Hudson v. Citibank

Hudson v. Citibank

Public Justice represents Janet Hudson and Cynthia Stewart, who were holders of Citibank credit cards. After they fell behind on their payments, Citibank brought debt collection actions against each of them in Alaska state court. And, as in thousands of other credit card debt collection actions, Citibank obtained default judgments against Ms. Hudson and Ms. Stewart.

In addition to obtaining judgments for the amounts owed on the credit cards, Citibank also cited an Alaska loser-pays rule to tack on thousands of dollars in attorney’s fees to the judgments. The affidavits filed in support of the fees did not attempt to justify the thousands of dollars in fees requested (and obtained), and, because these assembly-line debt-collection actions typically take only about two hours of attorney time, grossly inflated the actual earned fees.

Ms. Hudson and Ms. Stewart sued Citibank under Alaska’s Unfair Trade Practices Act, seeking to put an end to Citibank’s practice of obtaining inflated fee awards in debt collection actions.

Citibank moved to compel arbitration of their claims, and the trial court agreed to do so. Ms. Hudson and Ms. Stewart sought review in the Alaska Supreme Court, and that court granted review on the question whether their claims ought to be sent to arbitration.

In the Alaska Supreme Court, Public Justice argued that the plaintiffs’ claims should stay in court and not be sent to arbitration, because 1. Citibank waived its right to arbitrate by filing its debt collection actions and seeking fees in court; and 2. Ms. Hudson and Ms. Stewart cannot effectively vindicate their right to seek a statewide injunction in arbitration. Public Justice filed its opening brief in February 2013, and the court ruled against the plaintiffs in December 2016.

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