Markind Law Group, a Cherry Hill, N.J. debt collection law firm, has won a court ruling in a case brought by a consumer who argued an arbitration provision included in his sales contract for a Ford Fiesta couldn't be enforced by the firm.
Thomas Brown brought the lawsuit as a putative class action, alleging that the law firm "made false or misleading representations with regard to the character and legal status of his debt and his obligation to reimburse the cost of the debt collectors' services" in violation of the Fair Debt Collection Practices Act.
Brown originally purchased the vehicle from Pennsylvania dealership Woltz & Wind Ford in 2011. The contract included a clearly worded arbitration agreement for any claims arising from the credit application. When the Fiesta was later repossessed, the Ford Motor Credit Co., or FMCC, retained Sklar-Markind - Markind Law Group's former name - to represent it in an action to recover Brown's outstanding balance.
Brown had argued that his arbitration provision couldn't be enforced because it is unconscionable under Pennsylvania law and doesn't apply to claims brought under the FDCPA. U.S. Magistrate Judge Cynthia Reed Eddy of the Western District of Pennsylvania essentially rejected both arguments.
"The arbitration provision is applicable to Sklar-Markind, its employees and its lawyers - the alleged debt collectors in this case," Eddy ruled. "The fact that defendants are non-signatories to the sales contract does not prevent them from enforcing the arbitration provision under the circumstances."
Eddy reviewed the U.S. Court of Appeals for the Third Circuit's 1999 opinion in Harris v. Green Tree Financial to define substantive unconscionability, which occures when an agreement contains contractual terms that are unreasonably favorable to one side and to which the disfavored party does not assent.
Eddy agreed the sales contract is "procedurally unconscionable" under Pennsylvania law - having been prepared by one party and signed by the weaker party. But, she added, Brown offered nothing "to support his argument that the arbitration provision is substantively unconscionable."
She also ruled that because the "FDCPA is silent with regard to arbitration of claims brought under its auspices, the overwhelming majority of cases to consider the matter have, not surprisingly, compelled arbitration of FDCPA claims..." Eddy said.
The attorneys representing Markind Law Group in the case declined comment.