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A federal district court in Wisconsin confirmed an arbitration award in favor of credit card issuer because card holder did not bring his validity and arbitrability challenges in a timely fashion.
In FIA Card Services, N.A. v. Klinzing, No. 07-cv-704-bbc, 2008 WL 4103880 (W.D. Wis. Aug. 29, 2008), FIA issued Klinzing a credit card. The cardholder's agreement included an arbitration agreement. Amendments to the arbitration agreement, including new terms and an opportunity to opt out, were included in the monthly account statement.
Klinzing defaulted on his credit card payments. In response, FIA submitted the account dispute to the National Arbitration Forum (FORUM) for arbitral resolution. An arbitration award was issued in favor of FIA. However, the award was vacated by a circuit court for improper collection procedures.
Again, FIA filed an arbitration claim with the FORUM. Klinzing objected and argued that res judicata barred re-arbitration of the claim. The arbitrator determined that the issue was arbitrable and entered an award in favor of FIA.
Following, FIA moved to confirm the arbitration award. Klinzing argued that Wisconsin common law and the Wisconsin Consumer Act protected him from any award confirmation under the Federal Arbitration Act (FAA). The Court rejected this argument.
The FAA states that if the adverse party does not bring a timely motion to challenge the arbitration award, the court must enter judgment on the award once the prevailing party seeks confirmation. Klinzing never attempted to challenge the arbitration award within the statutory time period, but now challenged the validity of the arbitration agreement itself.
The Court stated that it was too late for Klinzing to challenge the existence of the agreement in court, noting he should have raised these issues before the arbitrator. In the absence of a timely motion, the Court found it could not consider these issues. Accordingly, the Court confirmed the arbitration award.
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