Plaintiff dismissed case w/o prejudice

[Bugsy]

Hello everyone, I was sued by midland credit in the state of New Jersey. This morning we had our hearing. When the judge was checking us in via zoom call the plaintiffs atty asked the court to dismiss the case in order for the defendant (me) to compel arbitration. I had a MTC filed, but no hearing date. The judge asked the plaintiff whether it be with or without prejudice. Unfortunately it was w/o prejudice. My question is what do I do next? Do I take them into arbitration even though they technically dropped their case? I still have the collections reporting on my credit profile and was really hoping for mutual dismissal w/prejudice. 

[WhoCares1000]

We will need to know who the OC is and whether this was sold and you are being sued by a JDB or not. You will have to start Arb at some point because of you don't, they will sue you again and if you try the MTC, they will say you had your chance but did not follow through so you did not mean it.

[Bugsy]

Original creditor was synchrony bank(PayPal credit) the JDB was midland credit management. I took your advice and filed with AAA (followed the arbitration clause in our contract). So far midlands lawyers haven’t filed an answer. I really don’t have a defense so I would love to settle this. All I want is for them not to sue me again or sell the debt off. How/what should I write to them? 

[BV80]

3 hours ago, Bugsy said:

Original creditor was synchrony bank(PayPal credit) the JDB was midland credit management. I took your advice and filed with AAA (followed the arbitration clause in our contract). So far midlands lawyers haven’t filed an answer. I really don’t have a defense so I would love to settle this. All I want is for them not to sue me again or sell the debt off. How/what should I write to them? 

Is this the same lawsuit as referenced in your other thread?  In that one, you said it was dismissed with prejudice.

[Bugsy]

Correct same lawsuit the “with” prejudice was a typo. Sorry about that I meant without prejudice 

[BV80]

29 minutes ago, Bugsy said:

Correct same lawsuit the “with” prejudice was a typo. Sorry about that I meant without prejudice 

Well, you could try to get them to arbitrate, but they don’t have to do so.  At that point, you’d have to MTC.  Even then, they could fail to pay the fees, and the arbitration case would be closed.   That could help you if they filed another lawsuit, but I doubt they’ll file.  However, it wouldn’t really help you with getting the TL removed from your CR.

[Bugsy]

Gotcha well it looks like they filed an answer. They sent me the copies, so I’m assuming they’re going to follow me into arbitration for a $2,000 debt 

[Brotherskeeper]

21 hours ago, Bugsy said:

Gotcha well it looks like they filed an answer. They sent me the copies, so I’m assuming they’re going to follow me into arbitration for a $2,000 debt 

You mean that Midland's attorney(s) filed Respondent's Answer to your AAA claim demand?

Did Midland file a counterclaim for the debt amount? 

I'm not clear whether or not you had a court order granted to compel Midland to arbitrate. If yes, did you include a copy of the court order to compel Midland when you filed your claim demand in AAA? 

In the past, AAA refused to handle claims with Midland without the court order. Midland failed to follow AAA's rules. @fisthardcheese may know if this is still the case. If AAA declines to arbitrate this, AAA will send a letter to both parties. 

 

[Bugsy]

We didn’t have a court order as they dismissed the case w/o prejudice. They didn’t file a counter claim I don’t think. They just filed an answer and I learned today they paid the fees. So I guess into arbitration is set to go forward. 

[Brotherskeeper]

@Bugsy What did you write on the AAA consumer demand form in the box that asks you to briefly explain the nature of the dispute? If you included their claim against you, then they would not have to file it as a counterclaim. 

You should've received a copy of everything the JDB as the Respondent sent to AAA. Without a court order, AAA may still decline to allow arb with Midland to go forward if Midland has not cured its non-compliance with AAA's rules. 

[Bugsy]

Ohh gotcha. I just made it simple and wrote something along the lines of debt dispute. I received a packet from the law firm representing midland. Just showed the debt they claim I owe along with statements etc.. I owe about 2k and didn’t think they would pay the fee. But as of yesterday I learned they payed the initial $500 fee. Not sure where to go from here. Any advice would be greatly appreciated 

[BackFromTheDebt]

It is hard to tell you the next steps, other than play it by ear.  

Are there more fees later on for AAA?  Perhaps you should contact them ASAP and try to work out some sort of settlement, preferably a mutual walkaway.  If there will be more fees later, your chances of such a settlement improve.

 

The thing is, these things are not 100% predictable.  The vast majority of the time they don't pursue the case in arbitration, but sometimes they do.  

[Brotherskeeper]

@Bugsy @BV80  @WhoCares1000 @BackFromTheDebt 

I think you need to find out from AAA if they will agree to arbitration with Midland without a court order. Also, will you request a hearing or a documents only arbitration? 

https://www.adr.org/sites/default/files/Consumer_Fee_Schedule_2.pdf

New AAA Consumer Fee Schedule Addresses Mass Arbitration Costs

"A litigation phenomenon that has recently surged is the simultaneous filing of hundreds or even thousands of individual arbitration demands against the same company by the same law firm, requiring the company to pay the substantial up-front filing fees typically charged by arbitration administrators.  Initially used in the context of employment arbitration claims, such “mass arbitrations” are now also being pursued against consumer businesses.

The American Arbitration Association (“AAA”) recently implemented a sliding scale for filing fees in “multiple consumer cases.”  The fees will apply when the AAA determines, in its sole discretion, that 25 or more similar arbitration claims have been filed by or against the same party by the same counsel or coordinated counsel.  The rules took effect on November 1, 2020.

Under prior AAA rules, in an arbitration commenced by an individual consumer, the filing fee was as high as $1,900. The business was required to pay $1,700 of that amount, and the consumer $200.   Failure to timely pay the filing fee could result in dismissal of the arbitration, enabling the consumer to sue in court.  When thousands of individual arbitrations were made or threatened against a company, as has happened on several occasions, the up-front filing fees totaled millions of dollars.  Under the new rules, the following filing fees are payable by businesses in “multiple consumer cases”: (a) $300 per case for the first 500 cases; (b) $225 per case for cases 500 to 1,500; (c) $150 per case for cases 1,501 to 3,000 and (d) $75 per case for cases 3,001 and beyond.  Consumers pay $100 per case for the first 500 cases, and $50 per case for cases 501 and beyond.

It is too early to tell whether the new AAA rules will have an impact on the filing and administration of mass arbitration claims.  The AAA rules also require businesses to pay a $1,400 case management fee prior to the appointment of an arbitrator, a minimum $2,500 arbitrator fee, half of which is payable once a preliminary management conference is held, and a $500 hearing fee.  The rules do not clarify whether these additional amounts must be paid in each case or if and how they are adjusted if there are multiple consumer cases.  Nor do they clarify whether multiple consumer cases must be filed at the same time or can be aggregated over a period of time.  In any event, this is clearly a step in the right direction as it seeks to balance the rights of all parties to the arbitration agreement."

[WhoCares1000]

4 hours ago, Brotherskeeper said:

@Bugsy @BV80  @WhoCares1000 @BackFromTheDebt 

I think you need to find out from AAA if they will agree to arbitration with Midland without a court order. Also, will you request a hearing or a documents only arbitration? 

https://www.adr.org/sites/default/files/Consumer_Fee_Schedule_2.pdf

New AAA Consumer Fee Schedule Addresses Mass Arbitration Costs

"A litigation phenomenon that has recently surged is the simultaneous filing of hundreds or even thousands of individual arbitration demands against the same company by the same law firm, requiring the company to pay the substantial up-front filing fees typically charged by arbitration administrators.  Initially used in the context of employment arbitration claims, such “mass arbitrations” are now also being pursued against consumer businesses.

The American Arbitration Association (“AAA”) recently implemented a sliding scale for filing fees in “multiple consumer cases.”  The fees will apply when the AAA determines, in its sole discretion, that 25 or more similar arbitration claims have been filed by or against the same party by the same counsel or coordinated counsel.  The rules took effect on November 1, 2020.

Under prior AAA rules, in an arbitration commenced by an individual consumer, the filing fee was as high as $1,900. The business was required to pay $1,700 of that amount, and the consumer $200.   Failure to timely pay the filing fee could result in dismissal of the arbitration, enabling the consumer to sue in court.  When thousands of individual arbitrations were made or threatened against a company, as has happened on several occasions, the up-front filing fees totaled millions of dollars.  Under the new rules, the following filing fees are payable by businesses in “multiple consumer cases”: (a) $300 per case for the first 500 cases; (b) $225 per case for cases 500 to 1,500; (c) $150 per case for cases 1,501 to 3,000 and (d) $75 per case for cases 3,001 and beyond.  Consumers pay $100 per case for the first 500 cases, and $50 per case for cases 501 and beyond.

It is too early to tell whether the new AAA rules will have an impact on the filing and administration of mass arbitration claims.  The AAA rules also require businesses to pay a $1,400 case management fee prior to the appointment of an arbitrator, a minimum $2,500 arbitrator fee, half of which is payable once a preliminary management conference is held, and a $500 hearing fee.  The rules do not clarify whether these additional amounts must be paid in each case or if and how they are adjusted if there are multiple consumer cases.  Nor do they clarify whether multiple consumer cases must be filed at the same time or can be aggregated over a period of time.  In any event, this is clearly a step in the right direction as it seeks to balance the rights of all parties to the arbitration agreement."

I think it would be dependent on whether the business wishes to go into arbitration or not. That is why I like @fisthardcheese's idea to hold off filing for arbitration until you have the order to compel in hand. Of course sometimes, you think you have the order or at least agreement (such as the recent Virginia case that has been discussed).

With the sliding fee scale, will that make businesses more likely to short circuit the court process and go directly to arbitration. Note that the rules say "by the same counsel or coordinated counsel. I highly doubt pro se defendants could be considered coordinated by any legal means of the word. Seems like they are lowering their initial fees. They will have to make the money back from somewhere.

[Brotherskeeper]

1 hour ago, WhoCares1000 said:

I think it would be dependent on whether the business wishes to go into arbitration or not. That is why I like @fisthardcheese's idea to hold off filing for arbitration until you have the order to compel in hand. Of course sometimes, you think you have the order or at least agreement (such as the recent Virginia case that has been discussed).

It isn't easy of late to get some of these judges to issue the order to compel; they will stay the case for 90-120 days, but stop short of signing an order.  I believe it was back in 2016 or so when forum members began to get letters from AAA that declined to accept claim demands against Midland due to Midland's failure to follow AAA's rules. Fisthardcheese advised that AAA would accept the claim if there was a court order compelling Midland that could be included in the demand packet--if an order could be gotten. Perhaps Midland has now complied with the AAA conditions and is back in the good graces of AAA. I hadn't heard that it had. 

Here's the gist of AAA letter a CIC member posted from June, 2016: 

Dear Parties:

Claimant has filed with us a demand for arbitration. We note that the arbitration clause provides for arbitration by the American Arbitration Association (“AAA”).

We must, at this time, decline to administer this claim and any other claims between Midland Funding, LLC and its consumers because the business failed to comply with the AAA's policies regarding consumer claims. These policies can be found on our web site, www.adr.org, in the Consumer Due Process Protocol (“Protocol”) and the Consumer Arbitration Rules.

On a previously-filed consumer matter, this business did not timely submit its share of the filing fees and/or failed to waive a provision in its consumer contract that the AAA identified as a material and substantial deviation from the Protocol. The AAA sent correspondence informing the business that it may decline to administer consumer arbitrations involving this business and requested that the business remove the AAA from its consumer arbitration agreements so that there would be no confusion to the public.

In addition, Midland Funding, LLC has not complied with our request to register its consumer clause on the AAA's Consumer Clause Registry (www.adr.org/consumerclauseregistry). Please note that submission of the expedited review fee on any particular matter does not satisfy the separate obligation to register the consumer clause.

Accordingly, we have administratively closed our file and will refund any payment received by the filing party. According to R-1(d) of the Consumer Arbitration Rules, should the AAA decline to administer an arbitration, either party may choose to submit its dispute to the appropriate court for resolution.

Pursuant to the AAA's current policy, in the normal course of our administration, the AAA may maintain certain electronic case documents in our electronic records system. Such electronic documents may not constitute a complete case file. Other than certain types of electronic case documents that the AAA maintains indefinitely, electronic case documents will be destroyed 18 months after the date of this letter.

Please email ConsumerFiling@adr.org if you have any questions.

Sincerely,

Consumer Filing Team
ConsumerFiling@adr.org
Fax: (877) 304-8457

[Bugsy]

Update: I waited to see if midland would pay the fees in order to get the arb going. They did so very slowly. Today I got a letter in the mail that they have just payed 3900$ in fees to start the arbitration. They are trying to collect 2200 from me. Looks like I’m going to have to head to arb court. Any advice would be greatly appreciated! 

[Bulldoger]

This changes everything for me, I was hoping to used MTC on my two outstanding Midland accounts. As for advice @Percyb @Brotherskeeper would be able to offer  advice.  Did the JDB community have a pow-wow and decide to start going through arbitration even at lost to stop this defense?  

[Brotherskeeper]

55 minutes ago, Bulldoger said:

Did the JDB community have a pow-wow and decide to start going through arbitration even at lost to stop this defense?  

I'm beginning to wonder. 

[Bugsy]

? They’re already about 4,400$ invested in this case guess I’m the test dummy haha 

[Bugsy]

Anyone have any ideas on next steps? I sent an email out to midlands lawyers to see if their willing to settle for a mutual dismissal. 

[kittycat]

The pandemic period caused some debt buyers to realize that their historical court procedures were adaptable to zoom style arbitration hearings at comparable cost.  Their custodian and attorney could connect through the same zoom session even though they were each in physically different locations, not much unlike a court trial where the custodian might testify by phone.  The elimination of all the travel for an in person hearing and the reduction of time spent on any one arbitration hearing greatly improved the economics of arbitration.

Much of the $3900 they paid is a retainer, some of which might be refundable if not used.

Even though normal non-pandemic procedures are starting to resume, zoom as a tool in arbitration might be here to stay.  If your contract provides for an in person hearing, you might not want to acquiesce to any type of virtual hearing instead.  Unfortunately, "in person" might be interpreted by the arbitrator to include a virtual hearing. So, if you lose the argument for an actual in-the-flesh in person hearing, there might not be much you can do about it.  Unless you argue that you don't have a computer, phone, or any internet connection.

In January 2020, the governor of NJ signed an amendment to the NJRUAA regulating arbitration forums and pre-dispute consumer arbitrations.  The language is mostly the same as California's language, in that fee reallocation is not permitted.  But since this change is to the NJRUAA, its effect at regulation of an arbitration done under the FAA has not been tested.

New Rules Coming for Consumer Arbitration in New Jersey

N.J. Stat. § 2A:23B-35

[Percyb]

@Bulldoger I think what’s happening is  these jdb pay a flat fee to these firms.  They are heading into arbitration as they haven’t been out much.  Getting virtual hearings and such.  Probably getting default after default judgement and have the spare money to afford paying all the fees.  Just as a side note just got the final brief last night from respondent and they want full lawyer fees and arbitration cost.   

[Brotherskeeper]

On 4/26/2021 at 11:51 PM, Bugsy said:

We didn’t have a court order as they dismissed the case w/o prejudice. They didn’t file a counter claim I don’t think. They just filed an answer and I learned today they paid the fees. So I guess into arbitration is set to go forward. 

I'm curious about your case.  AAA has agreed to arbitrate with Midland without a court order to compel? Many of our forum members received a letter from AAA declining to conduct arb with Midland as explained in this exerpt below. I wonder if Midland has now corrected AAA's objections and complied with its policies? 

On 4/27/2021 at 6:02 PM, Brotherskeeper said:

We must, at this time, decline to administer this claim and any other claims between Midland Funding, LLC and its consumers because the business failed to comply with the AAA's policies regarding consumer claims. These policies can be found on our web site, www.adr.org, in the Consumer Due Process Protocol (“Protocol”) and the Consumer Arbitration Rules.

On a previously-filed consumer matter, this business did not timely submit its share of the filing fees and/or failed to waive a provision in its consumer contract that the AAA identified as a material and substantial deviation from the Protocol. The AAA sent correspondence informing the business that it may decline to administer consumer arbitrations involving this business and requested that the business remove the AAA from its consumer arbitration agreements so that there would be no confusion to the public.

In addition, Midland Funding, LLC has not complied with our request to register its consumer clause on the AAA's Consumer Clause Registry (www.adr.org/consumerclauseregistry). Please note that submission of the expedited review fee on any particular matter does not satisfy the separate obligation to register the consumer clause.

 

[Bugsy]

I guess they’ve complied 

[BackFromTheDebt]

3 hours ago, kittycat said:

The pandemic period caused some debt buyers to realize that their historical court procedures were adaptable to zoom style arbitration hearings at comparable cost.  Their custodian and attorney could connect through the same zoom session even though they were each in physically different locations, not much unlike a court trial where the custodian might testify by phone.  The elimination of all the travel for an in person hearing and the reduction of time spent on any one arbitration hearing greatly improved the economics of arbitration.

Much of the $3900 they paid is a retainer, some of which might be refundable if not used.

Even though normal non-pandemic procedures are starting to resume, zoom as a tool in arbitration might be here to stay.  If your contract provides for an in person hearing, you might not want to acquiesce to any type of virtual hearing instead.  Unfortunately, "in person" might be interpreted by the arbitrator to include a virtual hearing. So, if you lose the argument for an actual in-the-flesh in person hearing, there might not be much you can do about it.  Unless you argue that you don't have a computer, phone, or any internet connection.

In January 2020, the governor of NJ signed an amendment to the NJRUAA regulating arbitration forums and pre-dispute consumer arbitrations.  The language is mostly the same as California's language, in that fee reallocation is not permitted.  But since this change is to the NJRUAA, its effect at regulation of an arbitration done under the FAA has not been tested.

New Rules Coming for Consumer Arbitration in New Jersey

N.J. Stat. § 2A:23B-35

This is important.

One of the biggest weapons we consumers had in the old days was the COST of the in-person hearing.  

Take an arbitrator with a $500/hour fee.  

In the pre-COVID days, I had the right to demand an in-person hearing in my home district.  That would mean Madison, Wisconsin.  I always used the Chicago JAMS office.  

Here would be the impact of an in-person hearing.  

The creditor would have to rent a room in the local courthouse.  (The only case that got to the point where we were arranging the hearing had a female arbitrator who insisted -- correctly -- that the hearing be held in a building with armed security guards and a metal detector.  I suggested renting a room in the county courthouse, and the arbitrator agreed).  

The creditor would have to pay transportation costs from Chicago to Madison -- including a per-hour fee for the travel.

The creditor would probably have to pay for a night in a local hotel near the courthouse, and the meals, etc.  

The creditor would have to pay the arbitrator's fees.  I think for an out-of-town meeting it would be a minimum of a day's fees.  I don't know if that was 8 or 10 hours, which would be either $4000 or $5000.

The creditor would have to pay the arbitrator's fees for any time spent researching and writing up a decision.

The creditor would have to arrange for an "expert" witness from the bank to appear via telephone.  This would just be part of the "expert's" salary, so not a big deal.  

The creditor would have to pay any other costs.  

 

It is no surprise that a number of cases, including one of mine, have been settled shortly before the hearing, before the creditor had to pay that massive bill.