845 F. Supp. 2d 491
E.D.N.Y.2012Background
- Butto and Houser entered into 2007 and 2009 wireless service contracts with Verizon and AT&T respectively.
- Collecto is not a signatory to those contracts but has a standing collection arrangement with Verizon and AT&T.
- Collecto sent Notices of Collection Placement to Butto and Houser on February 10–11, 2010 demanding principal and collection costs.
- Butto and Houser sued Collecto on June 23, 2010 alleging improper collection costs under FDCPA, NYGBL §349, and common law fraud.
- Collecto moved on February 22, 2011 to compel arbitration based on the arbitration provisions in the wireless contracts; Collecto argued they could be bound as a non-signatory.
- The court had previously held in Butto I (August 15, 2011) that Collecto did not prove the requisite estoppel-based relationship between Collecto and the wireless providers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Collecto has an agency relationship with Verizon or AT&T to estop Butto/Houser. | Butto | Collecto argues agency exists via contracts with providers. | No agency; not enough control or explicit agency terms. |
| Whether Collecto and the wireless providers acted in concert to establish close relationship. | Butto | Collecto contends express authorization and close relationship. | No close non-corporate relationship; mere authorization not enough. |
| Whether Collecto is entitled to reconsideration of the denial of arbitration and to compel arbitration. | Butto | Collecto seeks reconsideration under Local Rule 6.3. | Reconsideration denied; no basis to disturb prior ruling on arbitration. |
Key Cases Cited
- Ross v. Am. Express Co., 547 F.3d 137 (2d Cir. 2008) (arbitration requires consent and not all related entities bind signatories by estoppel)
- Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115 (2d Cir. 2010) (concerted misconduct not sufficient unless close relationship justifies estoppel)
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 560 U.S. 58 (Sup. Ct. 2010) (arbitration requires consent; parties decide with whom to arbitrate)