The Eastern District of California recently compelled arbitration of a TCPA claim based on the broad language of the plaintiff’s arbitration agreement. See Delgado v. Progress Financial Company, No. 14-0033, 2014 WL 1756282 (E.D. Cal. May 1, 2014). In reaching its decision, the Delgado court distinguished the agreement from those at issue in two other district court decisions that held that TCPA claims fell outside the scope of arbitration agreements.
The plaintiff in Delgado entered into a loan agreement with the defendant, Progress Financial. After falling behind on the loan, Delgado received numerous collection calls that he alleged violated the TCPA. In conjunction with the loan agreement, Delgado had also signed an arbitration agreement, which was incorporated into the loan agreement, and a disclosure form. The disclosure form contained a clause authorizing Progress to contact the plaintiff electronically stating in pertinent part:
You agree that you will accept calls, SMS text messages, emails, and other electronic communications from us regarding your loan application, your loan payments, the collection of you loan account, promotions and other important communications. You understand these calls could be automatically dialed and a recorded message may be played. You agree that we may leave a voicemail message on your mobile phone or send you a SMS text message to your mobile phone, which may include information about the delinquency of your account.
The agreement was quite broad and stated that “any and all claims, controversies, or disputes arising out of or related in any way to” the loan agreement were subject to arbitration.
In resisting arbitration, Delgado argued that his TCPA claim addressed the manner in which Progress attempted to collect a debt. In other words, it had nothing to do with the debt itself and therefore had nothing to do with his account or the loan agreement and thus fell outside the scope of the arbitration agreement. This argument was similar to ones raised in two other district courts in the Ninth Circuit in which the courts found that the “arising from and relating to” an account language typically found in arbitration provisions did not encompass the manner in which collection or contact with the customer would be made. In re: Jiffy Lube Int’l, Inc. Text Spam Litigation, 847 F. Supp. 2d 1253, 1262 (S.D. Cal. 2012); Wagner v. Discover Bank, No. 12-02786, 2014 WL 128372, at *4 (D. Colo. Jan. 13, 2014). In support of their holdings, both courts noted that the plaintiffs’ TCPA claims could be successful “despite the existence of any account or relationship” with the defendants. Wagner, 2014 WL 128372, *5; Jiffy Lube, 847 F. Supp. 2d at 1263.
The court in Delgado rejected the plaintiff’s argument and distinguished Jiffy Lube and Wagner. The court noted first that the two cases were exceptions to the rule. Most courts that have addressed arbitration provisions containing the “arising from and relating to” language held that TCPA claims were covered by the provisions. Delgado, 2014 WL 1756282, *3-4. Second, the court further noted that unlike the plaintiffs in Jiffy Lube and Wagner, Delgado had signed a disclosure form in conjunction with his loan agreement in which he specifically agreed to accept collection calls and text messages regarding the collection of his loan account, and that he understood that those calls “could be automatically dialed and a recorded message may be played.” Delgado, 2014 WL 1756282, *5. There was no question, therefore, that the TCPA claims were related to Delgado’s loan agreement and were within the scope of the arbitration provision in Delgado’s case.
The Delgado decision, and those that came before it, demonstrate the importance of using encompassing language in arbitration provisions. As the Delgado court noted, the majority of courts that have visited the issue have determined that TCPA claims fall under the purview of arbitration provisions where the language in the provision is sufficiently broad to encompass such claims. As a general matter, language such as “arising from or relating to” a customer account or contract generally meets that requirement. The two cases that held otherwise, Jiffy Lube and Wagner, are outliers and therefore illustrate the exception rather than the rule.