Broad-Form Arbitration Clause Covers TCPA Claims Arising From Computer Lease and Permits Dismissal of Litigation Rather Than Stay Justified Under FAA

Consumer Finance Blog Jan 24, 2018 Tampa, FL

By: Murray Silverstein and Jacob Boehner

In Tate v. Progressive Finance Holdings, LLC, No.: 2:17-cv-01589, 2017 WL 4804354 (C.D. Cal. October 24, 2017), Tate defaulted in his laptop lease payments. Progressive Finance then initiated collection calls through an automated dialer and/or via “Robocalls,” which use a pre-recorded or artificial voice. Tate sued for violations of the Telephone Consumer Protection Act (“TCPA”). Progressive moved to compel arbitration based on a broad-form arbitration clause in the parties’ lease agreement.

Tate opposed arbitration on the basis that the TCPA claims arising from this collection dispute were not within the scope of the clause. The lease agreement’s arbitration provision encompassed “any claim, dispute, or controversy between you and us (including any Related Party) that arises from or relates in any way to this Lease or the Property (including any amendment, modification or extension of this Lease) . . . any of our marketing, advertising, solicitations and conduct relating to this Lease, the Property and/or a prior lease and related property; our collection of any amounts you owe . . . .” Id. at *2. The Court defined this as a broad-form arbitration clause, meaning a “heightened presumption” of arbitration attaches under the FAA and that the party resisting arbitration must demonstrate “forceful evidence of a purpose to exclude the claim from arbitration . . . .” Id. at *3. As the Court explained, the allegations of Tate’s complaint need only “touch matters” covered by the arbitration clause, with all doubts resolved in favor of arbitration. Id. at *4.

The Court, therefore, determined that the clause was fully enforceable and within the FAA’s presumption of arbitrability (no challenge was made on unconscionability grounds), leaving the remaining decision of whether to stay or dismiss the litigation pending arbitration. In making its decision, the Court examined Ninth Circuit precedent supporting the proposition that, where the court finds that the arbitration clause “ensnares all of the party’s claims,” district courts have the discretion under the FAA to not only stay the litigation but to actually dismiss the case “so that the parties may arbitrate.” Id. *5. On this basis, the Court exercised its discretion and departed from the usual practice of staying the litigation, dismissing the case, presumably without prejudice to permit enforcement later.

*The information in this article is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Greenspoon Marder LLP or the individual author(s), nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

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Broad-Form Arbitration Clause Covers TCPA Claims Arising From Computer Lease and Permits Dismissal of Litigation Rather Than Stay Justified Under FAA

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