Barbosa v. Midland Credit Mgmt., Inc.
981 F.3d 82
| 1st Cir. | 2020Background
- Barbosa opened a Barclays credit card; account charged off and a $3,423.24 balance was sold to Midland Funding in 2015; Midland Credit Management (MCM) serviced the account and retained Schreiber/Cohen as counsel.
- Midland/its agents sued Barbosa in Boston Municipal Court; Barbosa appeared, won judgment because plaintiff failed to prove ownership, then sued MCM and Schreiber/Cohen in federal court under the FDCPA and Mass. Gen. Laws ch. 93A.
- Defendants moved to compel arbitration under the Barclays Cardmember Agreement; the agreement (governed by Delaware law) contains an assignment clause and an arbitration clause defining “we/us” to include employees, parents, subsidiaries, affiliates, beneficiaries, agents, assigns and (in certain cases) service providers.
- Barclays executed a Bill of Sale assigning account rights to Midland Funding; the record shows MCM acted as Midland’s servicer/agent and Schreiber/Cohen acted as Midland’s legal agent; Midland is a shell with no employees.
- The district court adopted the magistrate judge’s R&R compelling arbitration, concluding non-signatory MCM and Schreiber/Cohen could enforce the arbitration clause; Barbosa appealed only the question whether those non-signatories had authority to compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can non-signatory agents compel arbitration? | Barbosa: non-signatories lack authority to invoke arbitration. | MCM/Schreiber: as Midland’s agents/assignees they fall within the contract’s "we/us" and can invoke arbitration. | Yes — court affirms that MCM and Schreiber/Cohen have authority to enforce the arbitration clause as Midland’s agents (and MCM also as assignee). |
| Does Midland’s assignment give it Barclays’ contractual rights? | Barbosa: assignment doesn’t make Midland identical to Barclays for enforcement purposes. | Defendants: assignee stands in the assignor’s shoes and acquires contractual rights. | Yes — assignment conveyed Barclays’ rights to Midland, so Midland may exercise the Cardmember Agreement rights. |
| Does the arbitration-definition’s service-provider clause preclude agents of an assignee from invoking arbitration? | Barbosa: the latter part of the definition limits who "we" includes (only service providers if Barclays is a party), so agents of Midland cannot invoke it. | Defendants: the clause expands rather than narrows the list; agents of Midland are covered by the general "we/us" language. | No limit — the clause does not bar agents/assignees of Midland from invoking arbitration; MCM and Schreiber/Cohen fall within "we/us." |
| Is arbitrability of a non-signatory delegated to an arbitrator? | Barbosa: gateway question for the court to decide. | MCM: delegation clause assigns arbitrability to arbitrator. | Court decides — delegation clause did not clearly and unmistakably delegate this gateway issue to an arbitrator, so the court resolved arbitrability. |
Key Cases Cited
- National Fed'n of the Blind v. The Container Store, Inc., 904 F.3d 70 (1st Cir. 2018) (FAA policy favoring arbitration; de novo review of arbitration orders)
- Kristian v. Comcast Corp., 446 F.3d 25 (1st Cir. 2006) (courts presumptively decide gateway questions about whether arbitration binds non-signatories)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (arbitrators may decide arbitrability only if clear and unmistakable evidence shows parties agreed)
- Biller v. S-H OpCo Greenwich Bay Manor, LLC, 961 F.3d 502 (1st Cir. 2020) (clarifies clear-and-unmistakable standard and standards for enforcing arbitration clauses)
- MacKenzie v. Flagstar Bank, FSB, 738 F.3d 486 (1st Cir. 2013) (principle that assignee stands in assignor’s shoes)
- New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019) (FAA requires enforcement of arbitration agreements according to their terms)