On May 21, the U.S. District Court for the Northern District of Alabama granted an auto finance company’s motion to compel arbitration and a consumer reporting agency’s motion to dismiss in a consumer’s lawsuit alleging defamation and violations of the FCRA and the FDCPA arising from credit reporting after a vehicle purchase and total loss settlement. The consumer alleged that a total loss protection addendum required the auto finance company to waive his remaining loan liability after he accepted a total loss settlement through a safety recall reimbursement program, but that the auto finance company reported the account as a charge-off and the consumer reporting agency refused to remove the information from his credit report. The court held that the consumer and the auto finance company agreed to arbitrate disputes arising out of or relating to their relationship under American Arbitration Association rules, and that the consumer did not dispute signing the arbitration agreement or specifically challenge the delegation provision requiring threshold arbitrability issues to be decided by the arbitrator.

The court held that it was for the arbitrator to resolve the consumer’s arguments that: (i) arbitration was unduly delayed; (ii) the arbitration agreement should not be enforced because of an alleged material breach; (iii) the arbitration agreement was unconscionable; and (iv) statutory and tort claims fell outside the arbitration agreement. The court also dismissed the consumer’s FCRA claim against the consumer reporting agency, citing 11th Circuit precedent that the FCRA “does not require [credit-reporting agencies] to resolve legal disputes about the validity of the underlying debts they report” and concluding that the claim turned on the validity of the underlying debt. The court stayed the case pending arbitration and directed the parties to file a joint status report within 30 days after arbitration concluded.