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Lillegard v. Blatt, Hasenmiller, Leibsker & Moore, LLC

United States District Court, N.D. Illinois, Eastern Division

May 11, 2017

JANE BISHOP LILLEGARD, Individually and on behalf of a class, Plaintiff,


          JOHN Z. LEE United States District Judge.

         Plaintiff Jane Bishop Lillegard (“Plaintiff”) brought this action against Defendants Blatt, Hasenmiller, Leibsker & Moore, LLC (“Blatt”) and Unifund CCR, LLC (“Unifund”) (together, “Defendants”) alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq. After amending their affirmative defenses to include their position that Plaintiff's claims are subject to arbitration, Defendants have moved to compel arbitration. For the reasons that follow, Defendants' motion [52] is denied without prejudice.

         Factual and Procedural Background

         In 2006, Plaintiff opened a credit card account with Citibank, N.A. (“Citibank”). See Compl. ¶ 8, ECF No. 1; Defs.' Mem. Supp. Mot. Compel Arb. 2, ECF No. 53. Due to her financial circumstances, she could not fulfill her obligations under the account, and it went into default. Compl. ¶ 9. According to Defendants, Citibank thereafter sold Plaintiff's debt to Pilot Receivables Management, LLC (“Pilot”), who in turn sold Plaintiff's debt to Unifund. Defs.' Mem. at 2; see Compl. ¶ 10. Plaintiff alleges that Unifund, along with Blatt, which Unifund retained to collect the debt, thereafter sent her correspondence for the purpose of collecting the debt and contacted her directly about the debt, despite knowing she was represented by an attorney. Compl. ¶¶ 13-16, 22, 26-30. Plaintiff maintains that these actions violated the FDCPA. Id. ¶¶ 33-52.

         Plaintiff filed this suit on August 15, 2016. Unifund answered on September 28, 2016, and Blatt on October 5, 2016. Neither listed arbitration as an affirmative defense. Unifund's Answer, ECF No. 14; Blatt's Answer, ECF No. 18. On January 11, 2017, the Court granted the parties' agreed motion to extend the deadline for amended pleadings, setting February 9, 2017, as the new deadline. Order of Jan. 11, 2017, ECF No. 36. Defendants then filed motions to amend their affirmative defenses on February 9, each stating that Plaintiff's claims are subject to arbitration pursuant to an agreement with Citibank. Blatt's Mot. File Am. Affirmative Defenses, Ex. A, ECF No. 45-1; Unifund's Mot. File Am. Affirmative Defenses, Ex. A, ECF No. 47-1. Defendants claim that Plaintiff's credit card account with Citibank was subject to terms and conditions issued by Citibank, one provision of which permitted Citibank to elect mandatory arbitration for claims related to the account. Defs.' Mem. at 1-2. Defendants claim that “[t]he arbitration provision survives the transfer, sale, or assignment of the Account, ” such that they can invoke it in this case. Id. at 3-4.

         Legal Standard

         The Federal Arbitration Act mandates that courts enforce valid, written arbitration agreements. Tinder v. Pinkerton Sec., 305 F.3d 728, 733 (7th Cir. 2002) (citing 9 U.S.C. § 2). This mandate reflects a federal policy that favors arbitration and “places arbitration agreements on equal footing with all other contracts.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006). Courts are responsible for deciding whether an agreement to arbitrate exists before ordering arbitration. Janiga v. Questar Capital Corp., 615 F.3d 735, 741-42 (7th Cir. 2010). Once a court is satisfied that an agreement to arbitrate exists, the FAA instructs the court to stay proceedings on issues subject to arbitration and provides a mechanism for parties to request that the court compel arbitration pursuant to the agreement. 9 U.S.C. §§ 3-4; see also Tinder, 305 F.3d at 733. A party opposing a motion to compel arbitration bears the burden of identifying a triable issue of fact as to the existence of the purported arbitration agreement. Tinder, 305 F.3d at 735. The opponent's evidentiary burden is akin to that of a party opposing summary judgment under Federal Rule of Civil Procedure 56. Id. “[A] party cannot avoid compelled arbitration by generally denying the facts upon which the right to arbitration rests; the party must identify specific evidence in the record demonstrating a material factual dispute for trial.” Id. The Court must believe the evidence of the party opposing arbitration and draw all justifiable inferences in its favor. Id. If the party opposing arbitration identifies a genuine issue of fact as to whether an arbitration agreement was formed, “the court shall proceed summarily to the trial thereof.” 9 U.S.C. § 4; see Tinder, 305 F.3d at 735.


         Plaintiff argues that this Court should deny Defendants' motion to compel arbitration for two reasons. First, she contends that Defendants have waived their ability to seek arbitration by their conduct in this litigation. Second, she raises various issues as to the existence of the arbitration agreement that Defendants have posited. The Court will address each of these arguments in turn.

         I. Waiver

         Plaintiff first argues that Defendants have waived their ability to seek arbitration by their conduct in this litigation. A number of obstacles, however, stand in the way of this argument.

         First, the Supreme Court-albeit in general terms-has repeatedly stated that waiver is a defense to arbitration to be decided (at least presumptively) by an arbitrator, and not by a court. BG Grp., PLC v. Republic of Argentina, 134 S.Ct. 1198, 1207 (2014) (observing that “courts presume that the parties intend arbitrators, not courts, to decide disputes about the meaning and application of particular procedural preconditions for the use of arbitration, ” and listing waiver as one such “procedural matter”); Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 85 (2002) (same); see Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983) (“The [Federal] Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.”). If such a presumption applies, there is no reason to think it should be rebutted here. This is particularly so in light of the fact that the arbitration provision in the Citibank terms and conditions that Defendants have produced subjects “[c]laims regarding the application, enforceability, or interpretation of this Agreement and this arbitration provision” to arbitration. Defs.' Mem., Ex. 1-D, at 57, ECF No. 57-1.

         Granted, some courts have construed the Supreme Court's statements narrowly, interpreting them to permit courts to decide the issue of whether litigation conduct waives the right to seek arbitration. E.g., HTG Capital Partners, LLC v. Doe, No. 15 C 02129, 2016 WL 612861, at *4-5 (N.D. Ill. Feb. 16, 2016). And, while “no Seventh Circuit case has explicitly decided who should decide this type of waiver question, in several instances the Seventh Circuit has reviewed a district-court decision deciding the waiver issue and has not noted any problem with the district court being the decision-maker.” Id. at *5 (collecting Seventh Circuit cases reviewing district courts' findings of waiver by litigation conduct).

         But, even if this Court could decide that Defendants waived their right to arbitration by their conduct in this litigation, it would find they have not. The Seventh Circuit “recognize[s] a strong federal policy favoring arbitration and that waiver of arbitration is not lightly to be inferred.” Midwest Window Sys., Inc. v. Amcor Indus., Inc., 630 F.2d 535, 536 (7th Cir. 1980). To conclude that Defendants have waived their right to arbitration by their conduct in this litigation, the Court “must determine that, considering the totality of the circumstances, [Defendants] acted inconsistently with the right to arbitrate.” Kawasaki Heavy Indus., Ltd. v. Bombardier Recreational Prod., Inc., 660 F.3d 988, 994 (7th Cir. 2011). “While several factors are considered in the waiver analysis, diligence or the lack thereof should weigh heavily in the decision.” Id. (citing Cabinetree of Wis. v. Kraftmaid Cabinetry, 50 F.3d 388, 391 (7th Cir. 1995)). Other factors to consider include “whether the allegedly defaulting party participated in litigation, substantially delayed its request for arbitration, or participated in discovery.” Id. (citing St. Mary's Med. Ctr. of Evansville, ...

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