United States District Court, S.D. Indiana, Indianapolis Division
ANTHONY MINES, individually and on behalf of others similarly situated, Plaintiff,
GALAXY INTERNATIONAL PURCHASING, LLC, a Nevada limited liability company, GLOBAL CREDIT & COLLECTION CORP., a Delaware corporation, Defendants.
REPORT AND RECOMMENDATION
L. PRYOR, UNITED STATES MAGISTRATE JUDGE
matter comes before the Court on Defendants' Motion to
Compel Arbitration (Dkt. 26). The matter has been referred to
the Undersigned for a report and recommendation.
December 2017, Plaintiff, Anthony Mines (“Mr.
Mines”), individually and on behalf of others similarly
situated, filed a Class Action Complaint against the
Defendants, Global Credit & Collection Corporation
(“Global”) and Galaxy International Purchasing,
LLC (“Galaxy”), alleging that they failed to
identify the current creditor of his debt and the putative
class members' debts in violation of the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692 et seq. [Dkt. 1 at 4.]
April 5, 2018, the Defendants filed the present motion to
compel arbitration and stay this action pending arbitration.
[Dkt. 26.] Plaintiff opposes Defendants' motion to compel
on three grounds: 1) the Defendants have not provided
sufficient evidence to show that any contract to which Mr.
Mines was a party permitted the right to force binding
arbitration to be assigned; 2) even if there is an
arbitration provision, it does not apply to his FDCPA claim;
and 3) any right to arbitration was discharged through Mr.
Mines's bankruptcy proceedings. [Dkt. 41 at 1-2].
The Undersigned will address each in turn.
Credit Agreement Documents
Mines applied online for a Milestone Gold MasterCard credit
card through Mid-America Bank & Trust Company on May 12,
2015. [Dkt. 29 at 10.] Upon pre-qualification, Mr. Mines was
shown Mid-America's Terms and Conditions (the
“Terms and Conditions”) that contains an
arbitration provision that states:
Applicability of Arbitration Disputes
The Arbitration of Disputes Provision set forth in this
document and the Cardholder Agreement does not apply to
ARBITRATION OF DISPUTES PROVISION PLEASE READ THIS
ARBITRATION OF DISPUTES PROVISION CAREFULLY. UNLESS YOU SEND
U.S. THE REJECTION NOTICE DESCRIBED BELOW, THIS PROVISION
WILL APPLY TO YOUR ACCOUNT, AND MOST DISPUTES BETWEEN YOU AND
U.S. WILL BE SUBJECT TO INDIVIDUAL ARBITRATION. THIS MEANS
THAT: (1) NEITHER A COURT NOR A JURY WILL RESOLVE ANY SUCH
DISPUTE; (2) YOU WILL NOT BE ABLE TO PARTICIPATE IN A CLASS
ACTION OR SIMILAR PROCEEDING; (3) LESS INFORMATION WILL
AVAILABLE; AND (4) APPEAL RIGHTS WILL BE
[Dkt. 29 at 62.] The Terms and Conditions also state:
Arbitration of Disputes. The Cardholder
Agreement, which we will send to you if approved, provides
that you and we will resolve claims on your Account by
binding arbitration as opposed to in court with a judge or
jury. You may opt out of this arbitration provision within 60
days after the opening date of your Account. Your Cardholder
Agreement will explain how you may do so. Your Cardholder
Agreement terms will also provide that you waive the right to
pursue class actions against us.
[Id. at 63.] Mr. Mines checked the box in the
application portal, thereby acknowledging that he had
reviewed these terms and agreed to them. [Id. at
14, 2015, Mid-America opened Mr. Mines's Account (the
“Account”). [Dkt. 29 at 2.] The Account had a
credit limit of $300 and an annual fee of $75. [Id.
at 12, 102.] Defendants claim that Mid-America mailed Mr.
Mines the Cardholder Agreement in May 2015. [Id. at
Cardholder Agreement provides that it is binding from
“the earlier of (i) the date you sign or otherwise
submit an Application that is approved by us, or (ii) the
first date that we extend credit to you on your Account, as
evidenced by a signed sales slip or memorandum, a Cash
Advance transaction, or otherwise.” [Id. at
6.] It also includes the following arbitration provision:
Arbitration of Disputes Provision
PLEASE READ THIS ARBITRATION OF DISPUTES PROVISION
CAREFULLY. UNLESS YOU SEND U.S. THE REJECTION NOTICE
DESCRIBED BELOW, THIS PROVISION WILL APPLY TO YOUR ACCOUNT,
AND MOST DISPUTES BETWEEN YOU AND U.S. WILL BE SUBJECT TO
INDIVIDUAL ARBITRATION. THIS MEANS THAT: (1) NEITHER A COURT
NOR A JURY WILL RESOLVE ANY SUCH DISPUTE; (2) YOU WILL NOT BE
ABLE TO PARTICIPATE IN A CLASS ACTION OR SIMILAR PROCEEDING;
(3) LESS INFORMATION WILL BE AVAILABLE; AND (4) APPEAL RIGHTS
WILL BE LIMITED.
This provision replaces any existing arbitration
provision with us and will stay in force no matter what
happens to your Account, including the closing of your
Except as expressly provided below, you and we must
arbitrate individually, by binding arbitration under the
Federal Arbitration Act ("FAA"), any dispute or
claim between you, any joint cardholder and/or Authorized
User, on the one hand, and us, our affiliates and agents, on
the other hand, if the dispute claim arises out of or is
related to (a) this Agreement (including without limitation,
any dispute over validity of this Agreement to arbitrate
disputes or of this entire Agreement), or (b) your Account,
or (c) any relationship resulting from this Agreement, or (d)
any insurance or other service related to your Account, or
(e) any other agreement related to your Account (including
prior agreements) or any such service, or (f) breach of this
Agreement or any such agreement, whether based on statute,
contract, tort or any other legal theory (any
"Claim"). However, we will not require you to
arbitrate: (1) any individual Claims in small claims court or
your state's equivalent court, so long as it remains an
individual case in that court; or (2) any Claim by us that
only involves our efforts to collect money you owe us.
However, if you respond to a collection lawsuit by claiming
that we engaged in wrongdoing, we may require you to
. . . .
Judgment on the arbitration award may be entered in any court
having jurisdiction. Any dispute regarding whether a
particular controversy is subject to arbitration will be
decided by the arbitrator(s). If any part of the damages or
relief requested is not expressly stated as a dollar amount,
the controversy will be a Claim that is subject to
arbitration. You and we acknowledge and agree that the
transactions contemplated by this Agreement, and any
controversy that may arise under or relate to this Agreement,
your Account, or the services or other agreements described
above, involve "commerce" as that term is defined
and used in the FAA.
If you or we elect to arbitrate a claim, the electing party
must notify the other party in writing. The notice can be
given after the beginning of a lawsuit and can be given in
papers filed in the lawsuit. Otherwise, your notice must be
send to Bankcard Services, Attn: Arbitration Demand, P.O. Box
4477, Beaverton, Oregon 97076-4477, and our notice must be
sent to the most recent address for you in our files. The
arbitration will be administered by the American Arbitration
Association (the "AAA") under its rules in effect
at the time an arbitration is commenced that are applicable
to the resolution of consumer disputes (the "Arbitration
Rules"). We will tell you how to contact the AAA and how
to get a copy of the Arbitration Rules without cost if you
ask us in writing to do so. The Arbitration Rules permit you
to request deferral or reduction of the administrative fees
of arbitration if paying them would cause you a hardship. In
addition, if you ask us in writing, we will consider your
request to pay any or all or your costs of arbitration.
. . . .
If any provision of this Section regarding arbitration of
disputes shall be deemed to be unenforceable, the remainder
of this Section shall be given full force and effect.
However, if the provision precluding class, representative or
private attorney general Claims in arbitration is deemed
unenforceable, this this entire Arbitration Agreement shall
be void and of no force and effect.
You may reject this provision, in which case only a court may
be used to resolve any dispute or claim. Rejection will not
affect any other aspect of the Cardholder Agreement.
To reject this Provision, you must sent [sic] us a notice
within 60 days after you open your Account or we first
provide you with a right to reject this Provision. This
notice must include your name, address and Account number and
be mailed to Bankcard Services, Attn: Arbitration Provision,
P.O. Box 4477, Beaverton, Oregon 97076-4477. This is the only
way you can reject this Provision.
[Dkt. 29 at 100.]
Cardholder Agreement reflected the terms governing Mr.
Mines's Account. On May 23, 2015, Mr. Mines maxed-out his
credit card with a one-time $225 purchase at a Wal-Mart
store. [Dkt. 29 at 102.] After the purchase, Mr. Mines had no
remaining available credit. [Id. at 102.] Mr. Mines
failed to make any payments towards the Account balance and,
in December 2015, the Account was “charged off, ”
i.e., closed. [Id. at 28, 102-117.]
Chain of Ownership
Mid-America charged off Mr. Mines's Account, it sold the
Account to Genesis BankCard Services, Inc.
(“Genesis”). [Dkt. 29 at 3.] The sale
was made pursuant to Mid-America and Genesis's December
7, 2010 Receivables Sale Agreement (the “Mid-America
Sale”). [Id. at 3, 22-25.] In section 35 of
the Mid-America Sale, Mid-America agreed to “transfer,
assign, set-over, and otherwise convey to Genesis, for no
fee, all Loan Accounts opened pursuant to the Program that
have been charged-off by Bank in accordance with Bank's
policies and procedures regarding charge-offs.”
[Id. at 24-25.]
September 26, 2014, Genesis and Defendant Galaxy entered into
a Receivables Sale Agreement. [Dkt. 29 at 3, 27-54.] Pursuant
to this sale, Genesis agreed to “sell, assign and
transfer all right, title” and otherwise convey some
loan accounts to Galaxy, including Mr. Mines's Account.
[Id. at 54.] Thereafter, Defendant Galaxy hired
Defendant Global to collect the debt owed on Mr. Mines's
credit card. [Dkt. 28 at 2.]
February 28, 2017, Global sent a letter to Mr. Mines
attempting to collect the debt. [Dkt. 1-3.] The letter
identified the original creditor as Mid-America and the
current creditor as Galaxy and stated that Global was
“authorized by [its] client to collect the outstanding
amount owed to them.” [Dkt. 1-3.] Mr. Mines claims that
this letter violated Section 1692g(a)(2) of the FDCPA by
failing to effectively identify the current creditor of the
debt because the letter ...