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Class action suit against National Arbitration Forum
September 17, 2009 by Ross Runkel at LawMemo
A class action suit has been filed against National Arbitration Forum.
Text of complaint: Magnone v. Accretive LLC, United States District Court, Central District of California
A press release from the law firm filing the complaint:
New York, NY — September 15, 2009 — The law firm of Milberg LLP has filed a class action lawsuit in the United States District Court for the Central District of California on behalf of all persons who used NAF's arbitration services during the period from June 1, 2006 to the present, inclusive (the “Class Period”). The complaint is available from the Court or can be viewed at Milberg LLP’s website at www.milberg.com.Until recently, NAF held itself out as a leading forum for consumer arbitrations, which is how many consumer debt disputes are resolved. An arbitration forum must above all be impartial, so that consumers can be confident that their disputes with creditors (e.g., banks, credit card companies, phone companies, etc.) will be heard fairly, as would be the case if the dispute was resolved by a court of law. The class action lawsuit filed against NAF and related parties alleges that NAF has misled consumers for years in this regard because it was owned by and/or beholden to a debt collection agency and debt collection law firm, such that in reality it was a debt collector, not a neutral forum for resolving disputes by the debt collection industry against consumers. The result of these alliances was near perfect success rates by debt collectors against consumers in NAF arbitrations.
More specifically, the complaint alleges that NAF, National Arbitration Forum, LLC (“NAF LLC”), Mann Bracken, LLP (“Mann Bracken”), Accretive LLC (“Accretive”), Agora Fund I GP, LLC, Axiant, LLC, and Forthright Solutions (collectively “Defendants”), falsely held NAF out to be independent and unaffiliated with any persons or entities within or outside the collections industry and falsely presented its arbitration services as neutral. According to the complaint, Mann Bracken is a law firm that claims to specialize in consumer debt collection matters, but is a debt collector in its own right. NAF and Mann Bracken are both owned by Defendant Accretive who owns and controls both NAF and Mann Bracken, and their related entities. According to the complaint, NAF is now “under siege by local and state prosecutors for working alongside creditors, rubber-stamping illegitimate arbitration awards against consumers, deceiving the courts and the public, and undermining the integrity of the arbitration system.”
The complaint specifically alleges that NAF maintained a near perfect success rate -- ruling in favor of business entities -- by engaging in improper, deceptive and corrupt acts, including: (a) establishing incentives for arbitrators to favor debt collectors over consumers; (b) disregarding consumers’ evidence and/or arguments; (c) overlooking and violating its own Code of Procedure to benefit debt collectors, and ultimately, large creditors; (d) disregarding creditors’ lack of evidence; and (e) failing to provide the bona fide arbitration services it promised to consumers. The complaint also alleges that NAF breached its contractual obligation to provide arbitration services to consumers, and that NAF directly benefitted from, and was unjustly enriched by the contractual breaches.
Thanks to Disputing, where you can find more interesting background.
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