Illinois Federal Court Finds Putative Class Action Precluded by Arbitration Agreement – Collier v. Real Time Staffing Services

A putative class action alleging violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq. (FCRA), must be submitted to binding arbitration, according to the court in Collier v. Real Time Staffing Services, Inc., No. 11 C 6209, memorandum opinion and order (N.D. Ill., Apr. 11, 2012). The court found that a clause in the contract between the plaintiff and defendant required both parties to submit any disputes between them to arbitration. On the question of whether the class claims asserted by the plaintiff were subject to mandatory arbitration, the court left it for the arbitrators to decide.

The plaintiff, Darion Collier, submitted an electronic job application to the defendant, Real Time Staffing Services, which did business as SelectRemedy. According to the court’s order, the plaintiff signed an acknowledgment that said his employment with SelectRemedy would begin once he started an assignment for one of its clients, and that it would be on an “at-will” basis. The acknowledgment further said that SelectRemedy could at any time modify the terms and conditions of his employment. Order at 2. SelectRemedy did not hire the plaintiff after reviewing his application, allegedly based on information in his consumer credit report.

The plaintiff filed suit on September 7, 2011, alleging violations of the FCRA on behalf of himself and a proposed class. SelectRemedy filed a motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure, asserting that an arbitration agreement signed by the plaintiff with his application precluded the lawsuit. The agreement stated that the plaintiff agreed to submit any disputes to binding arbitration in accordance with the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (FAA). In opposing the motion to dismiss, the plaintiff argued that the arbitration agreement was unenforceable for lack of consideration, that SelectRemedy’s ability to change the terms of employment rendered the contract illusory, and that the arbitration agreement should not cover class claims.

On the issue of consideration, the plaintiff argued that no consideration existed because SelectRemedy had not agreed to submit to arbitration. The court disagreed, noting that the title of the agreement was titled “Mutual Arbitration Agreement,” and distinguished it from a case in which an arbitration agreement explicitly placed all of the obligations on the employee. Id. at 4, Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir. 1997). The fact that both parties had agreed to arbitrate was sufficient consideration, the court held.

Regarding the question of whether the contract was illusory, the court also rejected the plaintiff’s argument, although it noted that he made a reasonable argument that SelectRemedy’s right to change the terms of employment made its agreement to arbitrate illusory. Collier, order at 5. The court cited Gibson again, which held that the mere fact that an arbitration agreement is a contract of adhesion does not render it illusory. Gibson, 121 F.3d at 1132. Because the agreement in Collier demanded use of FAA-approved methods, the Collier court found the contract acceptable.

Finally, on the question of the class claims, the court held that the arbitration agreement did not specify whether class claims, or only the plaintiff’s individual claims, were subject to arbitration. The U.S. Supreme Court has held that class claims are only subject to arbitration with the agreement of the parties. Stolt-Nielsen v. Animalfeeds Int’l Corp., 130 S.Ct. 1758 (2010). The court therefore left the issue for the arbitrators to address. Collier, order at 9.

Class action lawsuits give consumers, who may lack the resources to fight a much larger opponent in court by themselves, a means to stand together and assert their rights in cases of consumer fraud. Lubin Austermuehle’s team of Chicago class action attorneys represent the interests of consumers throughout the Chicagoland area, including Cook, DuPage, Kane, Lake, McHenry and Will Counties, and in the Mid-West region including Indiana, Wisconsin and Iowa. Please contact us today online, at (630) 333-0333, or at 630-333-0333 to schedule a confidential consultation with one of our attorneys.

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