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Law firm Milberg LLP announced yesterday it has filed a class-action lawsuit against St. Louis Park, Minn.-based National Arbitration Forum Inc. (NAF) for allegedly misrepresenting its independence and hiding its ties to the collection industry.
The lawsuit, filed earlier this month in a California district court, includes allegations that NAF established incentives for arbitrators to favor debt collectors over consumers, disregarded consumers' evidence and creditors' lack of evidence and failed to provide the arbitration services it promised to consumers.
NAF representatives did not return calls seeking comment.
Most of the arbitrations, according to the complaint, were against consumers from whom Mann Bracken LLP, also named in the lawsuit, attempted to collect alleged credit card debts on behalf of its corporate clients.
NAF "was a sham operation whose primary purpose was to rubber-stamp arbitration awards and confer the appearance of legitimacy upon Mann Bracken's debt collection efforts," the complaint states.
In addition to restitution, attorney's fees and court costs, plaintiffs are seeking an injunction prohibiting NAF from arbitrating disputes involving Mann Bracken or Axiant LLC, a debt collector owned in part by Mann Bracken.
Other defendants named in the lawsuit include Accretive LLC, the direct owner of Axiant, and Forthright Solutions LLC, which is owned by NAF and defendant Agora Fund I GP LLC. Accretive owns NAF and Agora.
"NAF is under siege by local and state prosecutors for working alongside creditors, rubber-stamping illegitimate arbitration awards against consumers, deceiving the courts and the public, and undermining the integrity of the arbitration system," the complaint states. Minnesota's attorney general and San Francisco's city attorney recently have filed similar lawsuits against the company.
