The opinion of the court was delivered by: Robert F. Kelly, Sr. J.
Presently before this Court is a Motion for Summary Judgment filed by Defendant Mann Bracken, LLC ("Mann Bracken") against Plaintiff Delores Holmes ("Holmes"). For the reasons set forth below, the Motion is denied.
Holmes brings this case as a class action against the debt collection law firm Mann Bracken. Holmes, individually and on behalf of all other Pennsylvania consumers similarly situated,*fn1 seeks statutory damages and other relief against Mann Bracken for deceptive and unfair debt collection practices under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692e, 1692f (the "FDCPA").
Holmes applied on-line for a Chase Bank VISA Credit Card through a special arrangement with Amazon.com. (Holmes Dep. 36:7-14.) Chase approved her credit application and mailed Holmes a credit card along with the written terms and conditions that applied to Holmes's use of the card ("Cardholder Agreement"). (Id. at 37:13-18.)
Holmes used her credit card to make consumer purchases, but stopped making payments on her account because she believed that Chase improperly increased her interest rate.*fn2 When Holmes defaulted on her credit card debt,*fn3 Chase hired Mann Bracken to initiate arbitration proceedings against her and to collect the debt.
Mann Bracken filed a complaint against Holmes in the National Arbitration Forum ("NAF"). Mann Bracken then forwarded an arbitration demand along with a collection letter to Holmes telling her to pay her debt or answer the notice, or else risk a binding default judgment against her, which could be reduced to a judgment.*fn4 (Def.'s Mot. Summ. J., Ex. 4.) Holmes avers that Mann Bracken violated the FDCPA's prohibition on using false, misleading and/or deceptive statements in connection with the collection of a consumer debt by serving her with an arbitration claim on September 11, 2008. Holmes claims that this notice falsely represented that if Holmes failed to respond to the arbitration notice, any subsequent award entered against her would be binding and subject to judicial enforcement. (Compl. ¶¶ 12, 20, 21, 34.)
The basis of Holmes's claim that the notice of arbitration is deceptive and in violation of the FDCPA is as follows: Holmes asserts that in 2005, in response to a "tsunami of default arbitration awards entered against consumers," the Supreme Court of Pennsylvania amended the Pennsylvania Rules of Civil Procedure to create a specific section governing arbitration of consumer credit transactions. Pa.R.C.P. 1326-31 (effective Feb. 1, 2006) (the "Amended Rules"). Among other things, the Amended Rules specifically ban the practice of seeking to confirm default arbitration awards entered without participation by the consumer or involvement of a judicial officer. Holmes states that under these Amended Rules, debt collectors are no longer permitted to unilaterally obtain and seek to confirm default arbitration awards against Pennsylvania consumers. Instead, if a consumer is notified that a collector demands arbitration, the consumer can either appear and participate, or waive in writing. See Pa.R.C.P. 1327.*fn5 If the consumer does neither, the debt collector is required to first file a civil action compelling an arbitration before, rather than after, the arbitration occurs. See Pa.R.C.P. 1329(a)(1).*fn6 If the defendant fails to file a responsive pleading, the plaintiff may obtain a default judgment.
Pa.R.C.P. 1329(b). Whereas, if the defendant answers and opposes arbitration, the motion to compel arbitration shall be decided pursuant to the court's procedures for deciding motions. If the court grants the motion, the court shall enter an order compelling the parties to proceed with arbitration and staying court proceedings pending arbitration. Pa.R.C.P. 1329(d)(4).
In the instant case, Holmes argues that the arbitration notice that was sent to her is deceptive under the FDCPA because it fails to inform her of her arbitration rights pursuant to the Amended Rules, and that the Amended Rules apply to her as a Pennsylvania consumer and to the others in the potential class. Holmes claims that the arbitration notice is deceptive under the Amended Rules because Mann Bracken would not be able to compel an arbitration and/or enforce an arbitration award by NAF in the Pennsylvania Court of Common Pleas without having to first file a civil action in that court. See Pa.R.C.P. 1329(a)(1). Below, we will first address the issue of whether the Amended Rules govern the instant situation, and then address the issue of whether the arbitration notice is deceptive under the FDCPA.
Federal Rule of Civil Procedure 56(c) states that summary judgment is proper "if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Hines v. Consol. Rail Corp., 926 F.2d 262, 267 (3d Cir. 1991). The court asks "whether the evidence presents a sufficient disagreement to require submission to the jury or whether . . . one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). The moving party has the initial burden of informing the court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "A fact is material if it could affect the outcome of the suit after applying the substantive law. Further, a dispute over a material fact must be 'genuine,' i.e., the evidence must be such 'that a reasonable jury could return a verdict in favor of the non-moving party.'" Compton v. Nat'l League of Prof'l Baseball Clubs, 995 F. Supp. 554, 561 n.14 (E.D. Pa. 1998).
Summary judgment must be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. Once the moving party has produced evidence in support of summary judgment, the non-moving party must go beyond the allegations set forth in its pleadings and counter with evidence that presents "specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e); see also Big Apple BMW, Inc. v. BMW of N. Am. Inc., 974 F.2d 1358, 1362-63 (3d Cir. 1992). "More than a mere scintilla of evidence in its favor" must be presented by the non-moving party in order to overcome a summary judgment motion. Tziatzios v. United States, 164 F.R.D. 410, 411-12 (E.D. Pa. 1996). If the court determines that there are no genuine issues of material fact, then summary judgment will be granted. Celotex, 477 U.S. at 322.