On October 18, the U.S. District Court for the Western District of Washington granted a motion to compel arbitration filed by student loan servicer Navient Solutions, LLC because the arbitration provision in the promissory note signed by the plaintiff was broad enough to capture future credit reporting disputes. The case is Howard v. Navient Solutions, LLC, 2018 U.S. Dist. LEXIS 180022 (W.D. Wash., Oct. 18, 2018). A copy of the decision can be found here.
The plaintiff, Adrienne Howard, asserted claims under the Fair Credit Reporting Act for inaccurate credit reporting based on Navient's alleged failure to update her reduced loan balance to the credit reporting agencies, resulting in delinquencies appearing on her credit report. Howard had previously filed for bankruptcy and contested the non-dischargeability of her student loans, then settled with Navient after agreeing to a reduced loan balance.
Navient filed a motion to compel based on the arbitration provisions in promissory notes signed by Howard which provided for arbitration as to any claim that "ar[ose] from or relate[d] in any way to the Note." Howard opposed Navient's motion, claiming that the arbitration provisions in her notes were not broad enough to encompass her claim. She argued that her claim did not arise from Navient's failure to comply with its duties under her notes, but instead stemmed from its alleged failure to investigate and correct the credit reporting of her student loans after her dispute.
According to Judge Settle, the language in the promissory notes was sufficient to compel arbitration because Navient's "reporting or investigatory actions on the loans [we]re inherently related to the underlying promissory Notes." The court also found the arbitration provision was not unconscionable since (1) Howard had the option of opting out at the time of execution, (2) the clause provided a mutual right of appeal, and (3) the class action waiver in the clause was valid under governing law.
Troutman Sanders will continue to monitor these developments and provide any further updates as they are available.
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