For now, individual arbitration is still a viable option for avoiding at least some class actions. But what do you do when the transaction for the would-be class representative is so old that you no longer have a copy of the arbitration agreement? A recent decision from a federal appellate court gives businesses guidance about proving the existence of now-discarded arbitration contracts.
In that case, Bazemore v. Jefferson Capital Systems, LLC, the plaintiff defaulted on her credit card. She then filed for bankruptcy, and the card issuer filed a proof of claim in that proceeding seeking payment. According to the consumer, the credit-card debt was barred by the statute of limitations, so the issuer violated the Fair Debt Collection Practices Act (FDCPA) by continuing to demand payment.
Like many things nowadays, the consumer’s credit-card agreement did not exist in paper form. Instead, she had applied for her card on-line. The card issuer tried to use a declaration from one of its employees to prove that the consumer had agreed to an arbitration clause.
The main problem with that declaration, the United States Court of Appeals for the Eleventh Circuit held, was that the declarant could not say for sure which version of the company’s standard contract the consumer had agreed to. To prove the terms of a discarded contract, the court noted, a company should introduce: (1) competent evidence that the contract was sent to the consumer and (2) a copy of the actual contract the company is seeking to enforce. Also, if there is a factual dispute over whether the agreement existed, then the Federal Arbitration Act (FAA) requires that the court hold a jury trial on the issue.
So if any of your contracts are entered into via the internet, you should make a practice of separately saving documents or information for each one. A “virtual” folder system would be ideal. Maintain that as long as your state law requires (or longer, if you prefer).