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A federal district court in Florida awarded damages for non-payment of credit card debt caused by sham arbitration awards that the National Arbitration Council (NAC) issued to cardholders.
In Citibank (South Dakota) N.A. v. National Arbitration Council, Inc., Nos. 3:04-cv-1076-J-32MCR, 3:04-cv-1205-J-20MCR, 2007 WL 106565 (M.D. Fla. Jan. 9, 2007), the Court held that Chase Manhattan Bank ("Chase") successfully proved its entitlement to a majority of the nearly half-million dollars in damages it was seeking.
Relying heavily on the testimony of a Chase financial officer in charge of managing and forecasting recoveries on delinquent accounts, the Court held that Chase easily met the "reasonable basis" standard to justify an award of over $307,000 in non-payments. The damages resulted from NAC falsely telling cardholders that posting a final $10 payment to Chase would absolve them of all debt.
However, the Court refused to grant Chase's claim of nearly $200,000 in "suspicious charges" damages. Noting the speculative nature of trying to distinguish the "suspicious" from the normal, the Court refused to award damages for what Chase deemed to be unusual charges made by customers immediately prior to making their "final" $10 payment.
These damages stem from an earlier case, Citibank (South Dakota) N.A. v. National Arbitration Council, Inc., Nos. 3:04-cv-1076-J-32MCR, 3:04-cv-1205-J-20MCR, 2006 WL 2691528 (M.D. Fla. Sept. 19, 2006), in which the court awarded summary judgment in favor of Chase and Citibank on claims of tortuous interference and violations of unfair trade practice regulations against NAC.
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