Kulig v. Midland Funding

Midland Funding, LLC (Midland) (defendant) was a corporation that took title to charged-off debts and filed suit to collect them. Carol Kulig (plaintiff) allegedly owed credit-card debt to Chase Bank USA, NA (Chase) that Midland purchased. Midland attempted to collect the debt in New York state court but was unsuccessful because the claim was considered time-barred under New York law. Midland filed suit in federal district court under the Fair Debt Collection Practices Act, and Kulig sought to make the case a class action for hundreds of individuals in New York against whom Midland had filed and litigated time-barred lawsuits. Midland then demanded that Kulig elect individual arbitration instead of litigation, citing a generic, sample cardmember agreement for Chase customers that Midland claimed governed Kulig’s account. Kulig did not respond to the demand, and Midland filed a motion to stay the proceedings and compel arbitration under the Federal Arbitration Act (FAA). The cardmember agreement cited by Midland was not dated but contained interest rates calculated for a date three days after Kulig’s last documented use of her Chase account. Kulig asserted that she did not assent to the later-dated agreement. Midland claimed that the agreement amended an earlier version of the document that Kulig must have signed to open her account. Midland did not provide any evidence that Kulig received notice of agreement amendments. Midland further claimed that because the cardmember agreement provided for Delaware law to govern agreement disputes, Delaware law should apply in the case. Kulig argued that New York law applied due to the location of the interpreting court. The district court found that New York law would likely apply but analyzed whether a valid agreement to arbitrate was formed under both states’ laws.