Four years ago on New Year’s Eve in Baton Rouge, Fred Weaver received a voicemail from his credit card company. The message said that Weaver was “ruining his life” by not making his payments on time and demanded the call be returned that night.
“I was pretty scared,” said Weaver. “I knew I needed to figure out what was going on.” He had used the credit card -- which was advertised with an interest rate of 1.9 percent -- to upgrade his music studio with new equipment. (Mr. Weaver records music for a living.) The card had a $32,000 credit limit, so he maxed it out, knowing the interest rate was so low. “The offer was too good to pass up,” he said.
Weaver easily made his payments on time every month. Then, inexplicably, the credit card company, FIA, upped the rate to 18.9 percent. When he defaulted on payments, FIA upped the rate again -- this time to the high twenties. He called the company many times about the rate increases, but no one would heed his complaints.
After receiving the threatening voicemail on New Year’s Eve, he knew he needed to get a lawyer. He hired Baton Rouge attorney Garth Ridge.
Weaver and Ridge took FIA to court for its unannounced interest rate increases. But the company tried to force the plaintiff into arbitration, submitting as evidence a copy of a generic cardholder agreement that contained an arbitration clause.
For his part, Weaver submitted a sworn affidavit denying that the sample contract put forward by FIA had anything to do with him. His affidavit also stated that he had never agreed to arbitration.
Nevertheless, the trial court in Baton Rouge confirmed the arbitration award for FIA. Louisiana’s First Circuit Court of Appeal affirmed, holding that if a creditor seeks confirmation of an arbitration award and the award is not challenged within ninety days, the trial court can do nothing but approve -- even if the creditor fails to show that the consumer ever agreed to arbitration.
“Many consumers aren’t aware of the short time window to fight an arbitration award in court, and debt collectors know that,” says Public Justice attorney Leslie Bailey.
On appeal, the case reached the state supreme court, and Ridge reached out to Bailey and Public Justice to help defend his client. Early last year Bailey argued in front of the Louisiana Supreme Court, contending that the enforcement of an arbitration agreement requires proof of that agreement, not a generic photocopy. The court’s subsequent 6-1 decision ruled in Weaver’s favor, stating that an arbitration award against a consumer cannot be enforced unless there is proof that the consumer agreed to arbitration.
Bailey talked about the decision’s importance: “If FIA had prevailed, it wouldn’t matter whether a person never knew about the arbitration, never agreed to arbitration, or never even had a credit card -- it would be tough luck. Fortunately, the Louisiana Supreme Court recognized that consumers in this predicament do have the right to be heard in court.”
In addition to Ridge, local counsel for Weaver included Steve Conley of Covington, La., and Bill Cherbonnier of Greta, La.
“We could’ve given up along the way,” Weaver said about the 6-1 ruling. “But I felt the way these debt collectors and credit card companies treat people, I wanted to keep fighting. I thought it was important to pursue my case to help other people -- to establish a precedent so this kind of thing won’t happen to others.”
He continued, “These debt collectors can ruin people’s lives. I wanted to win more for them than for me.”