AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• The Plaintiff, struggling with credit card debt, was approached by the Defendant, United Debt Counselors, LLC (UDC), with an offer to resolve her debts. Based on representations made by UDC, the Plaintiff entered into a contract, ceased paying her credit card bills, and started paying UDC. Alleging UDC did nothing on her behalf, the Plaintiff filed a class action complaint for damages under the New Mexico Unfair Practices Act (UPA) and sought additional relief (para 2).

Procedural History

• Sanchez v. United Debt Couns., LLC, A-1-CA-40164, mem. op. (N.M. Ct. App. Aug. 17, 2022) (nonprecedential): The Court of Appeals held that the Plaintiff’s challenge to the delegation clause in the arbitration agreement was not sufficiently specific, affirming the district court's decision to compel arbitration (para 1).

Parties' Submissions

• Plaintiff: Argued that the arbitration agreement, including its delegation clause, was unconscionable under the UPA because it waived her right to recover attorney’s fees and costs, making it unenforceable. The Plaintiff maintained that the court should decide the enforceability of the delegation clause, not an arbitrator (paras 4, 17-18).
• Defendant (UDC): Contended that the delegation clause within the arbitration agreement required the case to be referred to arbitration, arguing that any challenge to the arbitration agreement's enforceability, including the delegation clause, should be decided by an arbitrator. UDC conceded that the waiver of attorney’s fees and costs was void for UPA claims but argued the rest of the agreement could still be enforced (paras 3, 5-6).

Legal Issues

• Whether the Court of Appeals erred in holding that the Plaintiff did not raise a specific challenge to the delegation clause because she challenged it on the same grounds as the arbitration clause as a whole (para 16).
• Whether the delegation clause and the arbitration clause are unenforceable (para 8).

Disposition

• The Supreme Court of the State of New Mexico reversed the Court of Appeals' decision, holding that the Plaintiff did raise a specific challenge to the delegation clause. The case was remanded to the district court for further proceedings to determine the validity and enforceability of the delegation clause (para 23).

Reasons

• The Supreme Court, with Justice Michael E. Vigil writing for a unanimous court, concluded that the Plaintiff's challenge to the delegation clause was sufficiently specific. The Court distinguished this case from previous jurisprudence by clarifying that a challenge to the delegation clause does not need to be distinct from a challenge to the arbitration agreement as a whole. The Court found that the Plaintiff specifically argued that the delegation clause was unconscionable under the UPA because it stripped her of the right to attorney’s fees and costs for litigating gateway issues, which was a specific challenge to the delegation clause. The Court criticized the Court of Appeals for conflating the specificity of the challenge with the merits of the unconscionability argument and for misinterpreting precedent regarding the specificity required for challenging delegation clauses (paras 17-22).