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Miffed Judge Grants One Technologies’ Bid to Strike Class Claims

July 23, 2020, 6:21 PM

One Technologies persuaded a Texas federal court to rethink its initial holding and strike class claims in a lawsuit alleging violations of the Illinois Consumer Fraud Act and the Credit Repair Organizations Act.

Although One Technologies waived its right to compel arbitration against plaintiff Vickie Forby, it had not waived the right with respect to potential class members, the Wednesday ruling from the U.S. District Court for the Northern District of Texas said.

Although Judge Sam A. Lindsay took “no umbrage” with the challenge to his prior ruling and was willing to change his mind, Lindsay admonished One Technologies for describing the decision as “nonsensical,” saying it was the equivalent of using the term “B.S.” Lindsay called counsel’s tone “astounding” and threatened sanctions if it happened again.

One Technologies initially succeeded in persuading the judge to compel arbitration, but the U.S. Court of Appeals for the Fifth Circuit reversed, concluding the company had “substantially invoked the judicial process” and consequently waived its right to enforce the agreement.

Forby revised the complaint, adding a CROA claim. After rejecting One Technologies’ argument that Forby had in effect revived its right to enforce arbitration, Lindsay declined to dismiss Forby’s class claims, concluding the arbitration clause excluded class or consolidated actions.

One Technologies sought reconsideration, or alternatively interlocutory appeal, arguing that absent class members—who presumably agreed to arbitrate their claims when they accepted its terms and conditions—can’t circumvent the agreement by participating in Forby’s case as class members.

It said the court misunderstood the argument to be that the arbitration clause extended to class action claims, when the argument was that, “the fact no class claims can be brought in arbitration does not mean that such claims can be pursued in a judicial forum.”

The first clause of the agreement required arbitration for “any claim” under a specified amount. The second stated that the arbitrator couldn’t preside over any class proceeding. In In re Online Travel Co., the court read similar language to mean that the right to bring a class action had been waived.

Lindsay agreed with One Technologies, partially reversed the prior ruling, and concluded the company hadn’t waived the right to arbitrate with respect to absent class members.

Lindsay also agreed that the determination would take an individualized analysis, and, concluding the class wouldn’t be ascertainable, dismissed the claims.

One Technologies LP and affiliated entities are represented by Gibson, Dunn & Crutcher LLP, Venable LLP, and Lynn Pinker Hurst & Schwegmann LLP.

Forby’s lead attorney is Nelson & Nelson.

The case is Forby v. One Techs., LP, N.D. Tex., No. 3:16-cv-856-L, 7/22/20.

To contact the reporter on this story: Holly Barker in Washington at hbarker@bloombergindustry.com

To contact the editor responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com

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