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Victoria Butto and Lakesha Houser, On Behalf of Themselves and All Others Similarly Situated v. Collecto Inc.

February 23, 2012


The opinion of the court was delivered by: Spatt, District Judge.


In this putative class action, the Defendant Collecto Inc., d/b/a EOS/CCA ("Collecto") seeks reconsideration of the Court's previous denial of its motion to compel the Plaintiffs Victoria Butto and Lakesha Houser to arbitrate their present claims, pursuant to an agreement to which Collecto is not a signatory. For the reasons that follow, the Court denies Collecto's motion for reconsideration and to compel arbitration.


In 2007 and 2009, the Plaintiffs Victoria Butto and Lakesha Houser entered into cell phone service contracts with, respectively, Verizon Wireless ("Verizon") and AT&T Mobility ("AT&T") (collectively, the "wireless providers"). Both Butto and Houser then failed to pay their cell phone bills, and in response, Verizon and AT&T cancelled their service. After the service termination, Butto's and Houser's accounts remained unpaid, and, pursuant to standing collection agreements that Verizon and AT&T had with the Defendant Collecto, Verizon and AT&T each requested Collecto to attempt to collect the unpaid charges. Collecto complied, and on February 10, 2010 and February 11, 2010, Butto and Houser each respectively received a "Notice of Collection Placement" in the mail from the Defendant Collecto. Each letter demanded payment of both "principal" and "Fees/Coll[section] Costs", in the following amounts:

Butto: demand for principal of $184.94 and collection costs of $33.29; Houser: demand for principal of $378.31 and collection costs of $68.27. (Compl., Exs. A & B.)

In response to these letters, Butto and Houser commenced the present putative class action against Collecto on June 23, 2010. Butto and Houser do not contest the principal amounts that Collecto seeks to recover, but rather assert that Collecto's demand for collection costs was improper. The Plaintiffs maintain that, at the time Collecto mailed its Notices of Collection Placement, Collecto had no valid basis for seeking to recover collection costs from the Plaintiffs and that doing so (1) violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"); (2) violated New York's consumer protection statute, New York General Business Law ("NYGBL") § 349; and (3) constituted common law fraud.

Collecto answered the Plaintiffs' complaint, and then, on February 22, 2011, moved to compel Butto and Houser to arbitrate their claims. In moving to compel arbitration, Collecto relied on arbitration agreements contained in the service contracts that Butto and Houser each entered into when they purchased cell phone services from Verizon and AT&T. Although Collecto is not a party to either of these service contracts, Collecto maintained that the arbitration provisions in both contracts are sufficiently broad so as to bind Butto and Houser to arbitration not just with Verizon and AT&T, but also with Collecto. The Plaintiffs dispute this conclusion.

On August 15, 2011, this Court entered a Memorandum of Decision and Order which determined that although the Defendant had demonstrated that there were intertwined factual issues between the claims asserted and the agreements containing the arbitration clauses - the first requisite showing - Collecto could not make the second necessary showing - namely, that there was a relationship among the parties of a nature that justified a conclusion that the party that agreed to arbitrate with another entity should be estopped from denying an obligation to arbitrate a similar dispute with the adversary who is not a party to the arbitration agreement. See Butto v. Collecto Inc., 802 F. Supp. 2d 443, 450 (E.D.N.Y. 2011) (Spatt, J.) ("Butto I"). Collecto now moves for reconsideration of that decision.


A.Legal Standard on a Motion for Reconsideration

A motion for reconsideration in the Eastern District of New York is governed by Local Rule 6.3. "The standard for granting such a motion is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked - matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). "The major grounds justifying reconsideration are an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992) (internal quotation marks omitted).

Of importance, a motion for reconsideration is not an opportunity for litigants to reargue their previous positions or present new or alternative theories that they failed to set forth in connection with the underlying motion. See Trans--Pro Logistic Inc. v. Coby Elecs. Corp., No. 05 Civ. 1759, 2010 WL 4065603, at *1 (E.D.N.Y. Oct. 15, 2010) (citing Ferrand v. Credit Lyonnais, 292 F. Supp. 2d 518, 520 (S.D.N.Y. 2003)); see also Zdanok v. Glidden Co., Durkee Famous Foods Div., 327 F.2d 944, 953 (2d Cir. 1964) ("[W]here litigants have once battled for the court's decision, they should neither be required, nor without good reason permitted, to battle for it again."). Indeed, Rule 6.3 should be "narrowly construed and strictly applied so as to avoid repetitive arguments on issues that have already been considered fully by the court" and is considered an "extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources." Trans--Pro Logistic Inc., 2010 WL 4065603 at *1 (internal quotation marks omitted).

Ultimately, the decision as to whether to grant a motion for reconsideration rests within the sound discretion of the district court. Kapsis v. Bloom, No. 08 Civ. 3092, 2009 WL 414001, at *1 (E .D.N.Y. Feb. 17, 2009). As set forth below, the Court finds that Collecto ...

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