The opinion
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MOHAMAD ELOUARRAK on behalf of )
himself and all others similarly situated, )
)
Plaintiff, )
) Case No. 1:19-cv-03666
v. )
) Judge Sharon Johnson Coleman
FIRSTSOURCE ADVANTAGE, LLC, )
)
Defendant, )
)
AMERICAN EXPRESS NATIONAL BANK, )
)
Intervenor. )
MEMORANDUM OPINION AND ORDER
Plaintiff Mohamad Elouarrak brings this class action against Firstsource Advantage, LLC
(“Firstsource”) alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §
1692 et seq. Currently before the Court is non-party American Express National Bank’s (“American
Express”) motion to intervene pursuant to Federal Rule of Civil Procedure 24(a)(2). For the reasons
stated below, the Court grants American Express’s motion.
Background
Using an American Express credit card, Elouarrak allegedly incurred a debt on his account.
Subsequently, he received three letters from “American Express Global Collections,” one each in
January, February, and March of 2019 (collectively the “Letters”). Each Letter offered to settle
Elouarrak’s account for a percentage of the outstanding balance.
Elouarrak takes issue with certain aspects of the Letters. He alleges that the Letters violate
the FDCPA because they fail to disclose that the debt they offer to settle is no longer legally
enforceable due to the passage of time. He also alleges that the return address and telephone
number on the Letters do not belong to American Express, but to Firstsource.
Firstsource, an agency which “attempts to obtain payments of debts owed,” has contracted
with American Express to collect debts as a third-party vendor. Elouarrak states that American
Express and Firstsource “have jointly developed and implemented a collection strategy specifically
designed to avoid compliance with the FDCPA.” According to Elouarrak, American Express uses
another third-party vendor to send the Letters, not Firstsource, to shield Firstsource from liability
for FDCPA violations. In addition, Elouarrak asserts that Firstsource “masquerades as American
Express” when answering phone calls to the numbers listed in the Letters by identifying itself as
American Express Global Collections.
American Express moves to intervene as a matter of right, arguing that it has significant
protectable interests in defending against the claims about its conduct. American Express notes the
arbitration agreement it has with Elouarrak as the source of one such interest. It also identifies
interests in communicating with shareholders, collecting on its accounts, and maintaining business
and contractual relationships with third-party vendors such as Firstsource.
Discussion
As a general principle, courts construe Rule 24(a)(2) motions liberally. See, e.g., Planned
Parenthood of Wis., Inc. v. Kaul, 942 F.3d 793, 799 (7th Cir. 2019); Lopez-Aguilar v. Marion Cty. Sheriff’s
Dept., 924 F.3d 375, 391 (7th Cir. 2019). In accordance with this liberal construction, courts “must
accept as true the non-conclusory allegations of the motion” a proposed intervenor makes. Illinois v.
City of Chicago, 912 F.3d 979, 984 (7th Cir. 2019) (citation omitted).
Under Rule 24(a)(2), “a proposed intervenor needs to meet four elements: ‘(1) timely
application; (2) an interest relating to the subject matter of the action; (3) potential impairment, as a
practical matter, of that interest by the disposition of the action; and (4) lack of adequate
representation of the interest by the existing parties to the action.’” Planned Parenthood, 942 F.3d at
797 (citation omitted). Because the parties do not dispute timeliness and inadequate representation,
the discussion will focus on the interest in the subject matter of the action and the potential
impairment of interests.
Interest Relating to the Subject Matter of the Action
The second element necessary to intervene under Rule 24(a)(2) is that the proposed
intervenor must have “a ‘direct, significant[,] and legally protectable’ interest in the question at issue
in the lawsuit” and that this interest must be “unique to the proposed intervenor.” Wisconsin Educ.
Ass’n Council v. Walker, 705 F.3d 640, 658 (7th Cir. 2013) (citation omitted). A “unique” interest is
“based on a right that belongs to the proposed intervenor rather than to an existing party in the
suit.” Planned Parenthood, 942 F.3d at 798 (citation omitted).
American Express claims to play an important part in this litigation. It asserts that
Elouarrak’s complaint is founded upon the Letters, which are from American Express, because
those Letters contain the language in controversy about settling the account balance, as well as the
telephone number used during the allegedly misleading phone calls. American Express therefore
seeks to intervene to respond to the allegations involving its conduct. Elouarrak, on the other hand,
asserts that American Express is not a debt collector subject to the FDCPA and cannot be liable for
any of the claims in the suit.
It is possible for American Express to hold interests directly related to the action even
without being subject to liability. Indeed, a federal district court in Pennsylvania hearing a case with
similar facts, including the same defendant and proposed intervenor, makes this distinction. Brown v.
Firstsource Advantage, LLC, No. 17-5760, 2018 WL 4538412, at *2 (E.D. Penn., Sept. 21, 2018) (“The
fact that Brown’s claim does not directly target American Express does not render its interests
insufficient or general.”). Therefore, the Court examines American Express’s stated interests below.
Maintaining Business and Contractual Relationships with Third-Party Vendors
American Express identifies an interest in its business and contractual relationships with
third-party vendors, including Firstsource. According to American Express, Elouarrak’s claim that
Firstsource conspired with American Express to flout the requirements of the FDCPA directly
implicates American Express’s business and contractual relationship with Firstsource. Elouarrak
responds that his lawsuit does not hinder American Express from contracting with Firstsource or
any other third-party vendors. His suit, as he characterizes it, alleges only that Firstsource has failed
to comply with the law.
To prevail, the proposed intervenor’s interest must be directly related to the question at issue
in the lawsuit. See Wisconsin Educ. Ass’n Council, 705 F.3d at 658. The key question in this suit is
whether Firstsource illegally misrepresented its identity during telephone calls by allegedly claiming
to be American Express. The business and contractual relationship between American Express and
Firstsource is therefore of direct importance to the question at issue. Moreover, this interest is
unique because the right to maintain a contractual relationship with third-party vendors “belongs to”
American Express, not Firstsource. American Express faces allegations of wrongdoing arising
exclusively out of its relationship with Firstsource. Firstsource, in contrast, is a third-party vendor
facing scrutiny for its own actions. As a result, American Express’s business and contractual
relationship with Firstsource meets the second element of the Rule 24(a)(2) standard.
Ensuring Proper Forum Usage under the Arbitration Agreement
American Express highlights its arbitration agreement with Elouarrak as the source of a
protectable interest in arbitrating the current action. Whether American Express has a right to
arbitrate this matter is not yet certain, as Elouarrak disputes the arbitrability of his present claims
against Firstsource.
Nonetheless, American Express has a protectable interest in identifying the proper forum in
which to settle Elouarrak’s claims, whatever that forum may be. See Brown, 2018 WL 4538412, at *2
(“[I]f the arbitration provision of the Cardmember Agreement does govern [this dispute], American
Express has a specific interest in ensuring those claims are resolved in its chosen forum.”). This
interest is directly related to the question at issue, as it determines where that question will be
resolved. An interest in arbitration is also unique to American Express. Although both American
Express and Elouarrak are parties to the arbitration agreement, Elouarrak claims that the agreement
does not apply to the present action. Therefore, the interest in asserting the right to arbitrate
“belongs to” American Express. These attributes indicate that American Express’s interest in
arbitration suffices under the second element of the Rule 24(a)(2) standard.
Resolving Outstanding Accounts and Communicating with Cardholders
American Express articulates an interest in resolving its outstanding accounts by
communicating with cardholders, including via settlement offer letters. Elouarrak’s alleged debt is
on an American Express account, and the Letters are all from “American Express Global
Collections.” Elouarrak, however, argues that Firstsource’s failure to identify itself properly to
callers is the basis of the lawsuit. According to Elouarrak, resolving this matter does not implicate
American Express’s ability to settle its accounts or send letters; it affects only Firstsource’s
communications.
When dealing with similar facts to the present case, other federal district courts differ
regarding whether a creditor has a protectable interest in the practices of a debt collector with whom
the creditor has contracted. Compare Martinez v. Nationwide Credit, Inc., No. 17-cv-4968-MCA-LDW
(D.N.J. March 22, 2018) (finding that “American Express has a specific interest in the alleged debt
owed to it by plaintiff and its Cardholders” and in “the manner” of collecting those debts) with
Abdurahman v. Alltran Fin., LP, 330 F.R.D. 276, 281 (S.D. Cal. 2018) (ruling in plaintiff’s favor would
affect defendant debt collector, but “would not affect [the rights of American Express, the proposed
intervenor,] to contract with debt collectors or to charge interest, fees, or costs as it sees fit”). In
short, the question of whether American Express has an interest in the method by which its third-
party vendor collects debts is somewhat murky.
Despite the debate, this interest falters in demonstrating the requisite direct relationship to
the issue the case seeks to resolve. The key question here is whether Firstsource’s alleged telephone
communications violated the FDCPA. The fact that the debt was allegedly incurred upon an
American Express account is not directly related to that question. Furthermore, the suit challenges
only Firstsource’s actions. Regardless of this lawsuit’s outcome, American Express’s ability to
communicate with its cardholders and contract with debt collectors will continue unimpeded within
the bounds of the law. These attributes weigh against a finding that American Express’s interest in
communicating and collecting on accounts suffices under Rule 24(a)(2). Nevertheless, American
Express’s other identified interests fulfill this element as required under Rule 24(a)(2).
Potential Impairment of the Interest by the Disposition of the Action
The parties also dispute the third element of the Rule 24(a)(2) standard, which requires a
showing that disposition of the action without the proposed intervenor would potentially impair the
proposed intervenor’s interest in the subject matter of the action. Planned Parenthood, 942 F.3d at
797. “Impairment exists when the decision of a legal question . . . would, as a practical matter,
foreclose the rights of the proposed intervenor in a subsequent proceeding.” Shea v. Angulo, 19 F.3d
343, 347 (7th Cir. 1994) (citation omitted).
American Express’s interest in maintaining business and contractual relationships with third-
party vendors, including Firstsource, may be impaired by the disposition of the action without
American Express’s involvement. While American Express remains free to contract as it pleases
with third-party vendors, including Firstsource, the details of its relationship with Firstsource may
have to change. For example, if the Court finds that Firstsource’s conduct violated the FDCPA,
American Express and Firstsource may have to renegotiate portions of their business arrangement
to ensure that Firstsource comes into comphance with the law. Although this outcome ts uncertain,
the Seventh Circuit’s standard calls only for “potential impairment,” and the potential effects on
American Express’s business relationship with Firstsource qualify.
Moreover, American Express’s interest 1n proper forum usage based on its arbitration
agreement with Elouarrak would be impaired by the disposition of the action. American Express
argues that this action falls under its arbitration agreement and should not be in federal litigation.
Allowing Elouarrak and Firstsource to litigate without the involvement of American Express would
certainly impair American Express’s interest in identifying and utilizing the proper forum under the
agreement. American Express has met its burden in fulfilling the third requirement under Rule
24(a)(2).
Conclusion
For the foregoing reasons, the Court grants American Express’s motion to intervene [23].
IT IS SO ORDERED.
Date: 1/21/2020 I ( ,
Entered: /
SHARON JOHNSON COLEMAN
United States District Judge