Illinois Southern District Judge Nancy Rosenstengel
EAST ST. LOUIS — Auto lender Santander's "snafu" in paying arbitration fees on time shouldn't mean a group of car owners should automatically be allowed to haul Santander back into court to face a class action lawsuit accusing the company of illegally demanding people make payments for vehicles they claim they can't legally own, a federal judge has ruled.
On Feb. 12, U.S. District Judge Nancy Rosenstengel rejected a motion by plaintiffs to formally shut down the arbitration proceedings sought by Santander and restart their class action in Illinois Southern District federal court.
In the ruling, Rosenstengel rejected plaintiffs' claims that Santander's seeming failure to pay $375 in arbitration fees by a deadline should result in resuming their class action lawsuit, potentially worth millions of dollars.
Rosenstengel essentially ruled that allowing the case to restart would be too severe of a response to what she found to be a "snafu" caused by an apparent technical glitch or human error.
"While the aggrieved party is a large financial institution that should avoid mistakes like this, they still can happen," Rosenstengel wrote. "Counsel attempted to pay the filing fee 'within minutes' of receiving the payment link. When he learned that the payment had not gone through, he immediately tried to make it.
"And when the AAA (American Arbitration Association) told the parties it would 'reopen' the case with (the plaintiff's) consent, she refused.
"To hold that counsel’s electronic payment error strips Santander of a bargained-for right appears to be a punishment unbecoming of the crime," Rosenstengel said.
The ruling comes as the latest step in a court fight dating back to January 2024, when attorneys from the firm of SWMW Law, of St. Louis, filed suit in St. Clair County Circuit Court against Santander Consumer USA.
Based in Dallas, Texas, Santander Consumer USA is one of the largest finacers of car loans in the U.S. It is a subsidiary of Santander Holdings USA, of Boston, and Spanish international banking and finance giant, Santander.
The putative class action lawsuit was filed on behalf of named plaintiff Crystal Brown, of St. Louis.
In the lawsuit, plaintiffs claim Santander violated consumer protection laws in Illinois and throughout much of the U.S.
According to the lawsuit, the company allegedly took ownership of loans obtained for vehicles which, unbeknownst to their would-be new owners, were already encumbered by liens held against the vehicles under past financing arrangements.
Thus, the new prospective owners, who had obtained loans to finance their vehicles, were prevented from registering their new vehicles with their state governments because the titles were not clear.
Nonetheless, the lawsuit asserts, Santander still attempted to collect payments from those new owners, even after the lender was allegedly notified of the defects in the title and inability of their borrowers to legally possess the vehicles.
In response to the lawsuit, however, Santander removed the case to federal court. Then, the company asserted its rights under the financing contracts held by the borrowers to force the disputes out of court and into arbitration.
The court agreed, entering an order to stay the case pending arbitration.
However, when Brown's particular case entered into arbitration with the AAA, Santander allegedly failed to make the $375 arbitration fee payment on time.
According to court documents, a lawyer representing Santander was notified of the need to pay the fees, and allegedly responded in minutes through a pay link supplied by the AAA. According to court documents, the attorney believed the payment had been made, but allegedly was shocked six weeks later to learn the AAA had moved to close the proceedings.
Upon learning of the apparent mix-up, the attorney asked again to make the payment and reopen the proceedings. However, while the AAA said it would be willing to do so, it could not, unless Brown agreed.
Brown then refused, and instead filed a motion to lift the stay and allow the class action lawsuit to resume.
Rosenstengel, however, said such a step was not in keeping with the perceived nature of the infraction.
The judge said it would be a different matter altogether if Santander had refused to pay the fees or had disputed them in some way. But that was not the case here.
Rather, she said, it was the result of either a technological problem or some kind of human error, neither of which should result in triggering the resumption of the class action.
Santander has been represented by attorney Robert J. Brener, of the firm of Duane Morris, of Florham Park, New Jersey.
Brown and the potential class has been represented by attorney Ben McIntosh, of SWMW Law.
