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By Chris Bruce
May 20 — The plaintiff in a usury lawsuit against LendingClub will “vigorously oppose” any motion to compel arbitration of his claims, a letter filed in federal court said.
Ronald Bethune's April lawsuit in the U.S. District Court for the Southern District of New York, a putative class case, claims LendingClub charged him interest at almost twice the rate allowed by New York law (76 BBD, 4/20/16).
LendingClub May 10 said plaintiff Ronald Bethune has already agreed to resolve disputes with LendingClub in arbitration, and asked the court to schedule a conference for a proposed motion to compel him to do so (92 BBD, 5/12/16).
Mitchell Breit, an attorney for Bethune with Simmons Hanly Conroy in New York, responded May 19 to the LendingClub move in a letter filed with the court the same day.
Breit's letter asked the court for limited discovery to determine whether the arbitration clause is enforceable. The letter argued that it is not, adding that Bethune will fight the motion to compel.
“Specifically, enforcement of the contract will result in the unjust enforcement of an onerous contract term — applying the law of Utah, a state without a usury statute, to circumvent the application of New York’s (and every other state’s) usury laws — through bargaining power disparity and a standardized, non-negotiable, misleading fine-print contract,” Breit said.
The skirmish over the arbitration clause in Bethune's contract is being watched in part because of a recent proposal by the Consumer Financial Protection Bureau (CFPB) to sharply restrict many arbitration agreements.
Some say LendingClub's expected move to compel Bethune to arbitrate his claims may add fuel to the CFPB efforts and help boost the case for the proposal.
“We worry that Lending Club’s decision to push for arbitration will become the real life example of why CFPB regulation is needed,” Jaret Seiberg, a financial institutions analysts with Guggenheim Partners, said in May 12 market commentary.
In addition to Breit, Bethune is represented by Richard D. McCune of McCuneWright in Redlands, Calif.
LendingClub is represented by Jessica Kaufman and Mark P. Ladner, both of Morrison & Foerster in New York.
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