In denying a motion to dismiss, a federal district court held that a debt purchaser who failed to provide an assignment or contract evidencing an assignment of all contractual rights did not acquire the assignor’s rights to enforce a class action waiver provision.

In Buford v. Palisades Collection, LLC, No. 07 C 4974, 2008 WL 2009885 (N.D. Ill. May 9, 2008), Buford brought a class action lawsuit against Palisades, alleging that Palisades purchased consumer debts from AT&T and sued the consumers more than two years after the debt accrued in violation of 47 U.S.C. § 415 of the Fair Debt Collection Practices Act.

Palisades moved to dismiss, arguing that the consumers waived their right to sue Palisades on a class basis because of a class action waiver provision in the contracts that the consumers signed with AT&T. Palisades argued that since AT&T sold its rights to the consumer debts to Palisades, Palisades had the same contractual rights as AT&T would have had, including the right to enforce the class action waiver provision.

The Court disagreed, holding that it was not at all clear that the class action waiver provisions were included in AT&T’s sale to Palisades. The Court noted that Palisades did not provide the Court with an assignment or purchase contract between Palisades and AT&T to clarify whether Palisades purchased all or only part of AT&T’s agreement with the consumers.

The Court held that because "Palisades is a debt collector, but not a wireless services provider, AT&T’s sale or assignment to Palisades would appear to be only partial, having to do with payments and charges, but not wireless service and usage." Thus, the Court denied Palisades’ motion to dismiss because Palisades did not prove that it acquired the class action waiver provisions when it purchased AT&T’s consumer debts.