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A complaint filed in federal court in Minnesota could subject the National Arbitration Forum and several of its card-issuing customers to the type of class-action lawsuit the firm once touted itself as helping defendants avoid. In the complaint, filed July 24, plaintiffs' attorneys from the Minneapolis-based Gustafson Gluek PLLC law firm charge that their client, Kerry Sydnes, was financially harmed when Sydnes lost a consumer-debt dispute arbitrated by the forum. The suit seeks class-action status for other consumers in similar situations. Gustafson Gluek attorneys were not available at CardLine's deadline, and a representative of the National Arbitration Forum declined to comment on the new case. Documents filed in the U.S. District Court for the District of Minnesota do not specify the type of debt and other parties involved in Sydnes' original dispute heard by the forum. But Sydnes' charges against the forum are similar to those Minnesota Attorney General Lori Swanson levied before the forum abruptly announced last month it would cease hearing consumer-related arbitration cases, including credit card cases, as part of a settlement reached with Swanson announced July 19 (CardLine, 7/20). Sydnes' complaint charges that from 2006 through 2007, a group of New York-based private equity funds, called Accretive, formed several other equity funds under the name Agora, which invested $42 million in the National Arbitration Forum. In a second deal, three of the country's largest debt-collection law firms merged to create a firm called Mann Bracken. Accretive gained majority interest in a debt-collection agency called Axiant, which had acquired Mann Bracken's collections operations, the complaint says. The Sydnes suit also cites claims from a federal employment bias suit filed by former forum employee Deanna Richert. Richert alleged that the forum fraudulently claimed neutrality while favoring regular business clients it referred to in-house as "Famous Parties." Forum employees "were instructed in management meetings to call arbitrators and tell them to change decisions in which they found against the Famous Parties, prior to the release of those decisions to the parties to the arbitration," the Sydnes suit alleges, citing Richert. Sydnes' complaint also names Accretive, Agora and Axiant as defendants, along with various card issuers that had used the forum's arbitration services: American Express Co., Bank of America Corp., MBNA Corp., Wells Fargo & Co. as owner of Wachovia Corp., Capital One Bank NA, JPMorgan Chase & Co., Citigroup Inc. and Discover Financial Services.
