On September 2, the U.S. District Court for the District of New Jersey denied a consumer reporting agency’s motion to strike class allegations and its alternative motion for partial summary judgment in a FCRA suit brought by a consumer who alleged the agency erroneously reported a “foreclosure proceedings started” code on her credit report for a mortgage that had been paid off two years earlier. The consumer alleged the inaccuracy appeared on her report in March 2023 and caused her to be denied a mortgage. The agency argued that the consumer waived the right to bring class claims when she agreed to terms of use containing an arbitration agreement with a class action waiver. The case had previously been sent to arbitration after the 3rd Circuit directed the parties to resolve the arbitration question before an arbitrator.

The court found the motion to strike premature, holding that the consumer had pled sufficient facts to satisfy Rule 23 requirements and that class certification should be addressed after discovery. On the alternative summary judgment request, the court acknowledged that class action waivers embedded in arbitration agreements are generally enforceable under New Jersey law but held that the class action waiver at issue — which was embedded within the arbitration agreement, not set out as a separate, standalone provision — did not apply because the arbitrator had already determined that the consumer’s claims fell outside the scope of the arbitration agreement. The court reasoned that the alleged inaccuracy occurred in March 2023, before the consumer entered into the terms of use in April 2023, and that the putative class period dated back to 2021, nearly two years before the agreement was executed. Citing 11th Circuit precedent, the court concluded that where claims are not subject to an arbitration agreement, the class action waiver contained within that agreement does not govern the dispute.