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Cain v. Midland Funding

Cain v. Midland Funding

This was an appeal to the Maryland Court of Appeals to keep a consumer class action against debt buyer Midland Funding in court and to prevent Midland from forcing the dispute into arbitration on an individual, non-class basis. Midland had operated in Maryland for two and a half years without the license that all collection agencies must obtain. During this unlicensed period Midland filed collection actions against thousands of consumers whose debts it had purchased, including the plaintiff Clifford Cain, Jr., and obtained money judgments, wage garnishments, and attorneys’ fee awards against them. When Mr. Cain filed a class action to recover the illegal judgments and fee awards, Midland argued that Mr. Cain’s lawsuit must be brought in arbitration pursuant to Mr. Cain’s agreement to arbitrate—not with Midland, but with his credit card company.

The Court of Appeals found that Midland Funding had waived any right to arbitrate by choosing first to litigate, rather than arbitrate, in small claims court over Mr. Cain’s debt. The court further held that Mr. Cain was entitled to stay in court even without showing that Midland’s choices had harmed, or prejudiced, him. The decision’s thoughtful treatment of waiver and prejudice is an important precedent that highlights the unfairness of a practice that too many courts allow—companies invoking arbitration clauses mid-dispute, when it is expedient to do so.

  • Karla Gilbride
  • Paul Bland
    Scott C. Borison of Legg Law Firm, LLC
    Phillip Robinson of Consumer Law Center, LLC