Household HSBC Watch

David McIntyre v. Household Bank, No. 02 C 1537 (N.D. Ill., August 20, 2002) 2002 U.S. Dist. LEXIS 15346; Plaintiff filed a class action suit alleging that defendant violated the Truth in Lending Act (TILA), and defendant moved to stay the proceedings pending arbitration pursuant to section 3 of the Federal Arbitration Act. Plaintiff’s attorneys had not yet filed a motion for class certification at the time the present motion to stay was filed by defendant.

The court held that its sole duty on a section 3 motion to stay is to determine whether the agreement contained a valid arbitration clause. If the clause is valid, the court may not go on to consider arguments concerning fairness of the contract formation process or validity of the entire agreement. Resolution of such matters would be for the arbitrator. The court found that the arbitration clause at issue was valid and that the parties were bound by it. The court went on to note that a fair hearing does not require all of the procedure available to a litigant in court. Although TILA allows for class actions, that statute does not provide an undeniable right to class actions, and they may be waived in order to enforce arbitration. The court held that plaintiff was bound by the arbitration clause and therefore would not be able to participate in a class action.

Said Household - HSBC Watch Consumer Advocates: “By agreeing to arbitrate you place yourself in a position where HSBC will take you to the legal limit on a daily basis, thus thinking that arbitration provides security for them. This suggests HSBC does not care about reputation, professionalism, nor bad publicity - they only care about taking your money, either legally or questionably. Businesses that contract with HSBC Retail Services thus become equally questionable and at fault.”