By Chris Bruce
May 25 — A federal judge said LendingClub may try to compel a plaintiff to arbitrate his claims in a lawsuit alleging illegal interest rates ( Bethune v. LendingClub Corp., S.D.N.Y., No. 16-cv-02578, 5/24/16 ).
The ruling late May 24 by Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York doesn't mean plaintiff Ronald Bethune has to resolve his claims in arbitration, but it does allow LendingClub to file a motion to compel without delay.
Bethune's April lawsuit, a proposed class case, says LendingClub charged him interest at almost twice the rate allowed by New York law (76 BBD, 4/20/16).
This month, LendingClub said Bethune has already agreed to resolve disputes with LendingClub in arbitration, but Bethune's lawyers vowed to fight the motion, saying the arbitration clause is unenforceable (99 BBD, 5/23/16).
Buchwald May 24 asked the parties to submit a briefing schedule in the case, which is being closely watched because of a recent Consumer Financial Protection Bureau proposal to ban mandatory pre-dispute arbitration clauses that block class actions, as well as the potential for similar suits against other marketplace lenders.
There was movement May 24 in a separate case that has a bearing on usury lawsuits against marketplace lenders. A brief by the U.S. Solicitor General said the U.S. Supreme Court should not review a May 2015 federal appeals court ruling that eases interest-rate challenges by consumers, even though the ruling was wrong (101 BBD, 5/25/16).
The appeals court ruling has been widely seen as opening the door for similar lawsuits against marketplace lenders.
In a May 25 note on the Solicitor General's brief, Isaac Boltansky of Compass Point Research & Trading said the justices likely will follow the government's recommendation and turn away the petition to review the appeals court ruling.
According to Boltansky, that would leave the appeals court decision in place and preserve “the cloud of uncertainty hovering over the marketplace lending industry’s operational construct.”
LendingClub has changed its business arrangements in an effort to minimize the risks associated with interest-rate lawsuits (40 BBD, 3/1/16).
To contact the reporter on this story: Chris Bruce in Washington at email@example.com
To contact the editor responsible for this story: Seth Stern at firstname.lastname@example.org
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)