Saks v. Andreu, Palma, Lavin, & Solis, PLLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

------------------------------------------------------------X

CHAYA-SARAH SAKS, individually and on

behalf of all others similarly situated,

REPORT AND

Plaintiff, RECOMMENDATION

24 CV 2045 (OEM) (CLP)

-against-

ANDREU, PALMA, LAVIN, & SOLIS, PLLC;

MIDLAND CREDIT MANAGEMENT, INC.,

Defendants.

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On March 20, 2024, plaintiff Chaya-Sarah Saks commenced this class action against

defendant Midland Credit Management, Inc. (“MCM” or “defendant”),1 alleging violations of

the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, stemming from

defendant’s efforts to collect a debt allegedly owed to Comenity Bank (“Comenity”). Currently

pending before this Court on referral from the Honorable Orelia E. Merchant is defendant’s

September 4, 2024 motion to dismiss the plaintiff’s Complaint for failing to comply with the pre-

suit notice requirements and class action waiver in the Comenity Bank Credit Card Agreement

(the “Agreement”), or, in the alternative, to compel plaintiff to arbitrate her claims on an

individual basis as specified in the Agreement.

FACTUAL BACKGROUND

Plaintiff, a resident of Queens, N.Y. and a “consumer” as defined under 15 U.S.C.

§ 1692(a)(3) and 12 C.F.R. § 1006.2(e), allegedly incurred an obligation with Comenity Bank,

1 The Complaint as originally filed included claims against defendant Andreu, Palma, Lavin, & Solis,

PLLC (“APLS”). (See Complaint, filed March 20, 2024 (“Compl.”) (ECF No. 1)). Those claims were dismissed by

order of the district court on January 28, 2025, finding that it lacked personal jurisdiction over APLS. (See ECF No.

25).

some time prior to March 5, 2024. (Compl. ¶¶ 7-8, 22-23). Plaintiff alleges that defendant

MCM acquired the alleged debt and contracted with APLS to collect the debt. (Id. ¶¶ 25-26).

According to evidence submitted by defendant MCM in support of its motion, plaintiff opened

an Account with Comenity on or about October 17, 2021, pursuant to an agreement issued by

Comenity (the “Agreement”). (Ross Decl.2 ¶¶ 6-7). The debt at issue constituted a charged off

Ann Taylor-branded Comenity Bank credit card (the “Account”), which plaintiff used to make

purchases, thus accepting the terms and conditions of the Agreement. (Id. ¶¶ 3-7, 11-12; Debt

Collection Notice, Ex. B to Ross Decl., ECF No. 22-10).3

The Agreement contains a mandatory arbitration provision with class action and jury trial

waivers that states: “Arbitration may be elected by any party with respect to any Claim, even if

that party has already initiated a lawsuit with respect to a different claim.” (Id. ¶ 9 (quoting

Agreement, Ex. A to Ross Decl. at 6, ECF No. 22-9). The Agreement further provides:

If you or we elect to arbitrate a Claim, you will not have

the right to pursue that Claim in court or have a jury decide

the Claim. Also, your ability to obtain information from us

is more limited in arbitration than in a lawsuit. Other rights

that you would have if you went to court may also not be

available in arbitration.

If you or we elect to arbitrate a Claim:

a. Neither you nor we may participate in a class action in

court or in class-wide arbitration . . . ;

2 In connection with the motion to dismiss or, in the alternative, compel arbitration, defendant has

submitted the Declaration of Sandra Ross, Manager Process Excellence at MCM, dated July 18, 2024 (“Ross

Decl.”), (ECF No. 22-8), and the Reply Declaration of Sandra Ross, dated September 3, 2024 (“Ross Reply Decl.”),

(ECF No. 22-15). According to Ms. Ross, she is a records custodian for MCM, is familiar with the recordkeeping

practices and policies of MCM, and has personally reviewed the file concerning plaintiff’s account. (Ross Decl. ¶¶

2-4).

3 Among other complaints, defendant asserts that plaintiff did not provide MCM with written notice of any

claim in accordance with the terms of the Agreement before initiating this lawsuit. (Id. ¶¶ 11-12). (See discussion

infra at 20-22).

(Id.). The Agreement also includes an additional pre-suit notice and cure provision that provides

that: “Prior to bringing a lawsuit or initiating an arbitration that asserts a claim arising out of or

related to this Agreement . . . the party asserting the Claim . . . shall give the other party . . .

written notice of the Claim . . . and a reasonable opportunity, not less than 30 days, to resolve the

Claim. . . .” (Id. ¶ 10 (citing Agreement, Ex. A to Ross Decl. at 5).

Under the terms of the Agreement, Comenity “‘may assign any or all of our rights and

obligations under this Agreement to a third party.’” (Id. ¶ 15 (citing Agreement, Ex. A to Ross

Decl. at 5)). On March 29, 2023, MCM sent plaintiff a letter, indicating that the Account had

been sold to MCM on March 28, 2023, and that MCM was now the sole owner of the Account.

(Id. ¶ 16 (citing Debt Collection Notice, Ex. B to Ross Decl.)). Ownership of the Account was

transferred via a Credit Card Account Purchase Agreement (“PSA”) between Comenity Bank

and MCM entered around October 25, 2019. (Ross Reply Decl. ¶ 6; Pl’s Opp.4 at 6).

According to the Complaint, on or around March 5, 2024, APLS, acting on behalf of

MCM, commenced suit against plaintiff in Palm Beach County Court in Florida, alleging that

venue lay in Florida. (Compl. ¶¶ 28, 34). Plaintiff asserts that she did not live in Palm Beach

County, Florida, and instead resided in New York when the Account was opened. (Id. ¶ 33).

Plaintiff further alleges that Comenity sent all account statements to her New York address. (Id.

¶¶ 32-33).

Plaintiff claims that defendant violated the FDCPA by knowingly making a false

representation to the Florida state court in an effort to forum shop and restrict plaintiff’s ability to

contest the claims in the lawsuit. (Id. ¶¶ 34, 36-37). Plaintiff brings claims under 15 U.S.C.

§ 1692(e)(10), for misrepresenting plaintiff’s residency in the Florida complaint; for using unfair

4 Citations to “Pl.’s Opp.” refer to Plaintiff’s Memorandum of Law in Support of Her Opposition to

Defendant Midland Credit Management, Inc.’s Motion to Compel Arbitration (ECF No. 22-11).

or unconscionable means to collect or attempt to collect a debt, in violation of 15 U.S.C. §

1692(f); and for engaging in conduct that results in the harassment, oppression, or abuse of a

person in connection with the collection of a debt, in violation of 15 U.S.C. § 1692(d). (Id. ¶¶

37-40, 61-64, 66-70, 72-75).

On September 4, 2024, defendant MCM filed a fully briefed motion to dismiss the

Complaint or, in the alternative, to compel arbitration. (Def.’s Mot.5). On October 23, 2024,

defendant MCM filed a motion for leave to electronically file the PSA under seal because it

contains confidential information. (See ECF No. 23 (“Sealing Mot.”)). On October 24, 2024,

Judge Merchant referred the motion to dismiss and compel arbitration to the undersigned.

DISCUSSION

Defendant first moves to dismiss the Complaint in its entirety based on plaintiff’s alleged

failure to comply with the Agreement’s provision that requires either party to provide pre-suit

notice to the other side before commencing a lawsuit or arbitration. (Def.’s Mot. at 6-7).

Defendant also contends that dismissal of the action is required because plaintiff asserts claims

on behalf of a class, in violation of the class action waiver contained in the Agreement. (Id. at 7-

8). In the alternative, defendant moves to compel arbitration, pursuant to the Agreement’s

arbitration provision (“Arbitration Provision”). (Id. at 9-12).

In opposing both motions, plaintiff contends that defendant lacks the right to enforce any

of the contractual provisions in the Agreement because MCM failed to demonstrate that the

terms of the Agreement, including the Arbitration Provision, were assigned to MCM upon

MCM’s purchase of plaintiff’s account from Comenity. (Pl.’s Opp. at 1-2, 5-13). Plaintiff

5 Citations to “Def.’s Mot.” refer to Defendant Midland Credit Management, Inc.’s Memorandum of Law

in Support of its Motion to Dismiss Or, Alternatively, Compel Arbitration (ECF No. 22-1).

further argues that her FDCPA claims are not within the scope of the Arbitration Provision. (Id.

at 13-16).

The Second Circuit holds that a district court should issue a stay rather than dismiss a

claim when all the claims in an action are subject to arbitration. See Katz v. Cellco Partnership,

794 F.3d 341, 347 (2d Cir. 2015); see also Jones v. Landry’s, Inc., No. 1:23 CV 9920, 2025 WL

1527307, at *5 (S.D.N.Y. May 29, 2025) (observing that “a district court should generally rule

on a motion to compel arbitration before proceeding to a merits-based motion to dismiss”

because “jurisdiction generally must precede merits in dispositional order”). Accordingly, the

Court first considers whether the entire Agreement, including the Arbitration Provision, was

assigned to MCM upon its purchase of the Account and whether the Arbitration Provision

applies to plaintiff’s claims in this action.

I. The Federal Arbitration Act

The Federal Arbitration Act (“FAA”) provides that “[a] written provision . . . to settle by

arbitration . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at

law or in equity for the revocation of any contract . . .” 9 U.S.C. § 2. The Supreme Court and

the Second Circuit have generally enforced agreements to arbitrate, noting that there is a strong

federal policy in favor of promoting arbitration consistent with legislative intent. See AT&T

Mobility v. Concepcion, 563 U.S. 333, 345-46 (2011); Guyden v. Aetna, Inc., 544 F.3d 376, 382

(2d Cir. 2008); Arciniaga v. General Motors Corp., 460 F.3d 231, 235 (2d Cir. 2006). Thus,

“‘any doubts concerning the scope of arbitrable issues should be resolved in favor of

arbitration.’” In re American Exp. Fin. Adv. Sec. Lit., 672 F.3d 113, 128 (2d Cir. 2011) (quoting

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)).

However, the FAA’s “liberal policy in favor of arbitration is limited by the principle that

. . . ‘arbitration is a matter of contract, and therefore a party cannot be required to submit to

arbitration any dispute which [it] has not agreed so to submit.’” Holick v. Cellular Sales of New

York, LLC, 802 F.3d 391, 395 (2d Cir. 2015) (alteration in original) (quoting JLM Indus. v.

Stolt-Nielsen SA, 387 F.3d 163, 171 (2d Cir. 2004)). The statute was enacted to ensure that

agreements to arbitrate would be “‘as enforceable as other contracts, but not more so.’” Ross v.

American Exp. Co., 547 F.3d 137, 143 (2d Cir. 2008) (emphasis in original) (quoting Cap

Gemini Ernst & Young, U.S., L.L.C. v. Nackel, 346 F.3d 360, 364 (2d Cir. 2003)) (further

citations omitted). Therefore, the presumption that disputes should be resolved in favor of

arbitration does not apply to the preliminary question of “whether an agreement to arbitrate has

been made” in the first instance. Applied Energetics, Inc. v. NewOak Cap. Mkts., LLC, 645

F.3d 522, 526 (2d Cir. 2011).

“In deciding whether a dispute is arbitrable, [the Court] . . . must answer two

questions: (1) whether the parties agreed to arbitrate, and, if so, (2) whether the scope of that

agreement encompasses the claims at issue.” Greene v. Kabbalah Centre Int’l, Inc., 625 F. Supp.

3d 3, 14 (E.D.N.Y. 2022) (alteration in original) (quoting Holick v. Cellular Sales of New York,

LLC, 802 F.3d at 394). The first question of “whether the parties have indeed agreed to

arbitrate” at all is “[t]he threshold question facing any court considering a motion to compel

arbitration.” Schnabel v. Trilegiant Corp., 697 F.3d 110, 118 (2d Cir. 2012). In determining

whether there is an enforceable agreement to arbitrate, courts apply general principles of contract

law, looking not only at whether the individual has acknowledged the terms of the written

agreement, see David L. Threlkeld & Co., Inc. v. Metallgesellschaft Ltd., 923 F.2d 245, 249 (2d

Cir. 1991), but also at whether the individual continues to perform services following notice of

the obligation to arbitrate disputes. See Brown v. Coca-Cola Enters., No. 08 CV 3231, 2009 WL

1146441, at *6-8 (E.D.N.Y. Apr. 28, 2009) (granting motion to compel arbitration despite the

absence of a signed arbitration agreement where plaintiff continued to work after receiving

employee manual including arbitration provision). This threshold question is “necessarily for the

court and not the arbitrator,” since “the arbitrator has no authority . . . with respect to a matter at

issue absent an agreement to arbitrate.” Schnabel v. Trilegiant Corp., 697 F.3d at 118 (citing

AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648-49 (1986)); see also

Doctor’s Assocs., Inc. v. Alemayehu, 934 F.3d 245, 251 (2d Cir. 2019) (holding that “parties

may not delegate to the arbitrator the fundamental question of whether they formed the

agreement to arbitrate in the first place”). The second question concerning the scope of

arbitrable issues under the agreement is considered a question of “arbitrability,” and is

“presumptively for the court to decide,” unless “‘there is clear and unmistakable evidence from

the arbitration agreement . . . that the parties intended that the question of arbitrability shall be

decided by the arbitrator.’” Alvarez v. Experian Info. Sols., Inc., 661 F. Supp. 3d 18, 27-28

(E.D.N.Y. 2023) (quoting Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002)).

“In the context of motions to compel arbitration . . . the court applies a standard similar to

that applicable for a motion for summary judgment.” Bensadoun v. Jobe-Riat, 316 F.3d 171, 175

(2d Cir. 2003). In determining whether a valid arbitration agreement exists, the court resolves

“all reasonable inferences in favor of the non-moving party.” Abdullayeva v. Attending

Homecare Servs. LLC, 928 F.3d 218, 221 (2d Cir. 2019) (citing Nicosia v. Amazon.com, Inc.,

834 F.3d 220, 229 (2d Cir. 2016)). “Because the standard is akin to that on summary judgment,

materials outside the pleadings may be considered.” Lobban v. Cromwell Towers Apartments,

Ltd. P’ship, 345 F. Supp. 3d 334, 342 (S.D.N.Y. 2018); see also Meyer v. Uber Techs., 868 F.3d

66, 74 (2d Cir. 2017) (on a motion to compel arbitration, “the court consider[s] all relevant,

admissible evidence submitted by the parties and contained in pleadings, depositions, answers to

interrogatories, and admissions on file, together with . . . affidavits, and draws all reasonable

inferences in favor of the non-moving party”) (alterations in original) (quotations and citations

omitted)).

A party seeking to compel arbitration “must make a prima facie initial showing that an

agreement to arbitrate existed before the burden shifts to the party opposing arbitration to put the

making of that agreement ‘in issue.’” Deng v. Frequency Electronics, Inc., 640 F. Supp. 3d 255,

259 (E.D.N.Y. 2022) (quoting Hines v. Overstock.com, Inc., 380 Fed. App’x 22, 24 (2d Cir.

2010) (summary order)); see also Zachman v. Hudson Valley Fed. Credit Union, 49 F.4th 95,

102 (2d Cir. 2022) (noting that the party seeking to compel arbitration must make a prima facie

showing that “an agreement to arbitrate was proposed and accepted”). “Once the moving party

establishes a prima facie showing that an agreement existed, the party ‘seeking to avoid

arbitration generally bears the burden of showing the agreement to be inapplicable or invalid.’”

Deng v. Frequency Electronics, Inc., 640 F. Supp. 3d at 259 (quoting Harrington v. Atl.

Sounding Co., Inc., 602 F.3d 113, 124 (2d Cir. 2010).

“[I]f there is a disputed question of material fact, such that the making of the arbitration

agreement . . . is in issue, then the court shall proceed summarily to the trial thereof.” Barrows v.

Brinker Rest. Corp., 36 F.4th 45, 49 (2d Cir. 2022) (quotation marks omitted and alterations

adopted). A genuine issue of material fact exists if there is “‘sufficient evidence favoring the

nonmoving party for a jury to return a verdict for that party.’” Golden Pac. Bancorp. v. F.D.I.C.,

375 F.3d 196, 200 (2d Cir. 2004) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249

(1986)). The party “opposing arbitration may not satisfy this burden through ‘general denials of

the facts on which the right to arbitration depends’; in other words, ‘[i]f the party seeking

arbitration has substantiated the entitlement by a showing of evidentiary facts, the party opposing

may not rest on a denial but must submit evidentiary facts showing that there is a dispute of fact

to be tried.’” Dill v. JPMorgan Chase Bank, N.A., No. 19 CV 10947, 2020 WL 4345755, at *4

(S.D.N.Y. July 29, 2020) (quoting Oppenheimer & Co. v. Neidhardt, 56 F.3d 352, 358 (2d Cir.

1995)); see also Doctor’s Assocs., Inc. v. Jabush, 89 F.3d 109, 114 (2d Cir. 1996) (holding that,

“[t]o establish a genuine issue entitling a party to a jury trial, an unequivocal denial that the

agreement [to arbitrate] had been made [is] needed, and some evidence should [be] produced to

substantiate the denial”) (quotation marks omitted). Courts have found the party opposing

arbitration to have satisfied its evidentiary burden through the provision of “affidavits and

exhibits attached to the petition and answer” which “tend[ed] to substantiate appellants’ denial of

the existence of contractual relations.” Interocean Shipping Co. v. National Shipping & Trading

Corp., 462 F.2d 673, 676 (2d Cir. 1972).

If a genuine issue of material fact is shown, an evidentiary hearing or summary jury trial

is required by the Federal Arbitration Act.6 See 9 U.S.C. § 4 (providing that “[i]f the making of

the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the

court shall proceed summarily to the trial thereof”). See also Burch v. P.J. Cheese, Inc., 861

F.3d 1338, 1347 (11th Cir. 2017) (noting that appellant had a statutory right under 9 U.S.C. § 4

for a jury to resolve a genuine issue of material fact regarding the making of an arbitration

agreement). On the other hand, if the court finds that the parties agreed to arbitrate the claims at

issue, Section 3 of the FAA requires that, “on application of one of the parties[,] [the court] stay

the trial of the action until such arbitration has been had in accordance with the terms of the

agreement.” 9 U.S.C. § 3. In 2015, the Second Circuit made clear that the FAA “requires a stay

6 Courts have used the terms “trial” and “evidentiary hearing” interchangeably in describing the hearing

required by 9 U.S.C. § 4 where a showing of a genuine issue of material fact is made. See WCW, Inc. v. Atlantis

Indus., Inc., 698 F. Supp. 3d 708, 734 (D. Vt. 2023), aff’d, No. 23 7726 CV, 2024 WL 5038529 (2d Cir. Dec. 9,

2024) (collecting cases).

of proceedings when all claims are referred to arbitration and a stay [is] requested.” Katz v.

Cellco P’ship, 794 F.3d at 343.

II. Motion to Compel Arbitration

In lieu of dismissal of the Complaint (see discussion infra at 20-22), defendant moves to

compel arbitration. (Def.’s Mot. at 9-12). As noted above, caselaw requires the party seeking to

compel arbitration to make a prima facie showing that an agreement to arbitrate actually existed

between the parties. (See discussion supra at 5-10).

In addressing the threshold issue of whether the parties entered into a valid agreement

such that defendant can compel the plaintiff to submit to arbitration, the Court looks to state

contract law to determine if there was an enforceable agreement to arbitrate. See First Options

of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).7 Here, defendant has satisfied its burden

of making out a prima facie case that an agreement to arbitrate exists by producing evidence of a

written and signed agreement to arbitrate. See Hines v. Overstock.com, Inc., 380 F. App’x at 24

(noting the holding in Scone Invs., L.P. v. American Third Mkt. Corp., 992 F. Supp. 378, 381

(S.D.N.Y. 1998), and finding that “production of signed writing” satisfies the prima facie case

requirement). Defendant contends that the Agreement, entered into between plaintiff and

Comenity, contained multiple statements advising the plaintiff of the arbitration requirements,

and thus is clear and unambiguous. (Def.’s Mot. at 9-10). Specifically, defendant notes that

there is language in the Agreement that states explicitly that “[t]his Agreement includes an

7 In deciding what state’s contract law to apply in this analysis, the forum state’s choice-of-law doctrine

governs. Oestreicher v. Equifax Info. Servs., LLC, No. 23 CV 239, 2024 WL 1199902, at *3-4 (E.D.N.Y. Mar. 20,

2024). Although the parties appear to rely largely on New York law and there does not appear to be a dispute as to

choice of law, the Court finds that the significant contacts—plaintiff’s alleged residence and the location where the

Agreement was entered into—all lie in New York and applies New York contract law in evaluating the issues

relating to the Arbitration Provision and the other terms of the Agreement. See Kai Peng v. Uber Techs., Inc., 237

F. Supp. 3d 36, 47 (E.D.N.Y. 2017) (holding that under New York’s choice of law analysis, the applicable state

contract law should be based on the state which “has the most significant contacts with the matter in dispute”).

Arbitration Provision with class action and jury trial waivers. You can reject the Arbitration

Provision. If you do not, it will be part of this Agreement.” (Id. at 10 (citing Agreement, Ex. A

to Ross Decl. at 3, ECF No. 22-9)).8 The Agreement provides instructions as to how to reject the

Provision, how to initiate arbitration, and what disputes are covered. (Id.) Defendant contends

that by failing to object and using the Account, plaintiff agreed to the Arbitration Provision and

cannot dispute its enforceability. (Id. at 10-11).

Indeed, plaintiff does not appear to dispute that she entered into the Agreement with

Comenity, nor does plaintiff dispute that the parties agreed to submit disputes to arbitration.

Here, as described supra, the Agreement contains several clauses clearly describing the

Arbitration Provision and its parameters. See Morelli v. Alters, No. 19 CV 10707, 2020 WL

1285513, at *9 (S.D.N.Y. Mar. 18, 2020) (finding valid agreement where the parties

“unambiguously agreed to arbitrate”). Given that defendant has carried its burden of

demonstrating the existence of the agreement to arbitrate and plaintiff’s assent to the same, the

burden shifts to plaintiff to demonstrate that there is a genuine issue of material fact as to the

enforceability of the Agreement and its Arbitration Provision.

While plaintiff does not challenge the existence of the Agreement or the language of the

Arbitration Provision, (Pl.’s Opp. at 2-3), plaintiff opposes both defendant’s motion to dismiss

and motion to compel arbitration on the ground that defendant MCM has failed to establish that

it has the right to enforce the Arbitration Provision after it acquired the Account from Comenity.

(Id. at 1). Plaintiff contends that absent specific evidence showing that there was an assignment

of rights to the underlying Agreement—specifically the right to enforce the Arbitration Provision

and not just the assignment of the right to collect the debt—courts have denied motions to

8 Defendant places this language on the second page of the agreement, but it appears that it appears on the

top of the third page.

compel arbitration. (Id. at 6-11 (citing Lance v. Midland Credit Mgmt., 375 F. Supp. 3d 604,

615 (E.D. Pa. 2019))); see also Kres v. Cavalry SPV I, LLC, No. 20-3176, 2021 U.S. Dist.

LEXIS 57764, at *8 (D.N.J. Mar. 24, 2021) (denying debt collector’s motion to compel

arbitration where defendants failed to produce the Master Purchase and Sale Agreement).

Plaintiff further cites Winkelman v. Midland Credit Management Inc., where the court denied a

similar motion filed by MCM to compel arbitration where MCM failed to submit the Master

Purchase and Sale Agreement that defined the “terms and conditions” of the assignment. No.

3:23 CV 407, 2024 WL 3551152, at *9-10 (D. Conn. July 27, 2024). The Winkelman court

found that MCM failed to demonstrate that there was no factual dispute as to whether it could

enforce the arbitration provision of the agreement because there was no “specific documentation

reflecting an assignment.” (Id.)

In the instant case, plaintiff notes that defendant MCM provided only the Portfolio Level

Affidavit of Sale by Original Creditor sworn to by Bruce A. Sweeten (the “Sweeten Aff.) (Ex. D

to Ross Reply Decl., ECF No. 22-17), Chief Credit Officer of Comenity Bank, and the Bill of

Sale. (Pl.’s Opp. at 11). Plaintiff argues that defendant’s motion fails because it has not

provided the critical document referenced in the Bill of Sale—the Credit Card Account Purchase

Agreement or “PSA”—which defines what rights were actually transferred when defendant

purchased the Account. (Id. at 5-11). In his affidavit, Bruce Sweeten, represents that on or about

March 28, 2023, Comenity, as the seller of the subject Account, sold a pool of charged-off

accounts (the “Accounts”) by a PSA to MCM. (Sweeten Aff. ¶ 4). The Sweeten Affidavit states

that Comenity “sold, transferred, assigned, conveyed, granted, bargained, set over and delivered

to [MCM] . . . good and marketable title to the Accounts and any unpaid balance.” (Id. ¶ 5).

However, the Sweeten Affidavit contains no mention of any other rights, such as the right to

compel arbitration, nor does it define “Accounts.” (Id.). The Bill of Sale states only that

Comenity Bank, “for value received and pursuant to the terms and conditions of that certain

Credit Card Account Purchase Agreement dated October 25, 2019,” assigns “all rights, title and

interest . . . in and to those certain Accounts described in the [PSA].” (Bill of Sale, Ex. D to

Ross Reply Decl., ECF No. 22-17). Plaintiff contends that although the Bill of Sale states that

“Accounts” have been assigned, there is no definition of “Accounts” in the document itself,

which leaves open the question of whether the right to enforce arbitration was assigned to

defendant MCM. (Pl.’s Opp. at 11-13).

Defendant points out that plaintiff relies on out of district opinions to argue this failure of

assignment, and notes that courts in this district have enforced arbitration provisions even when a

party does not provide the purchase and sale agreement underlying the transfer of arbitration

rights. (Def.’s Reply9 at 3-5 (citing Biggs v. Midland Credit Mgmt., Inc., No. 17 CV 340, 2018

WL 1225539 (E.D.N.Y. Mar. 9, 2018) (granting MCM’s motion to compel where PSA was not

provided)). In Biggs v. Midland Credit Management, Inc., Judge Bianco, then a United States

District Judge, found that the defendant could enforce an arbitration provision because the

plaintiff acknowledged in the complaint that the debt was transferred to the defendant for

collection. 2018 WL 1225539 at *7; see also Brecher v. Midland Credit Mgmt., Inc., No. 18 CV

3142, 2019 WL 1171476, at *6 (E.D.N.Y. Mar. 13, 2019) (finding that “a valid agreement to

arbitrate exists” where “the legal right to collect on the debt” was transferred). In the instant

case, plaintiff similarly alleges that “[t]he alleged debt was thereafter acquired . . . by Defendant

MCM.” (Complaint ¶ 25). Following the reasoning of Judge Bianco, defendant MCM’s rights

to enforce the arbitration provisions in the Agreement would naturally follow from its acquisition

9 Citations to “Def.’s Reply.” refer to Defendant Midland Credit Management, Inc.’s Reply Memorandum

of Law in Further Support of Its Motion to Dismiss Or, Alternatively, Compel Arbitration (ECF No. 22-12).

of plaintiff’s debt. Therefore, defendant contends that there is an independent basis—even

absent a PSA—to find that it has the right to enforce the Arbitration Provision.

Nevertheless, to remove any lingering doubt as to the assignment of the Arbitration

Provision, defendant submitted a redacted version of the PSA.10 (ECF No. 23-3). In the

redacted PSA provided by MCM, there is a provision that states that MCM purchased “all of

Seller’s [Comenity] rights, title and interest in and to eligible Accounts,” id. at 8, with “Account”

defined as “an account established or maintained for a cardholder pursuant to Seller’s credit card

program . . . including the Unpaid Balance owed by the applicable Cardholder and the associated

receivable owned by the Seller.” (Id. at 4). Indeed, the PSA does not distinguish between

“account” and “receivables,” and instead incorporates receivables into its definition of Account.

This further supports defendant’s argument that its purchase of the Account from Comenity gave

it rights beyond the collection of plaintiff’s debt. Citing this additional specific documentary

evidence, MCM contends that it has established that it is the sole owner of all rights, title and

interest in the Account, and that the Court should therefore enforce the Arbitration Provision.

(Def.’s Reply. at 5).

Having reviewed plaintiff’s critique of the evidence marshalled by defendant in support

of its motion, the Court finds that the redacted PSA firmly establishes that defendant MCM was

assigned not only the right to collect the debt, but also the right to enforce the Arbitration

Provision. To the extent that plaintiff has cited cases to suggest that the Court must deny any

request to compel arbitration based on the lack of sufficient evidence to support the transfer of

more than just the right to collect on the debt, the Court finds that these cases are not controlling.

10 In support of their reply, Defendants move to file a redacted copy of the Credit Card Account Purchase

Agreement (“PSA”) between MCM and Comenity Bank under seal. (ECF No. 23-1). The redacted copy is found at

ECF No. 23-3. This request to file the PSA in redacted form is granted.

Furthermore, defendant has, by supplementing its papers, responded to any doubt raised by these

cases. Based upon the language of the Bill of Sale and the PSA, the Court finds that in acquiring

the Account, both MCM and Comenity intended to transfer not only the debt and the right to

collect the debt, but also the entire Agreement along with its terms. Thus, the Court respectfully

recommends that the district court find that there are no material issues of fact in dispute as to

whether Comenity transferred all rights to the Account to MCM, and that there exists a valid

agreement to arbitrate between plaintiff and defendant.

III. FDCPA Claims Are Within the Scope of the Arbitration Clause

As for the second prong of the test to determine whether a dispute is arbitrable, the court

must determine if the allegations underlying the claims “touch matters covered by the parties’

. . . agreements.” Holick v. Cellular Sales of New York, LLC, 802 F.3d at 395. As noted above,

the Agreement, by its terms, covers “any claim, dispute or controversy . . . that in any way arises

from or relates to this Agreement, the Account, the issuance of any Card,” and includes “disputes

based on contract, tort, consumer rights, fraud.” (Ross Decl. ¶ 14; Agreement, Ex. A to Ross

Decl. at 5-7, ECF No. 22-9).

Citing the language of the Agreement, Defendant argues that the scope of the Arbitration

Provision is broad and covers any claims or disputes arising from the “Agreement, the Account

[or] the issuance of any Card,” and that the term “Claim” has “the broadest possible meaning,”

which includes consumer rights claims. (Def.’s Mot. at 11-12). Given that there is a written

Arbitration Provision and the dispute falls within the Arbitration Provision, defendant contends

that the plaintiff’s claims should be compelled to arbitration. (Id. at 12).

In response, plaintiff contends that even if there was a valid assignment of the right to

compel arbitration, her claims under the FDCPA do not fall within the scope of the Arbitration

Provision, which covers “‘any claim, dispute or controversy . . . that in any way arises from or

relates to this Agreement, [or] the Account.’” (Pl.’s Opp. at 13). Plaintiff cites several cases

from the Eleventh Circuit which hold that rights to fair debt collection practices “are the sole

reserve of the statute.” (Id. (citing cases)). She argues that her statutory claims under the

FDCPA did not arise under the Agreement because the Agreement only contemplates cases

arising from “the use of the Ann Taylor-branded credit card,” and here the allegedly deceptive

practices are not claims related to the use of the card. (Id. at 13-14 (citing Bazemore v. Jefferson

Capital Systems, LLC, No. CV 314-115, 2015 WL 2220057, at *8 (S.D. Ga. May 11, 2015)

(holding that plaintiff’s FDCPA claims against conduct of a debt collector were not ceded in

arbitration agreement)).

Plaintiff also argues that FDCPA claims are not covered by broad arbitration provisions

that do not expressly cover claims arising from a debt collector’s conduct. (Id. at 14-15 (citing

Pacanowski v. Alltran Financial, LP, 271 F. Supp. 3d 738, 749 (M.D. Pa. 2017)). She cites

Carter v. Payback Repo, Inc., No. 22 CV 5083, 2023 U.S. Dist. LEXIS 150415, at *10 (E.D.N.Y.

Aug. 25, 2023), where the court held under Florida law that a third-party debt collector could not

invoke the arbitration provision in an agreement between consumer and creditor where the third-

party entity had not purchased or owned the debt. Courts in this district have cited Carter v.

Payback Repo, Inc. to deny enforcement by third-party debt collectors of arbitration clauses in

FDCPA suits, while maintaining that those same arbitration provisions are enforceable by

creditors or assignees. See, e.g., Ferro v. Allied Interstate, LLC, No. 19 CV 49, 2019 WL

3021234 (E.D.N.Y. July 10, 2019) (granting signatory’s motion to compel arbitration in FDCPA

claim and denying motion as to non-signatory); Madorskaya v. Frontline Asset Strategies, LLC,

No. 19 CV 895, 2021 WL 3884177 (E.D.N.Y. Aug. 31, 2022) (finding that “Citibank did not

expressly assign its right to compel arbitration to Defendant”); Wojcik v. Midland Credit Mgmt.,

Inc., No. 18 CV 3628, 2019 WL 3423567 (E.D.N.Y. July 30, 2019) (denying debt servicer’s

motion to compel who was a non-party in the litigation).

Defendant argues that Carter v. Payback Repo, Inc. is not relevant because MCM is not a

third-party debt collector; it is the sole owner of the Account with all the rights and obligations

under the Agreement. (Def.’s Reply at 6-7). Moreover, defendant contends that plaintiff’s

FDCPA claims “arise from” or “relate to” the Agreement or the Account and efforts to collect

monies owed under the Account and fall within the provision that expressly refers to “statutory

or regulatory” claims. (Id.). Urging the Court to construe the arbitration agreement “liberally in

favor of arbitration,” defendant argues that the Agreement and the Arbitration Provision are

extremely broad and clearly encompass plaintiff’s claims. (Id.).

As defendant notes, plaintiff relies on out-of-district cases that are not controlling on this

Court. By contrast, in Clarke v. Alltran Financial, LP, this court held that a debt collector could

seek to enforce the terms of an arbitration clause when faced with alleged violations of the

FDCPA. No. 17 CV 3330, 2018 WL 1036951, at *4-6 (E.D.N.Y. Feb. 22, 2018); see also

Wexler v. LVNV Funding, LLC, No. 22 CV 1348, 2023 WL 4305776, at *7-8 (S.D.N.Y. June

30, 2023) (holding that the assignee of arbitration rights may compel arbitration).

Having considered the parties’ arguments, the Court finds that defendant has

demonstrated that the plaintiff entered into an agreement with Comenity Bank, and accepted the

terms of the Agreement, including the Arbitration Provision, by using the card and not opting out

of the Provision. Plaintiff has not contested any of these facts. Defendant has further

demonstrated that there are no material issues of fact in dispute as to whether MCM became the

assignee of the Agreement and its terms when it purchased the Account from Comenity.

Consequently, plaintiff continues to be bound by her agreement to arbitrate all covered disputes.

Finally, having considered the case authority cited by both parties, and construing the Arbitration

Provision broadly, see Abudullayeva v. Attending Homecare Servs., LLC, 928 F.3d at 222

(holding that “any doubt” as to whether a claim is arbitrable should be resolved “in favor of

arbitration”), the Court finds that defendant has met the second prong of the test for arbitrability

by demonstrating that the broad Arbitration Provision in the Agreement covers plaintiff’s

statutory FDCPA claims. These claims arise in connection with and are related to the Account,

to plaintiff’s failure to pay the debt owed under the Account, and to defendant’s efforts to collect

the monies owed.

Accordingly, the plaintiff’s claims under the FDCPA are subject to arbitration and the

Court respectfully recommends that the parties be Ordered to arbitrate the claims.

IV. The Court Compels Arbitration on an Individual Basis

Defendant also moves to dismiss the action because the Agreement contained a waiver of

plaintiff’s right to represent a class of consumers or participate in a class action. (Def.’s Mot. at

7). Citing the provision in the Agreement that states “[t]his Agreement includes an Arbitration

Provision with class action and jury trial waivers,” defendant contends that plaintiff accepted the

Arbitration Provision, and became bound by the provision that “neither [the plaintiff] nor [the

defendant] may participate in a class action in court or in class-wide arbitration.” (Id. at 8).

Class action waivers as part of an arbitration agreement have been found enforceable

because “classwide arbitration interferes with the fundamental attributes of arbitration and thus

creates a scheme inconsistent with the FAA.” AT&T Mobility LLC v. Concepcion, 563 U.S.

333, 344 (2001). Class action arbitration waivers have also been upheld in the context of credit

card agreements. See American Express Co. v. Italian Colors Rest., 570 U.S. 228, 238 (2013)

(reversing the decision to invalidate a class action waiver in a credit card agreement); see also

Frankel v. Citicorp Ins. Servs., Inc., No. 11 CV 2293, 2014 WL 1051855, *7-9 (E.D.N.Y. Aug.

12, 2014), report and recommendation adopted, No. 11 CV 2293, 2015 WL 6021534 (E.D.N.Y.

Oct. 14, 2015). Defendant argues that the case should be dismissed because plaintiff

commenced this action on behalf of a class, while having waived the right to participate in a

class action. (Def.’s Mot. at 8). In the alternative, defendant argues that the Court should

compel plaintiff to arbitrate her FDCPA claims on an individual basis. (Id. at 12).

In opposing defendant’s motion, plaintiff reiterates her position that the FDCPA claims

fall outside the scope of the Arbitration Provision and that defendant may not invoke the class

action waiver. Supreme Court precedent dictates that this Class Action Waiver is enforceable.

See, e.g., AT&T Mobility v. Concepcion, 563 U.S. at 352 (holding that class-action waivers in

consumer contracts are enforceable); see also Shetiwy v. Midland Credit Mgmt., 959 F. Supp. 2d

469, 474-75 (S.D.N.Y. 2013) (enforcing class action waivers with respect to FDCPA and RICO

claims). Indeed, “the enforceability of a class action waiver in an arbitration clause is a question

of arbitrability that is ordinarily for a court, and not the arbitrator, to decide.” Emilio v. Sprint

Spectrum L.P., 508 F. App’x 3, 4 (2d Cir. 2013). Having rejected plaintiff’s argument and

concluded that the Arbitration Provision covers plaintiff’s FDCPA claims, the Court finds that

the class action waiver is valid and respectfully recommends that defendant’s motion to compel

arbitration on an individual basis be granted.

It is also respectfully recommended that plaintiff’s class claims be dismissed. While the

Second Circuit held in Katz v. Cellco Partnership, 794 F.3d at 346-47, that a proceeding must be

stayed when all claims in an action have been referred to arbitration, courts in this circuit have

continued to dismiss a complaint’s class allegations based on a class action waiver while staying

an action pending individual arbitration. See Brecher v. Midland Credit Mgmt., Inc., No. 18 CV

3142, 2019 WL 1171476, at *7 (E.D.N.Y. Mar. 13, 2019); Vitrano v. N.A.R., Inc., No. 18 CV

06754, 2020 WL 1493620, at *10 (E.D.N.Y. Mar. 27, 2020); Biggs v. Midland Credit Mgmt.,

Inc., 2018 WL 1225539, at *9-10; Jackson v. Rushmore Serv. Ctr., LLC, No. 18 CV 4587, 2019

WL 4736914, at *7 (E.D.N.Y. Sept. 27, 2019); but see Dellarocca v. Atl. Credit & Fin., Inc., No.

19 CV 2667, 2020 WL 13553687, at *4 (E.D.N.Y. Sept. 28, 2020) (staying entirety of action,

including class action claims barred by waiver, when granting motion to compel individual

arbitration). This course of action conforms with the holding in Katz v. Cellco Partnership

because, unlike the other substantive claims underlying this action, the class claims that plaintiff

brings are explicitly not arbitrable given the class action waiver. In light of this precedent, the

class action waiver in the Arbitration Provision should be enforced. Accordingly, it is

respectfully recommended that the Court compel arbitration of plaintiff’s claims on an individual

basis and dismiss plaintiff’s class action claims.

V. Defendant’s Motion to Dismiss

MCM has also moved to dismiss the Complaint in its entirety because plaintiff failed to

allege that pre-suit notice was provided to defendant before commencing this action, as required

by the Agreement, and brought class action claims despite the clear waiver provision in the

Agreement. (Def.’s Mot. at 6-7). Defendant argues that plaintiff accepted the terms of the

Agreement by using the Account to purchase items, failed to provide written notice to defendant

prior to filing suit, and failed to allege that she provided any such notice in the Complaint. (Id.

(citing Anderson v. Unilever U.S., Inc., 607 F. Supp. 3d 441, 457 (S.D.N.Y. 2022) (holding that

in pleading pre-suit notice, “plaintiff must provide factual allegations . . . supporting the

contention that [they] notified [the] defendant of the alleged breach”))).

Since the Court has found that plaintiff’s claims must be heard by an arbitrator,

defendant’s request for dismissal under Rule 12(b)(6) is moot. See Fontaine v. Resurgent Cap.

Servs., L.P., 540 F. Supp. 3d 353, 362 (W.D.N.Y. 2021) (finding request for dismissal under

Rule 12(b)(6) moot where court granted motion to compel arbitration). While it is true that

courts in this district have dismissed claims where plaintiffs failed to provide pre-suit notice

before filing an action, see, e.g., DeSimone v. Select Portfolio Serv’g, Inc., No. 20 CV 3837,

2023 WL 6450236, at *6-9 (E.D.N.Y. 2023), the Court finds that these procedural questions

should be handled by the arbitrator. Although neither party addressed this issue, courts have

held that “once it is determined . . . that the parties are obligated to submit the subject matter of a

dispute to arbitration, ‘procedural’ questions which grow out of the dispute and bear on its final

disposition should be left to the arbitrator.” Turner on Behalf of Int’l Bhd. of Elec. Workers Loc.

1200, AFL-CIO v. CBS Broad. Inc., 599 F. Supp. 3d 187, 191 (S.D.N.Y. 2022) (quoting John

Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 (1964); see also Duran v. J. Hass Grp.,

LLC, No. 10 CV 4538, 2012 WL 3233818, at *3 (E.D.N.Y. June 8, 2012), aff’d 531 F. App’x

146 (2d Cir. 2013) (holding that “what kind of arbitration proceeding the parties agreed to” is “a

procedural question left to the arbitrator”). Procedural terms governing arbitration have been

held by courts as not “material” or “essential,” and thus to be determined by the arbitrator. See

Hudson Specialty Ins. Co. v. New Jersey Transit Corp., No. 15 CV 89, 2015 WL 3542548, at *7

(S.D.N.Y. June 5, 2015); Bristol v. Securitas Sec. Servs. USA, Inc., 597 F. Supp. 3d 574, 580

(S.D.N.Y. 2022) (defining non-essential terms to include “the method for selecting an arbitrator,

the arbitral forum, the procedural law to be followed, the substantive law to be applied, and the

location where the arbitration should be held”).

Since the Court recommends that defendant’s alternative request to compel individual

arbitration be granted, the Court further recommends that the motion to dismiss for lack of pre-

suit notice be stayed at this time and the question of pre-suit notice be considered by the

arbitrator during the course of arbitration.

CONCLUSION

In conclusion, it is respectfully recommended that defendant’s alternative request to

compel arbitration on an individual basis be granted, that plaintiff’s class action claims be

dismissed, and that plaintiff’s remaining claims be stayed in favor of arbitration.

Any objections to this Report and Recommendation must be filed with the Clerk of the

Court, with a copy to the undersigned, within fourteen (14) days of receipt of this Report. See

28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(2); see also Fed. R. Civ. P. 6(a) (providing the

method for computing time). Failure to file objections within the specified time waives the right

to appeal the District Court’s order. See, e.g., Caidor v. Onondaga Cnty., 517 F.3d 601, 604 (2d

Cir. 2008).

The Clerk of Court is respectfully directed to send copies of this Report and

Recommendation to the parties either electronically through the Electronic Case Filing (ECF)

system or by mail.

SO ORDERED.

Dated: Brooklyn, New York

August 8, 2025

/s/ Cheryl L. Pollak

Cheryl L. Pollak

United States Magistrate Judge

Eastern District of New York