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In Johnston v. Arrow Financial Services, LLC, No. 06 C 0013, 2006 WL 2710663 (N.D. Ill. Sept. 15, 2006), a federal district court in Illinois held that a Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §1692 et seq., claim related to a debt collection agency’s alleged correspondence was covered by an arbitration clause between the consumer and her bank.
Johnston, along with several other Capital One Bank consumers, purportedly received an amendment to her cardholder agreement that added a broad arbitration clause. After Johnston defaulted under the terms of her agreement, Capital One deployed Arrow Financial Services (Arrow), a debt collection agency, to collect Johnston’s debt.
Johnston sued Arrow, claiming that they had sent debt collection letters using “Capital One” letterhead, in an effort to induce consumers to call Arrow. Arrow denied that they had sent the letters, claiming that Capital One acted on its own behalf. When Arrow moved to compel arbitration, Johnston objected on the grounds that the claims were not arbitrable, and that Arrow was a non-signatory to the Johnston-Capital One arbitration agreement.
The Court compelled arbitration, finding the claims to be easily within the scope of the arbitration agreement. There was no compelling evidence that Arrow had sent the debt collection letters. Even if they had, however, Arrow still had the power to compel arbitration under the doctrine of “equitable estoppel.” Grigson v. Creative Artists Agency LLC, 210 F.3d 524, 527 (5th Cir. 2000). A non-signatory to an arbitration agreement may still be bound by the agreement when the “signatory raises allegations of…substantially interdependent and concerted misconduct by both the non-signatory and one or more of the signatories to the contract.” Hoffman v. Deloitte & Touche, LLP, 143 F.Supp.2d 95, 1004 (N.D.Ill. 2001), quoting MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir. 1999). Since Johnston’s claims alleged such conduct between Arrow and Capital One, arbitration of her claims was appropriate, regardless of which party actually sent the debt collection letters.
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