"The Fair Debt Collection Practices Act is not going to be gutted by arbitration clauses that were never intended to cover collection activities."
Stamford, CT (PRWEB) May 25, 2011
On the heels of the Supreme Court's decision in AT&T Mobility v. Concepcion, a U.S. District Court has ruled that a consumer can't be forced into arbitration by a debt collection agency trying to collect monies owed by AT&T. In Lucy v. Bay Area Credit Svc LLC, et al., the court ruled that Bay Area Credit Services could not invoke the arbitration clause contained within Teshema Lucy's wireless service agreement with AT&T. According to Lucy's attorney Sergei Lemberg, "In view of the U.S. Supreme Court's decision in AT&T Mobility v. Concepcion, this is excellent news for consumers who are abused by debt collectors. It sends a clear message that the Fair Debt Collection Practices Act is not going to be gutted by arbitration clauses that were never intended to cover collection activities."
In Concepcion, the Supreme Court split 5-4 in favor of AT&T, holding that the Federal Arbitration Act preempted California state law, and that contracts prohibiting consumers from joining a class action suit in an arbitration proceeding are enforceable. In the Lucy decision, the U.S. District Court ruled that a debt collection agency whose agreement with AT&T expressly stated that the agency was not an agent of AT&T could not compel arbitration. According to Lemberg, "Third-party debt collectors can't have it both ways. If they're not agents of the original creditor, they can't hide behind the fine print in service agreements."
The U.S. District Court decision said, in part, "Lucy has fairly asserted that the arbitration clause in the Wireless Service Agreement runs only to AT&T and not to Bay Area Credit. Bay Area Credit was not a signatory to the Wireless Service Agreement. Bay Area Credit was not even among the class of non-signatory entities for which Lucy granted permission to invoke the arbitration clause. Moreover, Bay Area Credit does not have a corporate relationship with AT&T, and Bay Area Credit is not closely affiliated with AT&T. Lucy has not alleged that Bay Area Credit acted in concert with AT&T. Bay Area Credit is not named in the Wireless Service Agreement as having specific duties under that Agreement. Finally, the court has not been presented with any evidence that Lucy treated Bay Area Credit and AT&T interchangeably."
Lemberg concluded, "Bay Area Credit's attempt to throw up a brick wall didn't work. Ms. Lucy is determined to pursue her action against the debt collection agency, in which she alleges that it engaged in multiple violations of the Fair Debt Collection Practices Act."
This release references Lucy v. Bay Area Credit Svc LLC, et al. (U.S. District Court, District of Connecticut, 3:10-CV-1024-JCH), and AT&T Mobile v. Concepcion (U.S. Supreme Court, No. 09-893).
About Lemberg & Associates, LLC
The attorneys at Lemberg & Associates, LLC are experts in fair debt and lemon law, and practice in New York, Connecticut, Massachusetts, Texas, Mississippi, Louisiana, Maine, New Hampshire, New Jersey, Ohio, Nevada, Arizona, Colorado, North Carolina, Pennsylvania, California, Maryland, Illinois, and Washington, D.C. Sergei Lemberg can brief you about the Fair Debt Collection Practices Act, remedies available to consumers who are victims of debt collector harassment, and other relevant issues.