The Supreme Court of Louisiana ruled last month that a debt collector can’t enforce an arbitration award without proof that the consumer agreed to arbitration. The ruling overturned the Court of Appeal’s decision in the case. Public Justice lawyers represented the Defendant, William Weaver, in the case.
The debt collector in this case was seeking over $32,000 from Mr. Weaver. After FIA Card Services (FIA) said that it was entitled to collect on the debt, which Mr. Weaver had allegedly incurred on an MBNA credit card, the National Arbitration Forum (NAF) entered an award for FIA in the full amount sought. As a general rule, the winning party in arbitration has up to one year to go to court and “confirm” the arbitration award. But the losing side usually has only 90 days to “vacate it.”
When FIA sought to confirm the arbitration award in court, it provided only a copy of the award from the NAF, and undated, unsigned, barely legible MBNA credit card contracts that contained no mention of either FIA or Mr. Weaver. The NAF’s involvement was also problematic. In 2009, the for-profit NAF was forced to abandon the consumer arbitration business after a scandal broke out. Historically, the NAF was known to side with creditors in almost every case.
A BusinessWeek investigation found that NAF arbitration awards were often pre-printed with the amount to be awarded to the creditor already filled in. Nonetheless, the trial court in Louisiana confirmed the $32,000 against Mr. Weaver. Louisiana’s First Circuit Court of Appeals affirmed, holding that if a creditor seeks confirmation of an arbitration award and the award is not vacated within 90 days, the trial court can do nothing but approve – even if the creditor failed to show that the consumer ever agreed to arbitration.
But many courts around the country had already ruled that the 90-day limit does not matter unless there is a valid arbitration agreement. The high courts of Arkansas, Montana, Kansas and Idaho reversed NAF awards on this exact issue for this reason. Now Louisiana has followed suit, thanks to the good work of Leslie Bailey and Melanie Hirsch, lawyers from Public Justice and their co-counsel – Steve Conley of Covington, La., Bill Cherbonnier of Greta, La., and Garth Ridge of Baton Rouge, La. Mark Moreau, the Legal Director of Southeast Louisiana Legal Services, filed an amicus brief in support of Mr. Weaver. Incidentally, Ms. Hirsch served as a law clerk several years ago for U.S. District Judge Myron Thompson in Montgomery, Ala.
Source: Public Justice