A party incurring expenses during an arbitration proceeding cannot recover damages for those expenses by asserting federal statutory claims, but must move to vacate or modify the underlying arbitration award, according to a federal district court in Michigan.

In Myles v. Wolpoff & Abramson, LLP, No. 07-CV-12247, 2008 WL 126620 (E.D. Mich. Jan. 14, 2008), Myles alleged that Wolpoff & Abramson (W&A) refused to produce evidence of a signed, written arbitration agreement between the parties as requested during arbitration proceedings. Myles maintained that W&A's conduct resulted in Myles incurring unwarranted attorney's fees during arbitration. Myles sought recovery under the federal Fair Debt Collection Practices Act (FDCPA) and various state statutes. W&A moved for summary judgment of the claims.

The Court summarized Myles's claims as premised on the argument that a written arbitration agreement is not binding on a party unless signed by that party. The Court found that premise unsupported, noting that such an agreement can be binding on a party without his or her signature under the Federal Arbitration Act (FAA).

Furthermore, the Court characterized Myles's federal claim as an "impermissible collateral attack" on the underlying arbitration award. The Court understood that Myles did not wish to challenge the award, since the National Arbitration Forum arbitrator found in his favor. But, according to the Court, Myles could not recover damages for W&A's alleged wrongdoing during the arbitration proceedings by filing an FDCPA action, but instead must move to vacate or modify the underlying award in the manner required by the FAA.

After granting W&A's motion to dismiss the FDCPA claim, the Court dismissed the related state claims without prejudice, exercising its power to refuse supplemental jurisdiction over state claims once all federal claims are dismissed.