Duane Morris Class Action Review - 2023 - Report - Page 332
II.
Key Rulings In State Court Class Actions
This chapter analyzes key rulings on a state-by-state basis.
Arkansas
Relying on arbitration agreements to fracture a class action is an important strategic
component to defending class actions, but complexities arise when the contract was
assigned to a third-party and courts then have to consider the enforceability of the
arbitration clause.
In Midland Funding, LLC, et al. v. Briesmeister, 2022 Ark. App. LEXIS 52 (Ark. App.
Feb. 2, 2022), is an example of the defendant defeating class certification by arguing
that the assignment of a contract with an arbitration provision is still binding on the
plaintiff. Here, the plaintiff opened a credit card issued by Synchrony Bank and made
purchases on the account. The bank sold the account to Midland Funding after which
Midland filed a complaint against the plaintiff seeking judgment on the past unpaid,
balance, interest, and costs. Midland sent the plaintiff a letter notifying her of the lawsuit,
and the plaintiff in turn filed a complaint against Midland on behalf of herself and a class
of similarly- situated individuals claiming violations of the Arkansas Fair Debt Collection
Practices Act (AFDCPA) because Midland’s letter contained allegedly misleading
information. Id. at *6. Midland moved to compel arbitration and to strike the class
allegations on the terms of the credit card agreement between Synchrony Bank and the
plaintiff. In turn, the plaintiff responded by asserting that Midland was not covered by the
credit card agreement containing the arbitration clause. The trial court denied Midland’s
motion to compel arbitration and to strike the class allegations on the grounds that the
assignment of the plaintiff’s account to Midland did not bind the plaintiff to arbitration
and prevent class action status regarding the AFDCPA. Id. at *8. The Arkansas court of
appeal reversed and remanded. Although Utah (the law that applied under the
agreement) had not addressed a similar circumstance, the court of appeal noted that
other jurisdictions had consistently held that assignees of credit card agreements step
into the shoes of the assignor. Id. at *14. This rule comported with Utah law in that Utah
courts had applied this principle in other assignee-assignor circumstances. The court of
appeal determined that this approach was supported by public policy to provide identical
rights and liabilities to the assignee as those that were owned by the assignor. Id. at
*22. Moreover, the arbitration provision was drafted broadly enough to encompass “any
dispute or claim” between the plaintiff and the defendants. Thus, the plaintiff’s unfair
debt-collection practices claim fell within this broad scope, and such a conclusion
aligned with courts in other jurisdictions. Id. Because this was an interlocutory appeal,
and the Arkansas Rules of Appellate Procedure did not permit the court of appeal to
consider motions to strike class allegations at that stage, and it found that it lacked
subject-matter jurisdiction over this portion of the appeal. Id. at *28.
In Altice USA, Inc., et al. v. City Of Gurdon, 2022 Ark. LEXIS 256 (Ark. Nov. 10, 2022),
the Arkansas Supreme Court upheld class certification where a cable company sought
to charge unlawful telecommunication fees to Arkansas municipalities. The plaintiff, the
City of Gurdon, brought a class action lawsuit against the defendant, Altice USA, Inc.,
331
© Duane Morris LLP 2023
Duane Morris Class Action Review – 2023
