This post was written by Judith L. Harris and Rob Jackson.
In a recent case, Smith v. Citibank, N.A., Craig Smith, the borrower, filed a class action against Citibank in state court in California alleging violations of the Telephone Consumer Protection Act (“TCPA”) and the state law regulating debt collection practices. In his complaint, Mr. Smith claimed that he had suffered emotional distress as the result of allegedly receiving 20 autodialed calls to his mobile phone after revoking permission for such calls. The calls were made in an attempt to collect payments owed on a student loan that Citibank had made to Mr. Smith. After removal of the action to federal court, Citibank filed a motion to compel arbitration in accordance with the mandatory arbitration clause contained in Mr. Smith’s student loan agreement. The court not only ruled in Citibank’s favor by compelling arbitration, but also by upholding that portion of the contractual arbitration provision that prohibited class action claims. This recent decision confirms the wisdom of those who have routinely used clearly worded arbitration provisions and class action waivers in their customer agreements and should flag an idea for others.
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