The Eleventh Circuit erected a high evidentiary barrier to enforcement of an arbitration agreement, although it is less favorable for consumers than the district judge’s decision, which categorically precluded lenders from compelling arbitration of claims alleging violations of the federal Fair Debt Collection Practices Act, or FDCPA.

The debtor applied for a credit card through the Internet in 2005 but never paid the debt in full. While the details are not contained in the Eleventh Circuit’s opinion on July 5, District Judge Dudley H. Bowen Jr. of Dublin, Ga., said in his opinion from May 2014 that the woman owed $1,150, mostly on account of fees, as she had charged only $250 on the credit card. The lender didn’t sue within six years, making the debt uncollectable under state law.

After the woman filed a chapter 13 petition, the lender lodged a $1,150 claim on the stale debt. The woman responded by filing a class action under the FDCPA that ended up in Judge Bowen’s court, prompting the lender to file a motion to compel arbitration.

In an opinion for the appeals court written by District Judge Lewis A. Kaplan of Manhattan, sitting by designation, the Eleventh Circuit upheld denial of the arbitration motion, but on different grounds from those relied on by Judge Bowen.

The circuit court held that the lender failed to produce competent evidence required by state law to establish the existence of a contract compelling arbitration.

The defendant submitted an affidavit by someone employed by the lender in 2005 saying that the woman “would have” clicked on a screen on her computer accepting the terms of an agreement containing an arbitration clause. Judge Kaplan said the signer of the affidavit did not assert he had “personal knowledge on that score or produce any documents to support that assertion.”

Judge Kaplan said that the assertions in the affidavit were “no competent evidence that she entered into any relevant arbitration agreement,” because the affiant did not even produce a copy of the agreement as it would have existed in 2005.

The lender’s affiant also said that the woman “would have” been sent a packet of information containing a copy of the account agreement and arbitration clause. Judge Kaplan said, however, that the lender did not submit a copy of the documents sent to the borrower in 2005 nor provide sufficient evidence by someone with personal knowledge proving that they were actually sent.

In short, the circuit court held there was evidence only of an agreement to repay a debt, not an agreement to arbitrate.

Judge Kaplan’s opinion includes clarification of the Eleventh Circuit’s rules on burden of proof and evidentiary standards invoked by a motion to compel arbitration. Since the Supreme Court’s 1995 decision in First Options of Chicago, he said that borrowers are neither required to deny existence of an arbitration agreement nor to “substantiate that denial with proof.” Instead, the burden is on the lender to show that an enforceable obligation to arbitrate exists under state law.

The appeals court’s decision did not reach the issue decided by Judge Bowen, who believed there was an enforceable agreement to arbitrate. Judge Bowen balanced the federal policy favoring arbitration against the “strong federal interest in its consumer advocacy laws, the principal purpose of which is to protect consumers from unfair, abusive and deceptive debt collection practices.”

In a holding more favorable for debtors than the circuit court’s opinion, Judge Bowen said that a consumer cannot “sign away her right to seek relief in federal court under consumer protection laws absent a clear and unmistakable intent to do so.”