Soucy's Cardholder Agreement also contained an arbitration cause and class action waiver, which stated:
7.19 Arbitration. Any dispute, claim, or controversy ("Claim") by or between you and us (including each other's employees, agents or assigns) arising out of or relating to this Agreement, your Account, or the validity or scope of any provision of this Agreement including this arbitration clause shall, upon election by either you or us, be resolved by binding arbitration. Arbitration shall take place before a single arbitrator on an individual basis without resort to any form of class action. Arbitration may be selected at any time unless a judgment has been rendered or the other party would suffer substantial prejudice by the delay in demanding arbitration.
* * *
YOU UNDERSTAND AND AGREE THAT IF EITHER YOU OR WE ELECT TO ARBITRATE A CLAIM, THIS ARBITRATION SECTION PRECLUDES YOU AND U.S. FROM HAVING A RIGHT OR OPPORTUNITY TO LITIGATE CLAIMS THROUGH COURT, OR TO PARTICIPATE OR BE REPRESENTED IN LITIGATION FILED IN COURT BY OTHERS. EXCEPT AS OTHERWISE PROVIDED ABOVE, ALL CLAIMS MUST BE RESOLVED THROUGH ARBITRATION IF YOU OR WE ELECT TO ARBITRATE.
(Cardholder Agreement § 7.19) (bold type in original).
On August 11, 2005, while Soucy's BOA credit card remained active, a group of plaintiffs filed a class action lawsuit against BOA and other major card issuers in the United States District Court for the Southern District of New York, alleging that the card issuers had conspired and agreed to implement and maintain mandatory arbitration clauses as a term and condition of sale, the purpose of which was to foreclose cardholders' access to judicial fora and collective remedial action, including class actions. Ross v. Bank of Am., N.A. (USA), No. 05 C 7116 (S.D.N.Y.) (Dkt. No. 1 ¶ 2) (filed in this case as Dkt. No. 26-1 Ex. A at 3). The case was transferred into a multidistrict litigation before Judge William H. Pauley, III.
On October 6, 2009, more than two years after BOA sold Soucy's account to WAP II, Judge Pauley approved "[a] class consisting of all persons holding during the Period in Suit a Credit Card under a United States Cardholder Agreement with the Bank Defendants, " (Dkt. No. 26-2 § 4(a)), where the "Period in Suit means the period from the first Bank Defendant's adoption of an Arbitration Clause in its consumer Credit Card agreement through [February 23, 2010], " (Dkt. No. 26-2 § 2(w)).
On February 23, 2010, nearly three years after BOA sold Soucy's account to WAP II, BOA entered into a settlement agreement with the class in Ross. (Dkt. No. 26-2 ("Settlement Agreement").) As part of the Settlement Agreement, BOA agreed to the following relevant obligations:
Section 3(a). Bank of America will remove any and all Arbitration Clauses and the Class Action Waiver Clauses from its United States Cardholder Agreements by mailing new agreements, change-in-terms notices or other form of notice to (i) all of its Consumer/Small Business Credit Card cardholders who will receive a 2010 annual privacy notice pursuant to 12 C.F.R. § 40.5, and (ii) all cardholders of newly-opened Consumer/Small Business Credit Card accounts who have Arbitration Clauses or Class Action Waiver Clauses in their United States ...