Appeals Court Permits Solo’s Student-Loan Suit, Despite Arbitration Clause
A federal appeals court is allowing a solo practitioner to avoid arbitration in a lawsuit that claims his student loan company engaged in deceptive practices.
The New York City-based 2nd U.S. Circuit Court of Appeals ruled that Manhattan solo Joshua Fensterstock could pursue his suit because the loan agreement’s ban on class actions and its arbitration requirement were unconscionable, the New York Law Journal reports.
Fensterstock had claimed in his suit that Affiliated Computer Services Inc. and Education Finance Partners were applying payments that were not received by a certain day each month to interest instead of principal. ACS had serviced loan notes for Education Finance Partners, a California company that is now bankrupt. He is seeking class action status.
Fensterstock had borrowed nearly $53,000 to consolidate student loans about three years after his 2003 graduation from Hofstra Law School, the opinion (PDF) says. He was paying a fixed interest rate of 9.32 percent a year.
