Lawsuits Challenge Release Debit Cards; Courts Rule Against Arbitration
Robert Regan, 67, was carrying $764 when he was arrested on a warrant in Rockdale County, Georgia. Upon his release from jail, instead of receiving cash or a check for the money seized during his arrest, he had no choice but to accept a debit card. Regan objected to the card’s numerous fees, which he had to pay to recover his own money, but when he sued the defendants attempted to dismiss his complaint by enforcing an arbitration clause to which he had never consented.
The federal district court agreed with Regan that the debit card’s arbitration clause was unenforceable, and that his lawsuit could proceed. That decision has ramifications for other prisoners forced to accept fee-laden debit cards at the time of their release.
The defendants, including Stored Value Cards, Inc., argued that the Federal Arbitration Act should apply, which required Regan to submit to arbitration in lieu of a lawsuit. They also noted that he had received written notification of the fees in a Cardholder Agreement included in his release papers. Regan established, however, that he had never signed any agreement assenting to the debit card fees or arbitration.
The district court noted in its January 13, 2015 order that “it is undisputed that the party seeking to avoid arbitration has not signed any contract requiring arbitration and is challenging the very existence of any agreement, including the existence of an agreement, including the existence of an agreement to arbitrate ... there is no presumptively valid contract which would trigger the district court’s duty to compel arbitration pursuant to the Act.”
As stated by the court, “the circumstances surrounding the receipt of the Card and Cardholder Agreement, the absence of Plaintiff’s signature (at least on the Cardholder Agreement), the language on the back of the Card and in the Cardholder Agreement, and Plaintiff’s actions throughout do not permit the Court to decide, as a matter of law, that a reasonable person in Defendants’ position would ascribe to Plaintiff’s actions acceptance or, perhaps later ratification of the Cardholder Agreement.”
The defendants appealed to the Eleventh Circuit, which issued a decision on June 18, 2015 affirming the district court. The Court of Appeals found the lower court had “correctly held that issues of fact exist to be resolved by the court or a jury as to whether Regan agreed to” the arbitration clause. See: Regan v. Stored Value Cards, Inc., 608 Fed.Appx. 895 (11th Cir. 2015).
Following remand the case settled under confidential terms in August 2015; according to Atlanta attorney William C. Klase, who represented Regan, the case was resolved to the satisfaction of all parties. See: Regan v. Stored Value Cards, Inc., U.S.D.C. (N.D. Ga.), Case No. 1:14-cv-01187-AT.
A number of jails have faced legal challenges for issuing debit cards to prisoners upon their release, which require them to pay various fees to access their own money. [See: PLN, June 2014, p.20].
Another pending lawsuit against Stored Value Cards (d/b/a Numi Financial) was filed by the Human Rights Defense Center, PLN’s parent organization, on behalf of plaintiff Danica Love Brown, a former prisoner at the Mulnomah County Jail in Oregon. On February 25, 2016, the federal district court denied the defendants’ motion to compel arbitration in that case, too. The ruling will be reported in greater detail in a future issue of PLN; the case remains pending. See: Brown v. Stored Value Cards, Inc., U.S.D.C. (D. Ore.), Case No. 3:15-cv-01370-MO.
Related legal cases
Reagan v. Stored Value Cards, Inc.
|Cite||608 Fed.Appx. 895 (11th Cir. 2015)|
|Level||Court of Appeals|
Regan v. Stored Value Cards, Inc.
|Cite||U.S.D.C. (N.D. Ga.), Case No. 1:14-cv-01187-AT|
Brown v. Stored Value Cards, Inc.
|Cite||U.S.D.C. (D. Ore.), Case No. 3:15-cv-01370-MO|