Barbosa v. Midland Credit Mgmt., Inc. ( 2020 )

United States Court of Appeals
For the First Circuit
No. 19-1896
JACKELINE BARBOSA,
individually and on behalf of others similarly situated,
Plaintiff, Appellant,
MARK ANDERSON, individually and on behalf of other similarly
situated; DOUGLASS BAKER, individually and on behalf of others
similarly situated,
Plaintiffs,
v.
MIDLAND CREDIT MANAGEMENT, INC; SCHREIBER/COHEN, LLC,
Defendants, Appellees,
LUSTIG, GLASER & WILSON, P.C.,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
Before
Thompson, Lipez, and Kayatta,
Circuit Judges.
Charles M. Delbaum, with whom National Consumer Law Center,
Kenneth D. Quat, Quat Law Offices, Alexa Rosenbloom, Nadine Cohen,
Matt Brooks, and Greater Boston Legal Services were on brief, for
appellant.
Cory W. Eichhorn, with whom Gordon P. Katz, Benjamin M.
McGovern, and Holland & Knight LLP were on brief, for appellee
Midland Credit Management, Inc.
Marissa I. Delinks, with whom Andrew M. Schneiderman and
Hinshaw & Culbertson LLP were on brief, for appellee
Schreiber/Cohen, LLC.
November 25, 2020
THOMPSON, Circuit Judge. This case dips us briefly into
the vast pool of credit card debt collection efforts within the
broader debt collection industry. Here's how it works. When a
credit card company gives up on collecting an individual account
in default (leading it to "charge-off" the debt), it bundles lots
of individual accounts together and sells the bundle to a debt
collection entity (otherwise known as the debt buyer). Peter A.
Holland, The One Hundred Billion Dollar Problem in Small Claims
Court: Robo-Signing and Lack of Proof in Debt Buyer Cases, 6 J.
Bus. & Tech. L. 259, 264-65 (2011). Buying such bundles of
individual consumer debt is a massive and lucrative industry; in
2016, the participating corporate entities disclosed revenue of
over $13 billion. Midland Funding, LLC v. Johnson, 137 S. Ct.
1407, 1416 (2017) (Sotomayor, J., dissenting) (citing Consumer
Financial Protection Bur., Fair Debt Collection Practices Act:
Annual Report 2016, at 8). Some of this revenue is earned by
winning default judgments in state small claims courts, where
corporate entities who have bought consumer debt often win their
gamble that individual consumers will not appear in court to defend
against a debt collection action to the tune of "billions of
dollars." Id. at 1417 (quoting Holland, supra, at 263).
The debt buyer in this case, Midland Funding LLC, lost
this gamble with appellant Jackeline Barbosa, who showed up in
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court to defend against the debt collection action and won, then
chose to go on the offensive in federal court.
HOW WE GOT HERE1
A resident of Massachusetts, Barbosa opened a credit
card account with Barclays Bank Delaware ("Barclays") in April
2011. The last payment she made on the account was in November
2012. By June 2013 (the last month for which we have a statement
from this account), Barbosa was carrying an overdue, unpaid balance
of $3,423.24.
In June 2015, Barclays sold this unpaid balance to
Midland Funding LLC. To be more precise, Barclays sold Midland
Funding a "series of accounts that originated with" it, à la
bundling practice we referred to above. Midland Funding is an
empty corporate shell entity (meaning it has no employees) which
buys charged-off consumer debt from other entities. For example,
when Midland Funding bought Barbosa's account from Barclays, her
account was part of a "pool of charged-off accounts."
Midland Credit Management, Inc. ("MCM") manages the
accounts purchased by Midland Funding, acting as its servicer and
1
Heads up: As this "appeal arises from an order on a motion
to compel arbitration in connection with a motion to dismiss, . . .
we draw the relevant facts from 'the complaint and the parties'
submissions to the district court' on the motion." Biller v. S-H
OpCo Greenwich Bay Manor, LLC, 961 F.3d 502, 505 n.2 (1st Cir.
2020) (quoting Bekele v. Lyft, Inc., 918 F.3d 181, 184 (1st Cir.
2019)).
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agent. The rights to Barbosa's account were assigned to MCM
pursuant to a Servicing Agreement between Midland Funding and MCM.
Schreiber/Cohen LLC is the law firm retained by MCM on behalf of
Midland Funding to assist in MCM's debt collection efforts,
including filing lawsuits against credit card debtors.
In August 2017, Midland Funding, as assignee of Barclays
and represented by Schreiber/Cohen, filed a statement of small
claim against Barbosa in the Boston Municipal Court, seeking to
collect the unpaid credit card account balance plus court costs.
The Municipal Court ultimately issued judgment in Barbosa's favor,
concluding Midland Funding had not proved it owned the subject
debt.
About a year later, Barbosa, along with two other
individuals who similarly experienced the credit card collection
practices of Midland Funding and MCM, sued MCM and Schreiber/Cohen
(as well as one other law firm not involved with Barbosa's account)
in federal district court, claiming the corporate entities
violated the Fair Debt Collection Practices Act ("FDCPA"), 15
U.S.C. §§ 1692e and 1692f, by attempting to collect the credit
card debt in the Massachusetts state court after the statute of
limitations for the collection action had expired pursuant to
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Delaware state law.2 The plaintiffs also claimed the violation of
the FDCPA was a per se violation of Massachusetts General Laws,
chapter 93A, § 2.3,4
MCM and Schreiber/Cohen each responded to the complaint
with a motion asking the district court to compel arbitration
pursuant to the arbitration election provision in each plaintiff's
credit card agreement, to strike the class action allegations, to
dismiss the complaint for failure to state a claim, and/or to stay
the litigation pursuant to a variety of theories. MCM primarily
relied on the arbitration provision of the Barclays Cardmember
Agreements.5 While Schreiber/Cohen argued that the complaint was
2 The Barclays Cardmember Agreement stated that the agreement
and Barbosa's account would be governed by Delaware state law and
applicable federal law.
3 Section 2 declares "[u]nfair methods of competition and
unfair or deceptive acts or practices in the conduct of any trade
or commerce" to be unlawful. Mass. Gen. Laws ch. 93A, § 2.
4 The plaintiffs also sought class certification under Fed.
R. Civ. P. 23. We say little more about this part of the
plaintiffs' claims because the district court struck these claims
and this decision has not been challenged in this appeal.
5 The first part of the long arbitration provision in
Barbosa's Cardmember Agreement says:
At the election of either you or us, any claim, dispute
or controversy ("Claim") by either you or us against the
other, or against the employees, agents or assigns of
the other, arising from or relating in any way to this
Agreement or your Account, or any transaction on your
Account including (without limitation) Claims based on
contract, tort (including intentional torts), fraud,
agency, negligence, statutory or regulatory provisions
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worthy of dismissal for failure to state a claim on several
grounds, it also argued the district court should compel
arbitration.
After a hearing, a magistrate judge issued a report and
recommendation (an "R&R" to use court lingo) in which she focused
primarily on the arbitration provision in the Barclays Cardmember
Agreement. The magistrate judge concluded the agreement contained
a valid arbitration provision which MCM and Schreiber/Cohen were
authorized to enforce and recommended the district judge send the
parties off to arbitration. In addition to suggesting the district
judge grant the motion to compel arbitration, the R&R also
suggested the district judge: (1) strike the class action claim,
and (2) dismiss the amended complaint without prejudice. The
or any other source of law and (except as specifically
provided in this Agreement) Claims regarding the
applicability of this arbitration clause or the validity
of the entire Agreement, shall be resolved exclusively
and finally by binding arbitration under the rules and
procedures of the arbitration Administrator selected at
the time the Claim is filed. The Administrator selection
process is set forth below. For purposes of this
provision, "you" includes any authorized user on the
Account, and any of your agents, beneficiaries or
assigns; and "we" or "us" includes our employees,
parents, subsidiaries, affiliates, beneficiaries,
agents and assigns, and to the extent included in a
proceeding in which Barclays is a party, its service
providers and marketing partners. Claims made and
remedies sought as part of a class action, private
attorney general or other representative action
(hereafter all included in the term "class action") are
subject to arbitration on an individual basis, on a class
or representative basis.
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plaintiffs filed a timely objection to the R&R but the district
judge ultimately agreed with the magistrate judge, accepting and
adopting her R&R in its entirety using a margin decision and
issuing an order dismissing the plaintiffs' claims. Barbosa was
the only plaintiff to file a notice of appeal. Her challenge to
the district court's order focuses exclusively on the district
court's conclusion that MCM and Schreiber/Cohen are authorized to
compel Barbosa to arbitrate her claims against them.6 As we explain
below, the legal principles at play here lead us to affirm.
STANDARD OF REVIEW
"We review a district court's denial of a motion to
compel arbitration de novo." Nat'l Fed'n of the Blind v. The
Container Store, Inc., 904 F.3d 70, 78 (1st Cir. 2018) (citing
Kristian v. Comcast Corp., 446 F.3d 25, 31 (1st Cir. 2006)). "In
conducting our inquiry, 'we are not wedded to the lower court's
rationale, but, rather, may affirm its order on any independent
ground made manifest by the record.'" Id. (quoting Campbell v.
Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 551 (1st Cir. 2005)).
OUR TAKE
The central issue in this appeal is whether MCM and
Schreiber/Cohen, two parties who were not signatories to Barbosa's
Cardmember Agreement, can force her into arbitration. Barbosa
6 As we mentioned before, Barbosa does not appeal from the
part of the order striking the class action claim.
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would like to us to answer this question with a resounding "no"
and the appellees (of course) want us, like the district court, to
say "yes."
Before we get into the weeds to resolve this issue, we
begin with a general overview of the Federal Arbitration Act and
how we generally consider arbitration provisions within contracts.
Then we proceed to describe, based on the amended complaint and
the documents filed in this case, the undisputed relationship
statuses between the entities.
The Federal Arbitration Act, 9 U.S.C. §§ 1-16, has been
in place since 1925, long recognized as Congress's solution to the
courts' dim view of arbitration, "replac[ing] judicial
indisposition to arbitration with a 'national policy favoring [it]
and plac[ing] arbitration agreements on equal footing with all
other contracts.'" Nat'l Fed'n of the Blind, 904 F.3d at 79
(second and third alterations in original) (quoting Hall St.
Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581 (2008)).
As enacted, the FAA promotes a liberal federal policy
favoring arbitration and guarantees that "[a] written
provision in . . . a contract evidencing a transaction
involving commerce to settle by arbitration a
controversy thereafter arising out of such contract or
transaction . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or
in equity for the revocation of any contract."
Id. (quoting 9 U.S.C. § 2).
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"The FAA allows one party to an arbitration agreement to
ask the court to put the litigation on hold and force the other
party to arbitrate the disputes." Rivera-Colón v. AT&T Mobility
P.R., Inc., 913 F.3d 200, 207 (1st Cir. 2019) (citing 9 U.S.C.
§ 4); see also 9 U.S.C. § 3. Basically, "[t]he Federal Arbitration
Act requires courts to enforce private arbitration agreements."
New Prime Inc. v. Oliveira, 139 S. Ct. 532, 536 (2019). The FAA
treats these agreements as "contract[s], and courts must enforce
arbitration contracts according to their terms." Biller, 961 F.3d
at 508 (quoting Henry Schein, Inc. v. Archer & White Sales, Inc.,
139 S. Ct. 524, 529 (2019)).
"A party seeking to compel arbitration under the FAA
must demonstrate that a valid agreement to arbitrate exists, that
the movant is entitled to invoke the arbitration clause, that the
other party is bound by that clause, and that the claim asserted
comes within the clause's scope." Id. (quoting Dialysis Access
Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 375 (1st Cir.
2011)). (As we will get into soon, the only disputed element in
this case is whether the moving parties (here MCM and
Schreiber/Cohen) were entitled to enforce the arbitration
provision in the Cardmember Agreement.) "If the movant [shows all
four elements], the court has to send the dispute to arbitration
'unless the party resisting arbitration specifically challenges
the enforceability of the arbitration clause itself . . . or claims
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that the agreement to arbitrate was never concluded.'" Id.
(quoting Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S.
287, 301 (2010)). "Those issues, which implicate 'whether or not
a dispute is arbitrable,' are typically for the court to decide."
Id. (quoting Dialysis Access Ctr., LLC, 638 F.3d at 375).
Barbosa is not challenging either the validity of the
arbitration provision or the formation of the Cardmember Agreement
in which the arbitration provision sits. Instead, her challenge
is narrowly focused on whether MCM and Schreiber/Cohen have the
contractual authority to enforce the Agreement's arbitration
provision by virtue of their status as non-signatories to the
agreement and agents of Midland Funding, to whom Barclays assigned
its contractual rights to Barbosa's credit card account.7
7A quick aside about governing law: Barbosa alleged in her
complaint that Delaware law governs the Cardmember Agreement and
she has argued in all of her papers that Delaware law governs.
The appellees do not dispute this principle and, while the
Cardmember Agreement expressly states it is governed by Delaware
law, the district court applied both Delaware and Massachusetts
state law, finding no significant differences between the two
states for the issues at hand. Indeed, "[b]ecause arbitration is
a creature of contract, 'principles of state contract law control
the determination of whether a valid agreement to arbitrate
exists'" as well as other principles of contract interpretation.
Rivera-Colón, 913 F.3d at 207 (quoting Soto-Fonalledas v. Ritz-
Carlton San Juan Hotel Spa & Casino, 640 F.3d 471, 475 (1st Cir.
2011)). While Barbosa has not challenged the validity of either
the Cardmember Agreement or the arbitration provision within it,
we will look to Delaware state law when we dig into some of the
contract law principles at play in this case.
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There is no doubt that MCM and Schreiber/Cohen's non-
signatory status to the Cardmember Agreement is not in and of
itself dispositive for this issue. While in general a "contract
cannot bind a non-party[,] . . . 'there are exceptions allowing
non-signatories to compel arbitration' and . . . 'a non-signatory
may be bound by or acquire rights under an arbitration agreement
under ordinary state-law principles of agency or contract.'" Grand
Wireless, Inc. v. Verizon Wireless, Inc., 748 F.3d 1, 9-10 (1st
Cir. 2014) (alteration omitted) (quoting Restoration Pres.
Masonry, Inc. v. Grove Eur. Ltd., 325 F.3d 54, 62 n.2 (1st Cir.
2003)); see also id. at 10 n.22 (citing with approval several cases
from other circuits "acknowledging that non-signatories may have
rights under an arbitration contract under certain
circumstances.").
Before turning to our analysis of whether MCM and
Schreiber/Cohen have the requisite authority to enforce the
arbitration provision in the Cardmember Agreement, it will be
helpful to lay out the undisputed relationships between the various
parties as presented in Barbosa's complaint and in the documents
the appellees submitted in support of their motions to compel
arbitration, as well as what the various relevant contractual
provisions in these supporting documents say. None of the parties
are disputing the following:
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 The validity of the Cardmember Agreement as a valid
contract between Barbosa, Barclays, and Barclays' assigns
or that this contract includes both valid assignment and
arbitration provisions.8
 Midland Funding is an assignee of Barclays; the express
assignment is in the "Bill of Sale" submitted with MCM's
motion to compel arbitration as well as reflected in the
"Portfolio Level Affidavit of Sale," also submitted in
support of the motion.9
 MCM is the servicer and agent of Midland Funding; Barbosa
admits as much in her complaint ("MCM has been Midland
8 The assignment provision within the Cardmember Agreement
reads:
We may at any time assign or sell your Account, any sums
due on your Account, this Agreement or our rights or
obligations under this Agreement. The person(s) to whom
we make any such assignment or sale shall be entitled to
all of our rights under this Agreement, to the extent
assigned.
The arbitration provision is long, but the first sentence
establishes the general authority to elect arbitration:
At the election of either you or us, any claim, dispute
or controversy ("Claim") by either you or us against the
other, or against the employees, agents or assigns of
the other, arising from or relating in any way to this
Agreement or your Account . . . shall be resolved
exclusively and finally by binding arbitration under the
rules and procedures of the arbitration Administrator
selected at the time the Claim is filed.
9 The Bill of Sale between Barclays and Midland Funding
regarding the Bulk Debt Sale Agreement "assign[ed], convey[ed],
grant[ed] and deliver[ed] [to Midland Funding] . . . all
[Barclays'] rights title and interest . . . in and to those certain
evidences of debt," including Barbosa's credit card debt.
The Portfolio Level Affidavit of Sale stated that Barclays
"sold, transferred, assigned, conveyed, granted, bargained, set
over and delivered" to Midland Funding "and its successors and
assigns, good and marketable title to the [pool of charged-off
accounts] and any unpaid balance free and clear of any encumbrance
. . . ."
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Funding's servicer and agent with respect to collecting
charged-off consumer debts acquired by Midland Funding")
and MCM submitted a declaration in support of its motion
stating:
MCM is the servicer and authorized agent for
Midland Funding and manages the accounts that
Midland Funding purchases. Midland Funding is an
indirect subsidiary of MCM. Midland Funding has no
employees and is a completely passive entity. To
that end, MCM fully services accounts owned by
Midland Funding and takes any and all actions on
those accounts on behalf of Midland Funding.
 Schreiber/Cohen is Midland Funding's agent. In Barbosa's
complaint, she alleges Schreiber/Cohen engaged in its debt
collection activities "on behalf of Midland Funding and
MCM" and, in her briefing, she refers to the law firm as
Midland Funding's agent.
So that's what everyone agrees on. The disagreement lies in
whether the arbitration provision authorizes MCM and
Schreiber/Cohen to elect arbitration and enforce this provision.
To that end, the crux of the parties' dispute centers on the
following language in the first paragraph of the arbitration
provision:
For purposes of this provision, "you" includes any
authorized user on the Account, and any of your agents,
beneficiaries or assigns; and "we" or "us" includes our
employees, parents, subsidiaries, affiliates,
beneficiaries, agents and assigns, and to the extent
included in a proceeding in which Barclays is a party,
its service providers and marketing partners.
The district court considered and relied on this language, the
assignment provision in the Cardmember Agreement, and the actual
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assignment of rights to Barbosa's account to Midland Funding
memorialized in the "Bill of Sale" when it concluded the following:
(1) Midland Funding now stands in the shoes of Barclays so
Midland Funding's affiliates, agents, and assigns, etc. are
entitled to invoke the arbitration provision just as
Barclays' affiliates, agents, and assigns, etc. could have
invoked the provision.
(2) MCM and Schreiber/Cohen fall within the definition of
"us" in the language quoted above because both are agents of
Midland Funding and, therefore, each has the authority to
invoke the arbitration provision.
Barbosa disagrees with both conclusions for reasons which we
discuss in turn.10
Standing in Barclays' Shoes
Before we can dive into who has the authority to enforce
the arbitration provision, we examine the implications of Midland
Funding as Barclays' assignee. Barbosa argues the district court
got it wrong when it concluded Midland Funding stands in Barclays'
shoes such that Midland Funding has all the same rights as Barclays
10 We take a brief moment to note that all three parties to
this appeal rely heavily on decisions from district courts around
the country addressing factual scenarios in similar procedural
postures. The parties spill quite a bit of ink arguing why these
cases are either analogous to -- or distinguishable from -- the
facts at hand here. None of these decisions carry the day because
they are, at best, persuasive. See Camreta v. Greene, 563 U.S.
692, 709 n.7 (2011) (stating that "[a] decision of a federal
district court judge is not binding precedent in either a different
judicial district, the same judicial district, or even upon the
same judge in a different case." (quoting 18 J. Moore et al.,
Moore's Federal Practice § 134.02[1][d], p. 134–26 (3d ed.
2011))). We are guided instead by the language of the contracts
at play here and the applicable general contract principles.
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under the Cardmember Agreement. According to Barbosa, to so
conclude creates contract provision surplusage, which is against
basic principles of contract interpretation, because Midland
Funding can't be both Barclays' assignee and standing in for
Barclays itself.
MCM says no way -- the principle that an assignee stands
in the shoes of an assignor's contractual rights is well-settled
and this principle does not result in the definition of "us" being
superfluous. Schreiber/Cohen, for its part, read Barbosa's
argument slightly differently, pointing out that the district
court's consideration of both the assignment provision and the
arbitration provision does not result in impermissible surplusage,
but instead demonstrates the proper application of the contract
interpretation principle of reading the contract as a whole and
giving effect to each provision. In her reply brief, Barbosa
shifts her argument a little by asserting that, if Midland Funding
is considered to stand in for every mention of Barclays within the
Cardmember Agreement, then the list of relationships in the
arbitration provision's definition of "us" (i.e., "employees,
parents, subsidiaries, affiliates, beneficiaries, agents and
assigns . . . ") is superfluous. We agree with the appellees.
As we stated above, there is no dispute the Cardmember
Agreement included an assignment provision giving Barclays
permission to "at any time assign or sell your Account" and
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providing that "the person(s) to whom we make any such assignment
or sale shall be entitled to all of our rights under this
Agreement, to the extent assigned." There is also no dispute
Barclays assigned its full contractual rights to Barbosa's credit
card account to Midland Funding. A long-standing given in contract
law is indeed that an "assignee stands in the shoes of the
assignor." MacKenzie v. Flagstar Bank, FSB, 738 F.3d 486, 494
(1st Cir. 2013) (quoting R.I. Hosp. Trust Nat'l Bank v. Ohio Cas.
Ins. Co., 789 F.2d 74, 81 (1st Cir. 1986)). In her brief, Barbosa
does not provide any support, beyond her blanket assertion, that
this conclusion is in conflict with binding contract law.
Therefore, contrary to what she asserts, pursuant to the assignment
provision and the express assignment of "all" rights to Barbosa's
account in the "Bill of Sale," Midland Funding does in fact stand
in Barclays' shoes as its assignee and now has all the same rights
regarding Barbosa's account as Barclays had when the Cardmember
Agreement was formed. And because of that, in the wake of the
assignment, Midland Funding becomes, as Barclays once was, the
"other" referred to in the arbitration provision, and MCM and
Schreiber/Cohen become "agents . . . of the other" (recall the
arbitration provision kicks off with "[a]t the election of either
you or us, any claim, dispute or controversy ("Claim") by either
you or us against the other, or against the employees, agents or
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assigns of the other . . ."). So Barbosa's claims against both
appellees are within the arbitration clause's sweep.
To so conclude does not, as Barbosa asserts, render any
other part of the Cardmember Agreement surplusage. Another well-
settled principle of contract law (using the Delaware Supreme
Court's words) tells us to "read a contract as a whole and . . .
give each provision and term effect, so as not to render any part
of the contract mere surplusage." Bank of N.Y. Mellon v.
Commerzbank Capital Funding Tr. II, 65 A.3d 539, 549 n.30 (Del.
2013) (quoting Kuhn Constr., Inc. v. Diamond State Port Corp., 990
A.2d 393, 396–97 (Del. 2010)). Barbosa does not provide a detailed
argument about how this conclusion results in impermissible
surplusage. She does express her view that "[a] general assignment
of account rights does not override explicit contract language
restricting the parties who may enforce an agreement to arbitrate."
Barbosa is not wrong on this point but, in our view, the assignment
and arbitration provisions within the Cardmember Agreement are not
in conflict, they co-exist: The assignment provision articulates
Barclays' authority to assign all its rights to Barbosa's account
to another entity, whereas the arbitration provision specifically
sets out what kinds of relationships with the account owner are
required before an entity related to the account owner can elect
arbitration. The bottom line is there is no surplusage resulting
from the district court's interpretation of the Cardmember
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Agreement. As a result of the assignment from Barclays to Midland
Funding, the latter is authorized to enforce the contractual rights
created by the Cardmember Agreement, including delegating
enforcement of the contractual provisions to one or two of its
agents to act on its behalf, as we examine next.
Who Can Elect Arbitration
According to Barbosa, MCM and Schreiber/Cohen lack the
authority to elect arbitration and enforce the Cardmember
Agreement's arbitration provision because these entities do not
have a direct relationship with Barclays and do not otherwise fall
within any part of the definition of "us" provided in the
provision. The relevant part of the arbitration provision states:
At the election of either you or us, any claim, dispute
or controversy ("Claim") by either you or us against the
other, or against the employees, agents or assigns of
the other, arising from or relating in any way to this
Agreement or your Account . . . shall be resolved
exclusively and finally by binding arbitration . . . .
For purposes of this provision, "you" includes any
authorized user on the Account, and any of your agents,
beneficiaries or assigns; and "we" or "us" includes our
employees, parents, subsidiaries, affiliates,
beneficiaries, agents and assigns, and to the extent
included in a proceeding in which Barclays is a party,
its service providers and marketing partners.
The way Barbosa reads the first part of the definition ("our
employees, parents, subsidiaries, affiliates, beneficiaries,
agents and assigns"), the arbitration provision does not authorize
the agents and affiliates of a Barclays' assignee (e.g., Midland
Funding) to enforce this provision, so the only entities with the
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authority to elect arbitration are -- literally -- Barclays and
Barclays' "employees, parents, subsidiaries, affiliates,
beneficiaries, agents and assigns." So, in Barbosa's thinking,
Midland Funding could elect arbitration but Midland Funding's
agents and assigns, etc. cannot. MCM and Schreiber/Cohen disagree
and assert that, because Midland Funding has the same contractual
rights as Barclays, Midland Funding's agents have the authority to
enforce the arbitration provision.
The arbitration provision clearly allows the account
owner and the account owner's "employees, . . . agents and assigns"
to elect arbitration and enforce this provision. Because Midland
Funding has the same rights as Barclays had to enforce the
Cardmember Agreement, Midland Funding's agents fall squarely
within the arbitration provision's definition of "us" and may
therefore elect arbitration on Midland Funding's behalf. As we
stated previously, the record shows MCM acted as an agent of
Midland Funding. Barbosa admitted as much in the allegations of
her complaint, and MCM provided evidence to this effect in a
declaration MCM submitted in support of its motion to compel
arbitration.
Turning our attention to Schreiber/Cohen, Barbosa
identified this law firm in her complaint as engaging in debt
collection activities "on behalf of Midland Funding" and, in her
reply brief, referred to this law firm as Midland Funding's agent.
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As Schreiber/Cohen argues, they are Midland Funding's agent as a
matter of law. See Comm'r v. Banks, 543 U.S. 426, 436 (2005)
(recognizing "[t]he relationship between client and attorney,
regardless of the variations in particular compensation agreements
or the amount of skill and effort the attorney contributes, [a]s
a quintessential principal-agent relationship") (citing
Restatement (Second) of Agency § 1, Comment e (1958) (stating an
attorney is an agent under basic principles of agency)). As
Midland Funding's legal counsel, Schreiber/Cohen was authorized to
act on its behalf and under its direction, including writing and
filing motions to enforce the provisions of the contract to which
Midland Funding had the proper authority to enforce.
Not so fast, says Barbosa. She places much emphasis on
the second clause in the definition at issue -- "'we' or 'us'
includes our employees, parents, subsidiaries, affiliates,
beneficiaries, agents and assigns, and to the extent included in
a proceeding in which Barclays is a party, its service providers
and marketing partners" (emphasis added) -- arguing this clause
also does not bring either MCM or Schreiber/Cohen within the
definition of "us." Barbosa argues this part of the definition is
a more specific articulation of to whom the definition applies and
so should control the first part of the sentence's general
definition. As Barbosa sees it, even if MCM and Schreiber/Cohen
are service providers, Midland Funding (if considered to now be in
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Barclays' position) is not a party to this litigation because it
is not a named defendant. As a result, she says, neither entity
is authorized to enforce the arbitration provision based on this
clause. MCM and Schreiber/Cohen respond that this "service
provider" clause does not need to come into play at all because
the first part of the definition ("'we' or 'us' includes our
employees, parents, subsidiaries, affiliates, beneficiaries,
agents and assigns . . ." (emphasis added)) expressly gives them
authority as Midland Funding's agents. Schreiber/Cohen
specifically argues this "service provider" clause is not a more
specific part of the definition limiting the first part and doesn't
preclude it from enforcing the arbitration provision as Midland
Funding's agent. Once again, we think the appellees have the
better understanding.
Based on our interpretation of the first part of this
definition, this second clause is not applicable to the situation
at hand because, as appellees argue, it does not come into play.
Even if Midland Funding was a named defendant, the plain language
indicates this clause is simply extending the list of entities
that may be authorized to elect arbitration and is not intended to
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limit the first part of the definition listing the entities with
this authority.11,12
Finally, we quickly touch on an alternative ground with
respect to MCM's status vis-à-vis Midland Funding which MCM
suggests we consider. According to a declaration from MCM, Midland
Funding and MCM entered into a Servicing Agreement in which, "to
the extent required and/or permitted by applicable law, [MCM] was
11For the first time before us, Barbosa argues another reason
MCM and Schreiber/Cohen do not have the authority to enforce the
arbitration provision: In the absence of a direct relationship
with Barclays, Barclays did not indicate in the Cardmember
Agreement that it intended non-signatory, third-party
beneficiaries to be able to invoke the mandatory arbitration
clause. As Barbosa herself concedes, however, the authority of a
non-signatory to enforce a contractual provision can be based on
different grounds such as agency or third-party beneficiary
principles. Because we hold MCM and Schreiber/Cohen had the
authority to enforce the arbitration provision as agents of Midland
Funding and Barbosa is making this third-party-beneficiary
argument for the first time before us, we need not reach her
arguments on this point.
12 Barbosa also makes a preemptive argument that the doctrine
of equitable estoppel does not prevent her from denying the
appellees' right to invoke the arbitration provision. Because the
appellees argued this point to the district court, Barbosa was
apparently anticipating they would make a similar contention
before us in case we disagreed with the district court's conclusion
that MCM and Schreiber/Cohen have the authority to enforce the
arbitration provision. She was right, they did. The district
court dodged the equitable estoppel issue, concluding in a footnote
that, because it concluded "MCM ha[d] the right to invoke the
arbitration provision, it need not address MCM's argument that the
plaintiffs should be equitably estopped from avoiding
arbitration." Our response to Barbosa's preemptive argument is
the same as the district court's: We need not address whether
Barbosa should be equitably estopped from fighting the appellees'
election to arbitrate because we resolved the primary issue in
favor of the appellees.
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assigned the rights in and to certain accounts, including the
Barbosa Account." Additionally, according to the "Portfolio Level
Affidavit of Sale," Barclays "sold, transferred, assigned,
conveyed, granted, bargained, set over and delivered" to Midland
Funding "and its successors and assigns, good and marketable title
to the [pool of charged-off accounts] and any unpaid balance free
and clear of any encumbrance . . . ." (Emphasis added.) The
district court did not expressly take these documents into account
but MCM urges us to consider its status as an assignee of Midland
Funding as well as of Barclays itself as alternative grounds to
affirm the district court's conclusion that MCM has the requisite
authority to enforce the arbitration provision. Remember, in our
de novo review of this issue, "we are not wedded to the lower
court's rationale, but . . . may affirm its order on any
independent ground made manifest by the record.'" Nat'l Fed'n of
the Blind, 904 F.3d at 78 (alteration omitted) (quoting Campbell,
407 F.3d at 551).
MCM's declaration indicates that an official
assignor/assignee relationship exists between Midland Funding and
MCM. Moreover, pursuant to the language in the "Portfolio Level
Affidavit of Sale," Barclays apparently specifically contemplated
that Midland Funding may engage its own assignees when it exercises
its rights with respect to Barbosa's account and assigned the
rights to Midland Funding and Midland Funding's assigns. MCM,
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therefore, acted not only as Midland Funding's agent but also as
Midland Funding's assignee, and was authorized on both levels to
enforce the arbitration provision.13
13One final issue bears mentioning because the parties have
addressed it in their briefs and it was the subject of some
interest during oral argument. MCM attempted to convince the
district court that Barbosa's arguments against compelling
arbitration of her claims are actually questions of arbitrability
that fall under the arbitration provision's delegation clause.
Among many details, the arbitration provision also states
"[c]laims regarding the applicability of this arbitration clause
or the validity of the entire Agreement, shall be resolved
exclusively and finally by binding arbitration under the rules and
procedures of the arbitration Administrator selected at the time
the Claim is filed." MCM says this delegation clause clearly
handed the decision of whether MCM had the authority to invoke the
arbitration provision to an arbitrator. The district court
disagreed and reminded MCM that, according to this Court,
"questions about whether an arbitration provision binds a party
that did not sign the agreement are presumptively for the court to
decide." (Citing Kristian v. Comcast Corp., 446 F.3d 25, 39 (1st
Cir. 2006)).
Before us, MCM argues that the district court got it wrong on
this point because the Cardmember Agreement required the
arbitrator, not the court, to decide whether MCM could compel
arbitration, and the district court can't ignore that language
within the arbitration provision. MCM urges us to consider sending
the entire question of whether it has the authority to invoke the
arbitration provision to an arbitrator. In her reply, Barbosa of
course disagrees and argues the district court got it right.
We have previously acknowledged that "parties may agree to
have an arbitrator decide not only the merits of a particular
dispute but also gateway questions of arbitrability, such as
whether the parties have agreed to arbitrate or whether their
agreement covers a particular controversy [but they] must do so
. . . by 'clear and unmistakable' evidence." Biller, 961 F.3d at
509 (quoting Henry Schein, Inc., 139 S. Ct. at 529, 530). We
employ a presumption, however, that courts (instead of
arbitrators) resolve gateway disputes about whether a particular
arbitration clause binds parties in a particular case, especially
when the dispute centers on whether "an arbitration contract binds
parties that did not sign the agreement." Kristian, 446 F.3d at
39 (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938
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WRAPPING UP
Because we conclude MCM and Schreiber/Cohen have the
authority to enforce the arbitration provision, we must "send the
parties off to arbitrate" Barbosa's claims. Rivera-Colón, 913
F.3d at 208. The district court's order granting MCM and
Schreiber/Cohen's motions to compel Barbosa's claims to the
arbitration process is affirmed. Each party to bear its own costs.
(1985)). In our view, the language in the arbitration provision
stating that "the applicability of this arbitration clause . . .
shall be resolved . . . by binding arbitration," does not provide
the "clear and unmistakable evidence" that the parties intended an
arbitrator to determine whether the parties attempting to enforce
the arbitration provision had the requisite authority to do so.
Biller, 961 F.3d at 509. The district court properly decided this
issue.
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