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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Hudson v. Citibank (South Dakota) NA (12/16/2016) sp-7141

Hudson v. Citibank (South Dakota) NA (12/16/2016) sp-7141

         Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER .  

         Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

         303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

                                                                                  

         corrections@akcourts.us.  



                  THE SUPREME COURT OF THE STATE OF ALASKA  



JANET HUDSON, on behalf of                          )  

herself and all others,                             )        Supreme Court Nos. S-14740/14826  

                                                    )        (Consolidated)  

                 Petitioner,                        )  

                                                    )        Superior Court No. 3AN-11-09196 CI  

         v.                                         )  

                                                    )        O P I N I O N  

CITIBANK (SOUTH DAKOTA) NA,  )
  

ALASKA LAW OFFICES, INC., and   )
                           No. 7141 - December 16, 2016  

CLAYTON WALKER,                                     )
  

                                                    )
  

                 Respondents.                       )
  

_______________________________ )
  

                                                    )
  

CYNTHIA STEWART, on behalf of                       )
       Superior Court No. 3AN-11-12054 CI  

herself and all others who are similarly )
  

situated,                                           )  

                                                    )  

                 Petitioner,                        )  

                                                    )  

         v.                                         )  

                                                    )  

MIDLAND FUNDING LLC,                                )  

ALASKA LAW OFFICES, INC.,                           )  

and CLAYTON WALKER,                                 )  

                                                    )  

                 Respondents.                       )  

_______________________________ )
  



                 Petition for Review from the Superior Court of the State of  

                                                                                 

                 Alaska, Third Judicial District, Anchorage, Frank A. Pfiffner,  

                 Judge.  


----------------------- Page 2-----------------------

                   Appearances:  James J. Davis, Jr., and Goriune Dudukgian,  

                   Northern  Justice  Project  LLC,  Anchorage,  and  Matthew  

                   W.H. Wessler, Public Justice, P.C., Washington, District of  

                   Columbia, for Petitioners.  Jon S. Dawson and Elizabeth P.  

                                                                                         

                   Hodes,   Davis   Wright   Tremaine   LLP,   Anchorage,   for  

                   Respondents  Midland  Funding  LLC  and  Citibank  (South  

                   Dakota)  NA.    Marc  G.  Wilhelm,  Richmond  &  Quinn,  

                                                                          

                   Anchorage, for Respondents Alaska Law Offices, Inc. and  

                   Clayton Walker.  



                   Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and
  

                                                             

                   Bolger, Justices.
  



                   STOWERS, Justice.
  

                   MAASSEN, Justice, with whom FABE, Chief Justice, joins,
  

                                                                    

                   dissenting.
  



I.        INTRODUCTION  

                   Two credit card holders defaulted on their accounts, and the issuing bank1  

                                                       



                                                                                                    

elected to litigate debt-collection actions. After courts entered default judgments against  



                                                                                                           

both card holders, the card holders filed new and separate suits alleging that the bank  



                                                                                                               

violated the Unfair Trade Practices and Consumer Protection Act (UTPA) during the  



earlier debt collection actions.  The bank moved in each case to arbitrate the UTPA  



                                     

claims, and the superior court stayed the UTPA litigation and ordered arbitration.  We  



must decide whether the bank waived its right to demand arbitration of the subsequent  



UTPA claims by litigating the debt-collection claims.  Because we conclude that the two  



                                                                

claims were not sufficiently closely related, we hold that the bank did not waive its right  



                                  

to demand arbitration of the separate UTPA claims.  But we also conclude that it was  



                                                                                                         

error for the superior court to interpret the arbitration agreement on the question of the  



          1  

                                                                                 

                   In both cases Citibank (South Dakota) NA issued the cards, but in Stewart's  

case Midland Funding LLC purchased the account from Citibank.  



                                                            -2-                                                          7141  


----------------------- Page 3-----------------------

availability of statewide injunctive relief:  the interpretation of an arbitration agreement  



is in the first instance a matter for the arbitrator.  



II.       FACTS AND PROCEEDINGS  



          A.       Hudson v. Citibank  



                   In April 1999 Janet Hudson opened a Citibank credit card account.  The  



original terms of the Card Agreement did not contain an arbitration clause.  In 2001  

                                                          



Citibank mailed Hudson a "Change-in-Terms" form along with her periodic statement.  

                                                                     



The form included an arbitration clause that allowed either party to "elect mandatory,  



binding arbitration" of "any claim, dispute, or controversy" (Claims).  The arbitration  



clause stated:  "All Claims are subject to arbitration, no matter what legal theory they are  

                                                                                



based on or what remedy . . . they seek.  A party who initiates a proceeding in court may  

                                                              



elect arbitration with respect to any Claim advanced in that proceeding by any other  



party."  The clause continued:  



                                                                            

                   At  any  time  you  or  we  may  ask  an  appropriate  court  to  

                                                                              

                   compel arbitration of Claims, . . . even if such Claims are part  

                                                          

                   of a lawsuit, unless a trial has begun or a final judgment has  

                                                     

                   been entered.  Even if a party fails to exercise these rights at  

                                          

                   any  particular  time,  or  in  connection  with  any  particular  

                   Claims, that party can still require arbitration at a later time  

                   or in connection with any other Claims.  



The  clause  also  asserted  that  "[a]ny  questions  about  whether  Claims  are  subject  to  



                                                               

arbitration shall be resolved by interpreting this arbitration provision in the broadest way  



the law will allow it to be enforced."  Finally, the clause stated that "Claims must be  



                                                                

brought in the name of an individual person or entity and must proceed on an individual  



                                                                             

(non-class, non-representative) basis."  Hudson was given the opportunity to opt out of  



the Change in Terms and did not.  



                   Hudson fell behind on her payments, and in November 2010 Citibank -  



represented by Alaska Law Offices - filed a collection action in the Kenai District  



                                                             -3-                                                      7141
  


----------------------- Page 4-----------------------

Court seeking the $24,170.24 that Hudson owed.                             Hudson did not appear in the action,  



and the court entered a default judgment.  Alaska Law Offices moved for attorney's fees  



                                                                                                         

under Alaska Rule of Civil Procedure 82, which allows the prevailing party in a default  



                                                                  

judgment  to  recover  either  its  reasonable  attorney's  fees  or  10%  of  the  judgment,  



                           2  

                              Alaska Law Offices requested 10% attorney's fees, arguing that its  

whichever is less.                                                                                                      



actual  attorney's  fees  for  the  default  judgment  were  $4,834.05,  exactly  20%  of  the  



                                                                   

recovery.    The  court  granted  Alaska  Law  Office's  motion  and  awarded  $2,417  in  



attorney's fees.  



                                                                                                        

                    In August 2011 Hudson filed a class-action complaint in the superior court,  



                                                                   

alleging that Citibank, Alaska Law Offices, and Clayton Walker (an attorney at Alaska  



                                                   

Law Offices) violated the UTPA by asking the court for attorney's fees in excess of the  



"reasonable"  fee  allowed  under  Rule  82.    Hudson  sought  damages  and  prospective  



                                                      

injunctive relief under the "private attorney general" provision of the UTPA.  Citibank  



                                                                                                                            

promptly moved to stay the action and to compel arbitration on an individual basis.  The  



                                                                                                               

superior court granted Citibank's motion to compel arbitration, but held that Hudson  



could be awarded statewide injunctive relief by the arbitrator.  



          B.        Stewart v. Midland Funding LLC  



                                  

                    Cynthia Stewart opened a Citibank credit card account in 2002 with the  



                                              

same arbitration provision as Hudson's.  Stewart fell behind on her payments, and in  



December  2010  Midland  Funding,  which  had  purchased  Stewart's  account  from  



                                                                                                                 

Citibank, initiated an action in Anchorage District Court to collect the debt. Alaska Law  



             

Offices  represented  Midland  Funding  in  the  proceeding.    The  district  court  entered  



default judgment against Stewart, who failed to appear.  Alaska Law Offices argued that  



Midland Funding's actual attorney's fees in the case were $739.04, again 20% of the  



          2         Alaska R. Civ. P. 82(b)(1), (b)(4).  



                                                               -4-                                                           7141  


----------------------- Page 5-----------------------

                                              

recovery, and asked for 10% attorney's fees under Rule 82.  The district court awarded  



the requested fees.  



                     Stewart later filed an action in the superior court alleging that Midland  



Funding  and  Alaska  Law  Offices  violated  the  UTPA  by  using  a  contingency  fee  



                                                                                                            

arrangement as their "reasonable" fees under Rule 82. The defendants moved to stay the  



action and to compel arbitration.  In July 2012, the superior court stayed the action and  



compelled arbitration "according to the same terms ordered by this court in Hudson v.  



Citibank."  



          C.         Petition for Review  



                                 3 

                                                                                                               

                     Hudson  petitioned for review and we granted the petition on three issues:  



                                               

(1) whether Citibank waived  its right to arbitrate the UTPA claims by litigating the  



                         

debt-collection  actions  in  court;  (2)  the  extent  of  any  waiver;  and  (3)  whether  the  



superior court erred in holding that the arbitrator could issue statewide injunctive relief.  



III.      STANDARD OF REVIEW  



                     Citibank  argues  that  waiver  is  a  factual  issue  that  should  be  reviewed  



                                                                                                             

deferentially, while Hudson argues that waiver is a mixed question of law and fact that  



should ultimately be reviewed de novo.  There is conflicting Alaska precedent on the  



         4 

                                                                                                          

issue,  but it is clear that the majority of jurisdictions treat arbitration waiver as a mixed 



          3         For convenience, the parties will be referred to collectively as "Citibank"     



and "Hudson."  



          4          Compare  Airoulofski  v.  State,  922  P.2d  889,  894  n.5  (Alaska  1996)  

                                                                       

(holding  that  waiver  should  be  reviewed  de  novo  when  decided  without  trial  on  

                                                                                                                         

undisputed facts), with Blood v. Kenneth Murray Ins. Co. , 68 P.3d 1251, 1254 (Alaska  

                                                                             

2003) (holding without elaborating that waiver is an issue of fact).  



                                                                -5-                                                          7141
  


----------------------- Page 6-----------------------

                                     5  

                                                                  

question of law and fact.   We believe that the mixed question of law and fact standard  



                                                                                                 

accurately reflects the nature of the inquiry:  the superior court must find the pertinent  



facts - if they are in dispute - and then correctly apply the law to those facts.  



                    Where  the  facts  are  not  in  dispute  on  appeal,  as  here,  we  must  decide  



                                                                                                                            6 

                                                                                                                               On  

whether the superior court applied the correct legal standard to the undisputed facts. 



                                                                                                      7  

questions of law we are "not bound by the lower court's decision."   Rather, we apply  



de novo review, "adopting the rule of law that is 'most persuasive in light of precedent,  



                                 8  

reason, and policy.' "    



IV.       DISCUSSION  



                                                                             

                    For the reasons that follow we agree with the superior court that Citibank  



did not waive its right to arbitrate the UTPA claims by litigating the debt-collection  



                                                                                        

actions, but we hold that the superior court erred when it decided the question whether  



                                                                      

the arbitrator could issue statewide injunctive relief - this question presents an issue of  



          5         See, e.g., La. Stadium & Exposition Dist. v. Merrill Lynch , 626 F.3d 156,   



 159 (2d Cir. 2010); In re Tyco Int'l Ltd. Sec. Litig.                      , 422 F.3d 41, 44 (1st Cir. 2005) ("A  

determination that a party has waived its right to arbitrate is reviewed de novo, whereas  

the district court's findings of fact are subject to 'clear error' review."); Hoover v. Am.  

                                                                           

Income Life Ins. Co. , 142 Cal. Rptr. 3d 312, 319 (Cal. App. 2012) ("The waiver issue  

                                                                     

may  be reviewed  de novo  when  the question  is whether the superior court properly  

                                                                                                             

applied the correct legal standard to the undisputed facts . . . ."); LAS, Inc. v. Mini- 

Tankers USA, Inc., 796 N.E.2d 633, 636 (Ill. App. 2003) (holding that because the facts  

                                                              

are not in dispute the court should review the arbitration waiver de novo and gathering  

                                                                                                       

federal cases holding the same).  



          6  

                                                                          

                    Guttchen v. Gabriel, 49 P.3d 223, 225 (Alaska 2002) (citing Foss Alaska  

Line, Inc. v. Northland Servs., Inc. , 724 P.2d 523, 526 (Alaska 1986)).  



          7         Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).  



          8         Classified Emps. Ass'n v. Matanuska-Susitna Borough Sch. Dist., 204 P.3d  



         

347, 352 (Alaska 2009) (quoting Lexington Mktg. Grp., Inc. v. Goldbelt Eagle, LLC , 157  

P.3d 470, 472 (Alaska 2007)).  



                                                               -6-                                                         7141
  


----------------------- Page 7-----------------------

                                                                                     

interpretation of the arbitration agreement that should be decided in the first instance by  



the arbitrator.  



          A.	       Citibank  Did  Not  Waive  Its  Right  To  Arbitrate  Hudson's  UTPA  

                    Claims.  



                    1.	       Federal law controls waiver by litigation conduct.  



                                                                     

                    As a threshold matter, the parties dispute whether Alaska law or federal law  



                                                                                                                        9  

                                                                                                                          The  

should be applied to determine if Citibank waived its right to demand arbitration. 

answer to this question depends on which provision of the Federal Arbitration Act10  



                                                                                                         

provides the basis for waiver by litigation conduct.  Hudson  argues that waiver is a  



          9         Citibank also argues that the arbitrator should decide the question whether  



a party waived its right to arbitrate by participating in litigation.  But if "the waiver turns  

                                                    

on the significance of action taken in a judicial forum, 'the issue is one for the court,  

                                                                                                       

rather  than  the  arbitrator,  to  decide.'  "  Int'l  Bhd.  of  Teamsters  Local  959  v.  King ,  

                                                                                  

572 P.2d 1168, 1174 (Alaska 1977) (quoting  Weight Watchers of Que., Ltd. v. Weight  

 Watchers Int'l, Inc., 398 F. Supp. 1057, 1058-59 (E.D.N.Y. 1975)).  This is the majority  

                                                                         

view among state and federal courts. See River House Dev. Inc. v. Integrus Architecture,  

                                                                                                 

P.S. , 272 P.3d 289, 295 (Wash. App. 2012) ("The weight of both federal authority under  

the Federal Arbitration Act, 9 U.S.C.  1-14, and state authority under the current and  

                                                                      

former versions of the [Uniform Arbitration Act] treat litigation-conduct waiver as an  

issue  for  the  court  rather  than  an  issue  for  the  arbitrator,  despite  the  U.S.  Supreme  

Court's including waiver in its list of arbitrable procedural issues in Howsam  [v. Dean  

 Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)] . . . ."); see also Marie v. Allied Home  

                                                                                                              

Mortg. Corp ., 402 F.3d 1, 3 (1st Cir. 2005) ("The issue of waiver of the right to arbitrate  

                                                                                                 

due to inconsistent activity in another litigation forum remains an issue for the court even  

after the Howsam and  Green Tree holdings."); Perry Homes v. Cull, 258 S.W.3d 580,  

                                                                                                        

587 (Tex. 2008) (noting that every federal circuit to consider the issue after Howsam has  

                                                                                                               

held that waiver by litigation conduct is still a decision for the court).  Courts have  

                                                                      

reasoned that "[c]ontracting parties would expect the court to decide whether one party's  

conduct before the court waived the right to arbitrate," Tristar Fin. Ins. Agency, Inc. v.  

                                      

Equicredit Corp. of Am., 97 F. App'x 462, 464 (5th Cir. 2004), because the court is in  

                                                                                                                  

a much better position to decide whether conduct in its own courtroom amounted to  

                                                                                             

waiver.  See Perry Homes, 258 S.W.3d at 588.  



          10        9 U.S.C.  1-14 (2012).  



                                                              -7-	                                                       7141
  


----------------------- Page 8-----------------------

                         

defense under  2 of the Federal Arbitration Act (the savings clause), which calls for the  



                                         11  

application of state law.     Citibank argues that waiver arises under  3 (the default  

clause), which calls for the application of federal law.12  



                      When  it  enacted  the  Federal  Arbitration  Act,  "Congress  intended  to  



                                                                                                                           13  

establish a uniform federal law over contracts which fall within its scope."                                                   Thus, "if  



the Arbitration Act is deemed applicable, federal law applies in construing and enforcing  

an arbitration clause, even in those cases in which jurisdiction is based on diversity."14  



The  default  clause  -    3  of  the  Federal  Arbitration  Act  -  directs  a  court  to  stay  



                                                                                                                        

proceedings and order arbitration so long as the "the applicant for the stay is  not in  



                                                                           15  

                                                                               If waiver by litigation conduct arises  

default  in proceeding with such arbitration." 



           11         9 U.S.C.  2 ("A written provision in any maritime transaction or a contract                         



evidencing  a  transaction  involving  commerce   to  settle  by  arbitration  a  controversy  

thereafter arising out of such contract or transaction, or the refusal to perform the whole   

or  any  part  thereof,  or  an  agreement  in  writing   to   submit  to  arbitration  an  existing  

controversy   arising  out  of  such  a  contract,  transaction,  or  refusal,  shall  be  valid,  

irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the                 

revocation of any contract." (emphasis added)).  



           12  

                                      

                      9 U.S.C.  3 ("If any suit or proceeding be brought in any of the courts of  

                              

the United States upon any issue referable to arbitration under an agreement in writing  

                                                                               

for such arbitration, the court in which such suit is pending, upon being satisfied that the  

issue  involved  in  such  suit  or  proceeding  is  referable  to  arbitration  under  such  an  

                                                                    

agreement, shall on application of one of the parties stay the trial of the action until such  

arbitration has been had in accordance with the terms of the agreement, providing the  

applicant for the stay is not in default  in proceeding with such arbitration." (emphasis  

added)).  



           13         Goodwin v. Elkins & Co., 730 F.2d 99, 108 (3d Cir. 1984).  



           14         Id .  



           15         See 9 U.S.C.  3 (emphasis added).  



                                                                     -8-                                                              7141
  


----------------------- Page 9-----------------------

                                                                                    16  

                                                                                                      

under  3 of the Arbitration Act, federal law applies.                                  But the savings clause -  2 of  



                                                                                                          

the Arbitration Act - provides that arbitration agreements "shall be valid, irrevocable,  



                                                                                     

and enforceable, save upon such grounds as exist at law or in equity for the revocation  



                           17  

                                                                                                                      

of any contract."               State law, not federal law, is applicable when a court is considering  

a defense under  2 that is grounds for "the revocation of [the] contract."18  



                                                                                                       

                      Whether waiver by litigation conduct arises under  2 or  3 of the Federal  



                                                                      

Arbitration Act has rarely been explicitly considered by courts.  Many federal courts  



                              

apply federal law while using default and waiver language interchangeably, and state  



                                                                                                           19  

courts generally apply state law while using waiver language only.                                             According to one  



commentator,  "There  is  general  agreement  among  the  circuit  courts  that  the  term  



                                                

 'default' in Section 3 should, under appropriate circumstances, be read to include waiver  



                                                                                        20  

                                                                                             In many cases there is little  

of the  right to arbitrate by participation in litigation." 



           16         Under  3, the court must apply federal law because "if the Arbitration Act   



is deemed applicable, federal law applies in  construing and enforcing an arbitration  

clause,  even  in  those  cases  in  which  jurisdiction  is  based  on  diversity."    Goodwin,  

                                                                                                       

730 F.2d at 108.  



           17         9 U.S.C.  2 (emphasis added).  



           18        Perry v. Thomas , 482 U.S. 483, 492-93 (1987); 9 U.S.C.  2.  



           19         See, e.g., Marie  v.  Allied Home  Mortg. Corp. , 402 F.3d 1, 13 (1st Cir. 2005)  



("A   'default'  has  generally  been  viewed  by  courts as including a 'waiver.' "); Ehleiter  

v.   Grapetree  Shores, Inc., 482 F.3d 207, 218 (3d Cir. 2007) (holding that waiver and  

default are synonymous); Thompson v.  Skipper Re                                al Estate Co., 729 So. 2d 287, 290-93  

(Ala.  1999)  (discussing  waiver  under  state  law  but  not  default);  Kirk  v.  Credit  

Acceptance Corp. , 829 N.W.2d 522, 532-34 (Wis. 2013) (same); Townsend v. Quadrant  

Corp., 268 P.3d 917, 922-23 (Wash. 2012) (same); Saint Agnes Med. Ctr. v. PacifiCare  

                                                

of Cal., 82 P.3d 727, 737 (Cal. 2003) (same).  



           20         Thomas  J.  Lilly,  Jr.,  Participation  in  Litigation  as  a  Waiver  of  the  



                                                                                                                     (continued...)  



                                                                   -9-                                                             7141
  


----------------------- Page 10-----------------------

                                                                 

                                                           

difference between the tests under state and federal law, so the distinction is not usually  



                    21  

a crucial one.          



                                                                                                         

                    We conclude that waiver by litigation conduct is a defense arising under  3  



                                                                                                            

of the Federal Arbitration Act such that federal law applies.  We believe that waiver is  



                                                                                                           22  

                                                                                                               Waiver is a  

not a defense that gives rise to "the revocation of [a] contract" under  2.  



defense that may make a contract unenforceable, but it does not traditionally give rise to  



                                               23  

                                                                                                          

the right to revoke the contract.                  As Justice Thomas explained in his concurrence to  



                                                                                                               

AT&T Mobility LLC v. Concepcion , "The use of only 'revocation' [in  2's savings  



clause] and the conspicuous omission of 'invalidation' and 'nonenforcement' suggest  



that the exception does not include all defenses applicable to any contract but rather  



                                               24  

                                                                                                 

some subset of those defenses."                    Again, waiver is not a defense traditionally included  



          20(...continued)  



Contractual Right to Arbitrate: Toward a Unified Theory, 92 NEB .   L.   REV .   86, 100  

(2013)  (citing Ehleiter ,  482  F.3d  at  217; Marie ,  402  F.3d  at  14; Patten Grading  &  

                                                                                                               

Paving, Inc. v. Skanska USA Bldg., Inc ., 380 F.3d 200, 204 (4th Cir. 2004)); see, e.g.,  

S & H Contractors, Inc. v. A.J. Taft Coal Co., 906 F.2d 1507, 1514 (11th Cir. 1990)  

                                                                                               

("Our determination of whether S & H waived its right to arbitration, as opposed to  

                                                                         

whether the contract is void under Alabama law, is controlled solely by federal law.").  



          21        See, e.g., Townsend, 268 P.3d at 922-23; Saint Agnes Med. Ctr., 82 P.3d  



at 737.  



          22        9 U.S.C.  2.  



          23        13 R.  LORD ,  WILLISTON ON  CONTRACTS   39:14, at 612-13 (4th ed. 2012)  



("[E]ither party to a contract may waive virtually any contractual provision  or  right in  

its favor . . . ."); id.  39:27, at 678 ("Waiver of a contract provision may be ma                                  de by a   

party's express declaration, or it may be i  mplied from representations t  hat  fall short of  

an express declaration of waiver . . . ." (emphasis added)).  



          24        563 U.S. 333, 354 (2011) (Thomas, J., concurring).  



                                                             -10-                                                       7141
  


----------------------- Page 11-----------------------

                                                          25  

                                                                                                         

in the "subset" of revocation defenses.                       Strengthening this position, when the Supreme  



Court has listed defenses under  2, it has only listed defenses that are traditionally  

grounds for the revocation of a contract:  fraud, duress, and unconscionability.26  



                                                                            

                     It is true that the Supreme Court has used language that arguably sanctions  



                                                                                           

the use of state law for all defenses to the arbitrability of contracts.  For example, in  



                                                                       

Arthur  Andersen  LLP  v.  Carlisle ,  the  Court  explained,  "  '[S]tate  law,'  therefore,  is  



                                                                                         

applicable to determine which contracts are binding under  2 and enforceable under  3  



                                                                                         

 'if   that   law   arose   to   govern   issues   concerning   the   validity,   revocability,   and  



                                                             27  

enforceability of contracts generally.' "                         But in Arthur Andersen  the Court was not  



                                                                               

interpreting  2.  Instead, it was focused on allowing a non-party beneficiary to a contract  



                                                                                                                                  28  

                                                                                                

to invoke  3 to enforce the Federal Arbitration Act arbitration clause in an agreement. 



The remainder of the Court's analysis focused upon  3.  We think that these statements  

                                                                                



do  not  sweep  waiver,  a  defense  giving  rise  to  the  non-enforcement  of  a  contract  



                                                                                                              

provision, into the category of defenses that are grounds for revocation of the contract.  



Consequently, we hold that waiver arises under  3 and federal law applies.   



          25         Compare 13 R.  LORD , WILLISTON ON  CONTRACTS  39:15, at 622 (4th ed.  



2012) ("[O]nce it has been established that a right has been waived, the party possessing  

the right prior to the waiver is generally precluded from asserting it in a court of law,  

                                                                                                                 

particularly  when  the  nonwaiving  party  has  suffered  prejudice  or  has  relied  to  its  

                    

detriment on the waiver." (footnotes omitted)), with 27 id.  70:106, at 530 ("A contract  

                                         

may be rescinded where there is a clear, bona fide, mutual mistake regarding a material  

fact or law.").  



          26        Doctor's Assocs., Inc. v. Casarotto , 517 U.S. 681, 687 (1996) ("[G]enerally  



                                                                               

applicable contract defenses, such as fraud, duress, or unconsionability, may be applied  

to invalidate arbitration agreements without contravening  2 . . . .").  



          27         556 U.S. 624, 629-31 (2009) (quoting Perry v. Thomas , 482 U.S. 483, 493  



n.9 (1987)).  



          28        Id.  



                                                               -11-                                                         7141
  


----------------------- Page 12-----------------------

                                         

                     There is no uniformly accepted federal rule to determine whether a party  



seeking arbitration has waived its right to arbitration, but the circuit courts generally  



consider  the  following  elements:    (1)  knowledge  of  the  right  to  compel  arbitration;  



       

(2) acts inconsistent with that right; and (3) prejudice to the opposing party because of  

those acts.29  



                     The amount of prejudice required varies among the circuits.30  We generally  



agree  with  the  Seventh  Circuit's  approach  set  out  in  St.  Mary's  Medical  Center  of  



                                                                                                     

Evansville, Inc. v. Disco Aluminum Products Co. that "where it is clear that a party has  



forgone  its  right  to  arbitrate,  a  court  may  find  waiver  even  if  that  decision  did  not  



           29        E.g. , ABF Freight Sys., Inc. v. Int'l Bhd. of Teamsters                            , 728 F.3d 853, 862  



(8th Cir. 2013) (citing  Wootten v. Fisher Invs., Inc., 688   F.3d 487, 492-93 (8th Cir.  

2012)); Sovak v. Chugai Pharm. Co., 280 F.3d 1266, 1270 (9th Cir. 2002) (citing                                              Britton  

v. Co-op Banking Grp., 916 F.2d 1405, 1412 (9th Cir. 1990)).  Some courts consider a  

variety of nonexclusive factors related to these elements in determining whether the right  

                                                  

to arbitration has been waived.  E.g. , Rota-McLarty v. Santander Consumer USA, Inc. ,  

                                                                                      

700 F.3d 690, 702 (4th Cir. 2012); In re Pharmacy Benefit Managers Antitrust Litig. ,  

                

700 F.3d 109, 117 (3d Cir. 2012) (quoting Gray Holdco, Inc. v. Cassady, 654 F.3d 444,  

                                                                             

451 (3d Cir. 2011); Nino v. Jewelry Exch., Inc. , 609 F.3d 191, 208 (3d. Cir. 2010)); Hill  

              

v.  Ricoh  Ams.  Corp. ,  603  F.3d  766,  772-73  (10th  Cir.  2010)  (quoting  Peterson  v.  

                                                                           

Shearson/Am. Express, 849 F.2d 464, 467-68 (10th Cir. 1988)); Khan v. Parsons Global  

                                             

Servs.,  Ltd.,  521  F.3d  421,  425  (D.C.  Cir.  2008)  (quoting Nat'l  Found.  for  Cancer  

                                     

Research  v.  A.G.  Edwards  &  Sons ,  821  F.2d  772,  774-75  (D.C.  Cir.  1987)); In  re  

                                             

Crysen/Montenay Energy Co., 226 F.3d 160, 163 (2d Cir. 2000); PPG Indus., Inc. v.  

                                                                                 

 Webster Auto Parts, Inc., 128 F.3d 103, 107 (2d Cir. 1997); Cabinetree of Wis., Inc. v.  

               

Kraftmaid Cabinetry, Inc. , 50 F.3d 388, 391 (7th Cir. 1995).  



           30  

                                                                                                                

                     Compare Sovak, 280 F.3d at 1270 (noting in Ninth Circuit party has "heavy  

               

burden" in showing prejudice (quoting Britton , 916 F.2d at 1412)), with In re Tyco Int'l  

                                                                                            

Ltd. Sec. Litig. , 422 F.3d 41, 44-45 (1st Cir. 2005) (noting First Circuit requires party to  

demonstrate "modicum of prejudice" (quoting Rankin v. Allstate Ins. Co., 336 F.3d 8,  

 12 (1st Cir. 2003))).  



                                                                 -12-                                                           7141
  


----------------------- Page 13-----------------------

prejudice the non-defaulting party."31  We conclude that "a court may consider prejudice  



                                                        

                                                                             

to the [party opposing arbitration] as a relevant factor among the circumstances that the  



                                                                                  

court examines in deciding whether the moving party has taken action inconsistent with  

                                      32   The essential question is whether, based on the totality of  

                                                              

the agreement to arbitrate."  



the  circumstances,  and  giving  due  regard  to  the  strong  federal  policy  favoring  



               33  

arbitration        and  disfavoring  an  inference  of  waiver,  the  alleged  waiving  party's  



participation in litigation evidences an intention to waive that right or is so inconsistent  



with the right to arbitrate that it is contrary to any other intention than waiver.  



                   2.	      Citibank did not waive its right to arbitrate the UTPA claims  

                            because the totality of the circumstances does not evidence an  

                            intention to waive its right to arbitrate.  



                   In this case Citibank filed a debt-collection suit in state court, and after  

                                                   



prevailing it was awarded attorney's fees; Hudson later filed a separate action based on  



the alleged unfair trade practices associated with the attorney's fees award.  Citibank then  



moved to arbitrate Hudson's separate action.  



                                                                                 

                   We conclude that, based on the totality of the circumstances, Citibank's  



                                                      

decision to litigate its debt collection claim and ask for attorney's fees did not evidence  



                                                            

an intent to waive its right to arbitrate the different, more complex UTPA claim.  First,  

it is well accepted that "the law favors arbitration"34 and "waiver is not to be lightly  



          31       969 F.2d 585, 590 (7th Cir. 1992).  



          32       Nat'l Found. for Cancer Research , 821 F.2d at 777.  



          33       See AT&T Mobility LLC v. Concepcion, 563  U.S. 333, 339 (2011); see also  



Am. Express Co. v. Italian Colors Rest. , 133 S. Ct. 2304, 2309 (2013).  



          34       Blood v. Kenneth Murray Ins., Inc. , 68 P.3d 1251, 1255 (Alaska 2003)  



(citing Bd. of Educ., Fairbanks N. Star Borough Sch. Dist. v. Ewig, 609 P.2d 10, 13  

(Alaska 1980)); Midwest Window Sys., Inc. v. Amcor Indus., Inc., 630 F.2d 535, 536 (7th  

                                                              

                                                                                                       (continued...)  



                                                          -13-	                                                    7141
  


----------------------- Page 14-----------------------

               35  

                                                           

inferred."         All doubts regarding the occurrence of waiver should be resolved in favor  



                     36  

                                                                                                    

of arbitration.          And  3 of the Federal Arbitration Act provides that if a suit is brought  



                                                                                                              

on  an  issue  that  is  referable  to  arbitration  and  one  party  moves  to  have  the  issue  



arbitrated, the trial court "shall . . . stay the trial of the action until such arbitration has  



                                                                                                             

been had in accordance with the terms of the agreement, providing the applicant for the  



                                                                                         37  

stay is not in default in proceeding with such arbitration."                                 



                                                                                                 

                     Second, the Arbitration Agreement governing the relationship between the  



                                                                                                                    

parties allowed either party to "elect mandatory, binding arbitration" of "any claim,  



dispute,  or  controversy."    The  arbitration  clause  stated:    "All  Claims  are  subject  to  



                                                                                             

arbitration, no matter what legal theory they are based on or what remedy . . . they seek.  



A party who initiates a proceeding in court may elect arbitration with respect to any  



Claim advanced in that proceeding by any other party."  The clause continued:  



                                                                                 

                     At  any  time  you  or  we  may  ask  an  appropriate  court  to  

                                                                      

                     compel arbitration of Claims, . . . even if such Claims are part  

                                                              

                     of a lawsuit, unless a trial has begun or a final judgment has  

                                                        

                     been entered.  Even if a party fails to exercise these rights at  

                                                                                  

                     any  particular  time,  or  in  connection  with  any  particular  

                     Claims, that party can still require arbitration at a later time  

                     or in connection with any other Claims.  



                                         

The  clause  also  asserted  that  "[a]ny  questions  about  whether  Claims  are  subject  to  



          34(...continued)  



Cir. 1980).    



          35        Blood ,  68 P.3d at 1255 (citing S & R Co. of Kingston v. Latona Trucking,             



Inc. , 159 F.3d 80, 83 (2d Cir. 1988)).  



          36        Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24  



(1983); Blood , 68 P.3d at 1255 (citing Doctor's Assocs. Inc. v. Distajo , 107 F.3d 126,  

                                                                            

 130 (2d Cir. 1998)).  



          37         9 U.S.C.  3 (2012) (emphasis added).  



                                                               -14-                                                          7141
  


----------------------- Page 15-----------------------

                                                                                                        

arbitration shall be resolved by interpreting this arbitration provision in the broadest way  



the law will allow it to be enforced."  Finally, the clause stated that "Claims must be  



                                                                   

brought in the name of an individual person or entity and must proceed on an individual  



(non-class, non-representative) basis."  The text of the Arbitration Agreement clearly  



                                          

provides that Citibank was authorized under its contract with Hudson to seek arbitration  



                                                                                        

on claims distinct from its original debt collection action and its request for attorney's  

fees.38  



                                                                                                                

                    Third, a party may waive its right to arbitrate separate claims, but the claims  



must be closely related in order for the party's act in bringing suit on one claim to be  



                                                                                               39  

                                                                                                                       

inconsistent with the existing right to arbitrate another claim.                                   One circuit has held  

claims were waived when "basically only one controversy exists between the parties."40  



                                                                                             

And another has held that a party waived arbitration when  matters were "so closely  



          38        We disagree with the dissent's analysis about what would have happened   



had Hudson actually raised a UTPA counterclaim in the collection litigation.  If Hudson  

had raised the UTPA simply to defend and reduce the Rule 82 award, Citibank may have  

                                 

been locked in to the superior court litigation.  But if Hudson had raised the UTPA to  

                                                                                                      

assert an affirmative counterclaim of some kind, Citibank would have had every right  

                                                                            

under the arbitration provision to demand arbitration of that counterclaim, regardless of  

its connection to the Rule 82 claim.  Under the dissent's analysis, Hudson avoids the  

plain language of the arbitration provision to which she agreed simply by defaulting in  

                                                                                                            

the first lawsuit and waiting to assert her counterclaim in a separate lawsuit.  That cannot  

be the correct result.  



          39  

                                                        

                    See  Midwest  Window  Sys.,  Inc.,  630  F.2d  at  537;  PPG  Indus.,  Inc.  v.  

              

 Webster Auto Parts, Inc., 128 F.3d 103, 110 (2d Cir. 1997); see also Gutor Int'l AG v.  

Raymond Packer Co ., 493 F.3d 938, 946 (1st Cir. 1974) (holding that "[a]ll related  

                                                                                          

matters" must be arbitrated);  G.T. Leach Builders, LLC v. TCMS, Inc., No. 13-11-310  

CV, 2012 WL 506568, at *3-5 (Tex. App. Feb. 16, 2012) (applying federal law and  

finding waiver when the two claims were based on the same contract).  



          40  

                                                                                  

                    Midwest  Window  Sys.,  Inc. ,  630  F.2d  at  537  (holding  claims  waived  

because they all "[grew] out of their unsatisfactory business relationship").  



                                                              -15-                                                         7141
  


----------------------- Page 16-----------------------

related as to form what is really a single controversy" because the claims involved the  



                                                41  

                                                                                                                     

"same  facts  and  legal  issues."                   Another  way  of  saying  this  is  that  the  claims  are  



"intertwined" and that the "fact finder would necessarily have to resolve fact issues  



                            42  

                                                                  

common to both."                While being brought in separate actions makes it more likely that  



                              

two claims are not "intertwined," the filing of separate actions alone does not make the  



                          43  

claims unrelated.              



                                           

                     We conclude that Citibank's decision to litigate its simple debt-collection  



action does not convey that it also intended to forgo arbitration on a different, more  



                                      

complex UTPA claim.  The UTPA claim broadens the scope of the proceeding by such  



                                                                                            44  

a magnitude that it fundamentally transforms the litigation.     The evidence and legal  



          41        PPG Indus., Inc. , 128 F.3d at 110.  



          42         Owens & Minor Med., Inc. v. Innovative Mktg. & Distrib. Servs.                                    , 711 So.  



2d 176, 177 (Fla. Dist. App. 1998).  



          43         See Midwest Window Sys., Inc., 630 F.2d at 536-37 (holding that fraudulent  



collection  on  promissory  note  was  reasonably  related  to  breach  of  contract  claim);  

Blackburn v. Citifinancial, Inc., No. 05AP-733, 2007 WL 927222, at *5 (Ohio App. Mar.  

                                                                                                             

29, 2007) (holding that debt-collection action was closely related to fraud in origination  

                                                                              

of the loan); G.T. Leach Builders, LLC, 2012 WL 506568, at *3-5 (holding that claims  

                             

in two separate lawsuits - one for breach of contract and one for payment - were  

reasonably related).  



          44  

                                                                           

                     See Plaintiff's Shareholders Corp. v. Southern Farm Bureau Life Ins. Co. ,  

486  F.  App'x  786,  790  (11th  Cir.  2012)  ("Nonetheless,  where  a  plaintiff  files  an  

amended complaint that 'unexpectedly changes the scope or theory of the plaintiff's  

claims,' fairness dictates that a defendant's prior waiver of arbitration be nullified and  

the  right  to  compel  arbitration  revived."  (quoting  Krinsk  v.  SunTrust  Banks,  Inc. ,  

654 F.3d 1194, 1202 (11th Cir. 2011)));  Cabinetree of Wis. v. Kraftmaid Cabinetry, Inc.,  

                

50 F.3d 388, 391 (7th Cir. 1995) ("The shape of the case might so alter as a result of  

                                                                                                     

unexpected developments during discovery or otherwise that it might become obvious  

                                                                                                

that the party should be relieved from its waiver and arbitration allowed to proceed.").  



                                                               -16-                                                          7141
  


----------------------- Page 17-----------------------

theories included in the two different claims would have little if any overlap.45                                           The  



                                                                                                                 

bank's claim for recovery of the debt would center on the language of the contract and  



the breach of the cardholder's duty to pay, while the cardholder's UTPA claim would  



                                                                                      

involve attorney's fees practices, e.g., whether Citibank entered into a contingency fee  



contract with its collections attorneys and whether a contingency fee is a permissible  



                                                                                                               

basis for recovering attorney's fees under Alaska Civil Rule 82's default judgment fee  



               46  

                                                                                                      

provision.         The claims did not arise out of the same transaction; one arose from the  



                                                                                                            

credit card contract and one arose from the bank's fee agreement with its lawyers and  



                                                          47  

post-litigation attorney's fees motions.                      



                    Other courts considering similar fact patterns have likewise held that a debt- 



collection proceeding does not waive arbitration of a later consumer-protection claim.  



A federal district court in Michigan noted that "[n]umerous courts across the country  



have found that commencing a separate debt collection lawsuit does not, on its own,  



                                             48  

                                                                                        

waive the right to arbitration."                 In Fields v. Howe , a case from the Southern District of  



          45        See PPG Indus., Inc., 128 F.3d at 110 (holding that the claims must be "so  



closely related as to form what is really a single controversy" and share the "same facts  

                                                                                                    

and legal issues").  



          46        The  essence  of  Hudson's  UTPA  claim  is  that  Citibank's  attorneys  



performed relatively little work to obtain a default judgment on a simple debt action, yet  

                                                                                                                    

because the attorneys were being compensated under a 20% contingency fee agreement,  

                                  

the attorney's fees requested and awarded under Rule 82(b)(1) were disproportionately  

                                                                          

higher than the hourly fee they would have charged, making them unreasonable.  Hudson  

                                                                                                                       

alleges this attorney's fee practice violates the UTPA.  



          47  

                                                                                        

                    Cf. Midwest Window Sys., Inc., 630 F.2d at 537 (finding waiver for two  

                                                                                                                

disputes - one for payment and one for performance - that grew out of the same  

contract); G.T. Leach Builders, LLC, 2012 WL 506568, at *4 (same).   



          48  

                                                                                     

                    Garcia v. Weltman, Weinberg & Reis Co. of Mich., No. 2:13-CV-14362,  

                                                                                                              (continued...)  



                                                              -17-                                                         7141
  


----------------------- Page 18-----------------------

Indiana, the court held that "[t]he fact that the present action arose because of Discover's  

                                                              

                                                        



allegedly improper conduct in the course of [the debt-collection action] does not render  

                                                              

this cause one and the same as Discover's state court case."49  The court explained, "The  

                                                                              



state court case is a collection action - a case initiated by Discover; the federal court  

                                                             



case is an action for alleged violation of federal and state laws - a case initiated by  

                           



            50  

Fields."       And in Funderburke v. Midland Funding, L.L.C. a federal district court in  



Kansas held that a debt-collection action did not waive the right to demand arbitration  



                                                               51  

of a later-filed consumer-protection claim.                        We agree with these courts.  



                                                                                                                              52  

                    Hudson relies on Midwest Window Systems, Inc. v. Amcor Industries, Inc. ,  



a case from the Seventh Circuit.  In that case, Midwest Window and Amcor agreed that  

                                                                                                



Amcor would make all of its pending deliveries and Midwest Window would issue  



                                                           53  

                                                               Unfortunately for Midwest Window, Amcor  

promissory notes for the pending orders. 



did not make any of the deliveries but still went to court and received default judgment  



                   54  

                                                   

on the notes.         Midwest Window promptly filed a separate action alleging breach of the  



          48(...continued)
  



2014 WL 1746522, at *5-6 (E.D. Mich. Apr. 30, 2014).
  



          49        No.  IP-01-1036-C-B/S,  2002  WL  418011,   at  *7-8  (S.D.  Ind.  Mar.  14,  



2002).  



          50        Id.  



          51        No. 12    -2221-JAR/DJW,  2013  WL 394198,  at  *7-8 (D. Kan. Feb. 1, 2013).  



          52        630 F.2d 535 (7th Cir. 1980).  



          53        Id. at 535-36.  



          54        Id.  



                                                             -18-                                                        7141
  


----------------------- Page 19-----------------------

                                                                                55  

                                                                                                   

contract and fraud, which Amcor moved to arbitrate.                                 Midwest Window re-opened the  



                                                                                              56  

promissory-note case and the court consolidated the two cases.                                     On appeal, the Seventh  



Circuit held that Amcor's action to reduce the notes to judgment waived arbitration of  



                                                                                                                   

the second proceeding - the breach of contract claims.  It found that the issues in the  



            

breach  of contract action and in the debt-collection action were similar enough that  

"basically only one controversy exists between the parties."57  



                                                                                          

                     But Midwest Window is distinguishable. The majority of the claims at issue  



                                                                                                                      

in that case were breach of contract claims all arising from the same contract.  The fraud  



                                                                   

claims on the notes were mainly incidental to these claims.  Thus the issue was whether  



                                                                                                                     

the two suits - one for payment and one for performance, both on the same contract -  



                                                                                                           

were related.  The Seventh Circuit reasonably concluded they were related.  The two  

proceedings  concerned  the  "same  facts  and  legal  issues"58   -  facts  relating  to  the  



                                                                                       

wording and origination of the contract. Here, however, Hudson does not argue that the  



          55        Id .  



          56        Id.  



          57        Id. at 537.  



          58        PPG Indus., Inc. v. Webster Auto Parts, Inc. , 128 F.3d 103, 110  (2d Cir.  



1997).  Hudson  points to              another c   ase fr    om  the O     hio  Court of Appeals where an elderly  

woman was fraudulently convinced to sign  a mortgage and loan secured by her house.  

See Blackburn v. Citifinancial, Inc., No. 05AP-733, 2007 WL 927222, at *4 (Ohio App.  

Mar. 29, 2007). Citifinancial instituted a foreclosure action in court and sought judgment  

                                                                                 

on the underlying promissory note, which was covered by an arbitration agreement.  The  

                                                                                                                                

suit was dismissed as premature, and the plaintiffs filed suit against Citifinancial alleging  

                                                                                                      

fraud  in  the  origination  of  the  loan.    Citifinancial  immediately  moved  to  stay  the  

proceedings and compel arbitration, but the court held that it had waived the right to  

                                                                               

arbitrate by litigating the foreclosure.  Blackburn is distinguishable because the claims  

                                                                             

                                                                                                                      

were  more  closely  related.    The  same  evidence  would  have  been  relevant  to  both  

                                                                                                                          

claims - the origination of the note and the specifics of the contract.  



                                                               -19-                                                          7141
  


----------------------- Page 20-----------------------

underlying contract was fraudulently induced or that she did not owe the debt.  The  

                                                                                                   



evidence and legal issues central to the two controversies do not overlap.  The UTPA  

                                                                                                               



proceeding would feature testimony relating to the standard for reasonable attorney's  



                                                            

fees in debt-collection actions, the hours actually worked by Alaska Law Offices, and the  



general practice of attorneys in similar types of cases.  The debt collection proceeding  



would rely on the credit card agreement and evidence of Hudson's failure to pay her  



debts.  



                                                                                                 

                    We conclude that Citibank's debt collection claims and Hudson's UTPA  



                                                                                                                 

attorney's  fees  claims  are  not  sufficiently  closely  related  such  that  they  would  be  



considered only one controversy.  Given this conclusion, and giving due regard to the  



                                                                                                

strong federal policy resolving all doubts in favor of arbitration, we also conclude that  



Citibank's filing a state court action to recover its debt did not evidence a clear intent to  



                                                                                                             

waive its right to arbitrate a subsequent UTPA claim.  Therefore, under the totality of the  



circumstances - particularly given the language of the arbitration provision and the  



                                                                                    

unrelatedness of the two sets of litigation - we hold that Citibank did not waive its right  



                                                                  

to arbitrate Hudson's UTPA attorney's fees claim and affirm this aspect of the superior  



court's decision.  



          B.	       It Was Error To Hold That The Arbitrator Could Issue Statewide  

                    Injunctive Relief.  



                                                                                                          

                    The superior court concluded, notwithstanding the explicit language of the  



                                                    

Arbitration  Agreement  providing  that  "the  arbitrator  may  award  relief  only  on  an  



individual (non-class, non-representative) basis," that under the UTPA Hudson had a  



                                                                                          

non-waivable  right  to  pursue  relief  on  a  statewide  basis.                        By  drawing  a  distinction  



                                                                                      

between the right to litigate a claim and the right to pursue a type of relief, the court held  



that the arbitrator could grant statewide relief.  



                    The Supreme Court has been exceedingly clear that parties to an arbitration  



                                                             -20-	                                                      7141
  


----------------------- Page 21-----------------------

agreement may not be subjected to procedures for which they did not bargain.  In                                            Stolt- 



Nielsen S.A. v. AnimalFeeds International Corp. , the Supreme Court decided whether  



                                                                                                                59  

class arbitration was available when the contract was silent on the issue.                                          The Court  



               

                                                              

held that parties may choose the type of arbitration they wish to employ and with whom  



                                                                                           

they  want  to  arbitrate,  and  courts  must  "give  effect  to  the  contractual  rights  and  



                                           60  

                                               But because the arbitration agreement was silent on the  

expectations of the parties."                                                                                              



availability of class arbitration in Stolt-Nielsen, the Court held that class arbitration was  

                                                                                                      



not available because a "party may not be compelled under the [Arbitration Act] to  

                                                                                                                         



submit to class arbitration unless there is a contractual basis for concluding that the party  

                                                               



                           61  

agreed to do so."              And in AT&T Mobility v. Concepcion , the Supreme Court struck  



down  a  California  rule  of  decision  because  it  allowed  consumers  to  demand  class  

                                                                                                           

arbitration even when it was prohibited by their arbitration agreements.62  The Court held  



that this violated the central tenant of its arbitration precedent:  to "ensur[e] that private  

arbitration agreements are enforced according to their terms."63  



                    We do not need to decide whether the arbitration agreement in this appeal  

                                                                                                                 



prohibits statewide injunctive relief.  The interpretation of an arbitration agreement is a  



                                    64  

                                         For example, in Ferguson v. Corinthian Colleges , the Ninth  

question for arbitration. 



          59         559 U.S. 662 (2010).  



          60        Id. at  682-83 (quoting Volt  Info.  Scis.,  Inc.  v.  Bd.  of  Trs. of Leland Stanford  



Junior Univ. , 489 U.S. 468, 479 (1989).  



          61        Id. at 684.  



          62         131 S.Ct. 1740, 1756 (2011).  



          63        Id. at 1748 (alteration in original) (quoting  Volt, 489 U.S. at 478).  



          64        See  Johnson  v.  Aleut  Corp.,  307  P.3d  942,  949  (Alaska  2013); Ahtna,  



                                                                                                                (continued...)  



                                                               -21-                                                         7141
  


----------------------- Page 22-----------------------

Circuit concluded that the question whether public injunctive relief could be granted in                         



                                                                                                         65  

a student loan controversy was initially a question for the arbitrator.                                      It was error for  



the superior court to decide that the arbitrator could order statewide injunctive relief.  We  

                                                                                                      



vacate  the  court's  decision:    on  remand  the  issue  of  the  availability  and  scope  of  

                              



injunctive relief must be referred to arbitration.  



V.        CONCLUSION  



                    We AFFIRM  the superior court's order staying  court proceedings  and  

                                                                                                           



submitting  the  dispute  to  arbitration,  but  we  REVERSE  and  VACATE  the  superior  



                                                                                

court's ruling that the arbitrator can order statewide injunctive relief, and we REMAND  



for further proceedings consistent with this opinion.  



          64(...continued)  



Inc. v. Ebasco Constructors, Inc. , 894 P.2d 657, 662 (Alaska 1995).  



          65         733 F.3d 928, 937 (9th Cir. 2013).  



                                                               -22-                                                         7141
  


----------------------- Page 23-----------------------

MAASSEN, Justice, with whom FABE, Chief Justice, joins, dissenting.  



                    The  determinative  issue  in  this  case  is  whether  Citibank's  claim  for  



                                                             

attorney's fees under Alaska Civil Rule 82 is "closely related" to Janet Hudson's claim  



                                                            

in response:  that Citibank's attorney's fees claim is greatly inflated, violates the Unfair  



                                

Trade Practices and Consumer Protection Act (UTPA), and entitles Hudson to statutory  



remedies.  I believe the attorney's fees claim and the UTPA-based response to it are  



                                                            

indeed closely related. For that reason, and because the language of the parties' contract  



                                           

has no effect on the court's authority to find that a party waived arbitration through its  



use  of  the  judicial  process,  I  would  hold  that  Citibank,  by  deliberately  bringing  its  



                                                                   

attorney's fees claim in Alaska's courts and pursuing it to judgment, waived its right to  



                                                                                                                                 I  

                                                                                                                  

arbitrate  Hudson's  factual  and  legal  challenges  to  the  claim's  basis  and  amount.    



therefore dissent from the court's holding today.  



          A.	       Hudson's UTPA Claim Based On Citibank's Rule 82 Claim Is Closely  

                    Related To Citibank's Rule 82 Claim.  



                    Citibank's  complaint  against  Hudson  demanded  not  only  "[a]  money  



                                                                                                               

judgment in the amount of $24[,]170.24" but also "Alaska Rule of Civil Procedure 82  

                                                                  1  After securing a default, Citibank filed an  

Attorney[']s fees" in an unspecified amount.                                                



affidavit in which it claimed $4,834.05 in "actual attorney[']s fees"; it noted that this  

               



amount exceeded the ten percent of the judgment allowed by the Rule 82 schedule and  

                                                                                                           



therefore requested that lesser amount - $2,417.02 - instead. There is no question but  

                                                                                                             



that Citibank intentionally put both its entitlement to Rule 82 attorney's fees and their  



                                                                                                                                 2  

                                                                                       

amount at issue in its lawsuit and thereby waived the right to arbitrate the Rule 82 claim. 



          1         I describe the background of only Hudson's case here; Cynthia Stewart's   



ran a parallel course and is analytically indistinguishable.  



          2         Citibank contends that it "would have had the right to pursue its fees" in  

                                                                                                                       

                                                                                                              (continued...)  



                                                              -23-	                                                        7141
  


----------------------- Page 24-----------------------

                                                                                                           

                    Hudson did not appear in the collection suit.  She did not object to the fees  



                                                                                                      

award until later, when she filed her class-action complaint alleging that the fees claimed  



                                               

by Citibank, in her case and  others, exceeded the amounts allowed by Rule 82 and  



                                                                                

violated the UTPA.  That her objections were raised in a later lawsuit does not matter to  



                                                                                                         3  

                                                                                                             In determining  

whether the relevant claims are "closely related," as the court agrees: 



whether the party demanding arbitration has already indicated an intent to litigate the  



                                                                               

same legal and factual issues, "[i]t is irrelevant that the prior litigation occurred as part  



                                                                   4  

of a separate action or in a different court."   What matters, in the words of the court  



today, is whether the attorney's fees claim and the response to it are "so closely related  



                                                                                    

as to form what is really a single controversy" because they involve the "same facts and  



                    5 

legal issues";  in other words, whether the claims are "intertwined" and the "fact finder 



                                                                                                6  

would necessarily have to resolve fact issues common to both."    



                                                                                                                

                    The court's application of this test today goes astray, in my view, when it  



contrasts "[t]he evidence and legal theories included in the two different claims" - the  



                                                         

debt collection action and the UTPA claim - and concludes that they "have little if any  



          2(...continued)  



arbitration; it chose to litigate them in court instead.  



          3         Op. at 17-18 ("[T]he filing of separate actions alone does not make the  



claims unrelated.").  



          4         PPG Indus., Inc. v. Webster Auto Parts, Inc. , 128 F.3d 103, 108 n.2 (2d Cir.  



1997); see also In re Enron Corp., 364 B.R. 489, 512 (Bankr. S.D.N.Y. 2007) ("A party  

                  

waives the right to invoke arbitration where it has previously litigated the same legal and  

                                                                                                                       

factual issues even if that litigation occurred as part of a separate action or in a different  

                                        

forum.").  



          5         Op. at 17 (quoting PPG Indus., Inc., 128 F.3d at 110).  



          6  

                                                       

                    Id. (quoting Owens & Minor Med., Inc. v. Innovative Mktg. & Dist. Servs.,  

711 So. 2d 176, 177 (Fla. Dist. App. 1998)).  



                                                              -24-                                                         7141
  


----------------------- Page 25-----------------------

              7  

                                                           

overlap."        The court is contrasting the wrong two claims.  Citibank did not merely sue  



to collect a debt; it also made a claim for Rule 82 attorney's fees, which - as the court  



                                                                                              8  

points out - had a wholly separate evidentiary and legal basis.   The proper focus of  



                         

today's inquiry is on the overlap between Citibank's claim for Rule 82 attorney's fees  



                                                                            9  

                                                                               The evidentiary overlap between  

and Hudson's UTPA claim raised in response to it. 

these two claims is close to complete;10 a "fact finder would necessarily have to resolve  

                                                                               



                                           11  

fact issues common to both,"                   i.e., whether Citibank misstated its fees.  A victory for  

                 



Hudson in her later lawsuit would impugn the legitimacy of Citibank's judgment in its  

                                                                                                          



earlier lawsuit.  Indeed, the two claims are inextricably intertwined even as the court  

                                                  



describes them:   



                    The  essence  of  Hudson's  UTPA  claim  is  that  Citibank's  

                    attorneys performed relatively little work to obtain a default  

                                                                  

                   judgment on a simple debt action, yet because the attorneys  

                    were  being  compensated  under  a  20%  contingency  fee  

                    agreement, the attorney's fees requested and awarded under  

                    Rule 82(b)(1) were disproportionately higher than the hourly  

                                                                                              



          7         Op. at 18.  



          8         See Op. at 18-19, 21-22.  



          9         The  court's attempt to distinguish Midwest  Window Systems,  Inc. v. Amcor  



Indus.,  Inc. ,  630  F.2d  535  (7th  Cir.  1980),  is  thus  irrelevant,  in  my  view,  because  

whether Hudson's claim is related to  any  aspect of Citibank's debt-collection action  

                                                                

other than its Rule 82 claim is beside the point.  Op. at 21.  I find support in the court's  

                                                                              

discussion of Blackburn v. Citifinancial, Inc., No. 05AP-733, 2007 WL 927222 (Ohio  

App. Mar. 29, 2007), which the court distinguishes because "[t]he same evidence would  

                                          

have been relevant to both claims."  Op. at 21 n.58.  That is the situation here.   



          10        As the court describes it, Hudson's UTPA claim "arose from the bank's fee  



agreement with its lawyers and post-litigation attorney's fees motions" - in other words,  

Hudson's UTPA claim "arose from" Citibank's Rule 82 claim.  Op. at 19.  



          11        Op. at 17 (quoting Owens & Minor Med., 711 So. 2d at 177).  



                                                             -25-                                                       7141
  


----------------------- Page 26-----------------------

                                                                                                                      [12] 

                                                                         

                      fee they would have charged, making them unreasonable.  



                                                                                

 One simply cannot articulate Hudson's UTPA claim outside the context of Citibank's  



                                                  13  

Rule 82 attorney's fees claim.                        



                      Although a challenge to the basis or amount of a Rule 82 attorney's fees  



claim  can  never  be  unanticipated  in  Alaska  practice,  we  can  perhaps  assume  that  



                                                                                                                      14  

                                                                                                                          But I caution  

Citibank did not anticipate a challenge based specifically on the UTPA.  



against deferring too much to the defenses a litigant anticipated when we are deciding  



whether  its  claim  is  closely  related  to  the  other  party's  response.    The  court  today  



           12         Op. at 19 n.46.   



           13         The court's reliance on three unpublished cases that "consider[ed] similar         



fact patterns" is unpersuasive.   Op. at 19-20.                            The cases are similar in that they involved  

consumer protection suits following debt collection actions, but, unlike here, they did not   

also include a claim in the original action that turned on facts common to the consumer     

protection suit.  See Garcia v. Weltman, Weinberg & Reis Co. of Mich., No. 2:13-cv- 

14362, 2014 WL 1746522, at *2, *5 (E.D. Mich. Apr. 30, 2014) (finding "the issues at  

                                                                                                                           

play  in  the  state  court  [debt-collection]  litigation  .  .  .  fundamentally  different  from  

                                                                                                                        

Plaintiff's unfair debt collection practice claims" based on debt collection practices taken  

                                                                                                        

outside of court); Funderburke v. Midland Funding, L.L.C. , No. 12-2221-JAR/DJW,  

              

2013 WL 394198, at *2, *7 (D. Kan. Feb. 1, 2013) (finding the new claim arbitrable  

where the first claim was for debt collection and the later claim alleged that the defendant  

                                                                                             

had no authority to collect the debt and the attempt to do so was tortious and otherwise  

                                                                                                

unlawful, issues "not litigated in [the first] action" and dependent on facts not at issue  

there);  Fields  v.  Howe ,  No.  IP-01-1036-C-B/S,  2002  WL  418011,  at  *7  (S.D.  Ind.  

                                                  

Mar. 14, 2002) (concluding that "the tort and other claims Fields pursues in federal court  

                                                                    

are  not  the  same  claims  [the  defendant]  lodged  in  state  court,"  though  apparently  

rejecting  waiver  as  a  defense  categorically,  noting  in  dicta  that  the  cardmember  

                                                                                                 

agreement would have allowed arbitration "even if the cases were one and the same").  

                                                                                       



           14  

                                                                                                                                

                      Even this is questionable, given our long-standing application of the UTPA  

     

to debt-collection practices.  See, e.g., State v. O'Neill Investigations, Inc., 609 P.2d 520,  

                                                                                                                        

523-36 (Alaska 1980) (rejecting constitutional challenges to the UTPA and applying it  

to independent debt-collection practices).    



                                                                     -26-                                                              7141
  


----------------------- Page 27-----------------------

 observes that "Citibank's decision to litigate its simple debt-collection action does not  



                                    

 convey that it also intended to forgo arbitration on a different, more complex UTPA  



              15  

                                                                                       

 claim."          I doubt that the plaintiff in a consumer debt-collection case will ever be found  



 to have subjectively anticipated a complex defense to its claim, no matter what that  



                                        

 defense might be and how "closely related" it appears to an objective eye.  Sometimes,  



                                                                                                                                                    

 as in these cases of consumer default, the plaintiff likely expects no defense at all.  But  



 I suggest that whether the plaintiff anticipated the defense to its claim should not have  



                                                                                                                                            

 the significance the court gives it; much more important is whether the plaintiff intended  



                                                                                         

 to litigate its claim.  By filing its claim in court the plaintiff invites a response in the  



                       16  

                                                                         

 same forum.               Citibank's claim for Rule 82 attorney's fees was plainly inconsistent with  



 an intent to arbitrate either its right to those fees or the reasonableness of those fees.  



                        Nor  do  I  believe  that  the  closely  related  claim  and  response  lost  their  



relatedness because Hudson chose to file her action on behalf of a proposed class.  The  



                                                                                       

proposed class consists of persons like Hudson "against whom defendants obtained a  



            15          Op. at 18.  



            16          This also differentiates other cases on which the court relies, in which it is         



 a defendant who acquiesces in a court proceeding and later invokes arbitration when the       

plaintiff  expands the theory or scope of the claims at issue.  See Plaintiffs' S'holders   

 Corp.  v.  S.  Farm  Bureau  Life  Ins.  Co.,  486  F.  App'x  786,  790  (11th  Cir.  2012)  

 ("[W]here a plaintiff files an amended complaint that 'unexpectedly changes the scope  

                                                                                         

 or theory of the plaintiff's claims,' fairness dictates that a defendant's prior waiver of  

                        

 arbitration be nullified and the right to compel arbitration revived." (quoting Krinsk v.  

                                           

SunTrust Banks, Inc., 654 F.3d 1194, 1202 (11th Cir. 2011)));  Cabinetree of Wis. v.  

                   

Kraftmaid Cabinetry, Inc. , 50 F.3d 388, 389, 390 (7th Cir. 1995) (finding presumptive  

                                                                                                                      

waiver of arbitration when defendant to a contract claim first sought removal to federal  

                                                                    

 court  and  later  "dropped  a  bombshell  into  the  proceedings"  by  seeking  arbitration  

                                                                                                                         

 instead, but acknowledging that the defendant might be allowed to rescind the waiver  

under  certain  "extraordinary  circumstances");  Op.  at  18  n.44.    The  same  fairness  

 concerns are not implicated in a case like this one - at least not in favor of the party  

                                                                                                       

 demanding arbitration - where it is that party who opted for court in the first place.  



                                                                          -27-                                                                    7141
  


----------------------- Page 28-----------------------

default judgment including attorney's fees since July 15, 2009."  Had the collections  



                                  

cases been defended, Citibank could reasonably have expected a challenge to the amount  



of fees from each of these class member-defendants; it waived its right to arbitrate the  



                                     

Rule 82 claim in each  individual case and as to each potential class member.  That  



Hudson seeks to consolidate the cases for decision adds procedural efficiencies this court  



                                17  

has long encouraged;                it does not dilute the claims' relatedness.  In other words, the fact  



that all the class members' claims are closely related to the attorney's fees claims on  



which they hinge cannot mean that none of them are.  And the fact that Citibank waived  



arbitration as to each one of them individually cannot mean that it reserved arbitration  



as to all of them as a class.    



                                                          

          B.	        The Language Of The Arbitration Agreement Does Not Restrain The  

                     Court's Application Of Waiver Principles.  



                                      

                     The court today relies heavily on the language of the parties' Arbitration  



Agreement to conclude that Citibank retained the right "to seek arbitration on claims  



                                                                                                      

distinct  from  its  original  debt  collection  action  and  its  request  for  attorney's  fees"  



                                                                                         18  

                                                                                                               

regardless of waiver principles that would otherwise apply.                                  But parties cannot contract  



          17        See State, Commercial Fisheries Entry Comm'n v. Carlson                                     , 65 P.3d 851,  



872 (Alaska 2003) ("Class action suits, in which the result for one becomes the result for   

many in the same legal predicament, are necessary to avoid a multiplicity of duplicative  

lawsuits.");  Turner v. Alaska Commc'ns Sys. Long Distance, Inc., 78 P.3d 264, 268  

                                

(Alaska 2003) (observing that "the aggregation of small individual claims is an important  

                        

use of the class action device, since without it, 'aggrieved persons may be without any  

                         

effective redress' " (quoting Deposit Guar. Nat'l Bank v. Roper , 445 U.S. 326, 339  

(1980))); Crawford & Co. v. Vienna, 744 P.2d 1175, 1177 (Alaska 1987) ("The purpose  

                                                                                 

of a class action is to afford numerous individuals united in interest an efficient means  

                                                             

to adjudicate claims.").  



          18         Op.  at  15-16;  see  also  id.  at  22  ("Therefore,  under  the  totality  of  the  



circumstances -  particularly given the language of the arbitration provision  and the  

                                                                                                                (continued...)  



                                                               -28-	                                                         7141
  


----------------------- Page 29-----------------------

away the courts' exercise of the inherent authority to find that the right to arbitrate has  



been waived by the pursuit of a judicial remedy.   



                                 

                    Federal  courts  are  appropriately  skeptical  of  "no  waiver"  clauses  in  



arbitration agreements.  "[T]he presence of [a] 'no waiver' clause does not alter the  



                                                                                                                              19  

                                                                                                  

ordinary analysis undertaken to determine if a party has waived its right to arbitration." 



"This makes sense because 'to allow the "no waiver" clause to preclude a finding of  



                                                                              

waiver would permit parties to waste scarce judicial time and effort and hamper judges'  



                                                                            

authority to control the course of the proceedings' and allow parties to 'test[] the water  



                      

before  taking  the  swim'  by  delaying  assertion  of  their  right  to  arbitration  until  the  



          18(...continued)  



unrelatedness of the two sets of litigation -  we hold that Citibank did not waive its right  

                                                                  

to arbitrate Hudson's UTPA attorney's fees claim and affirm this aspect of the superior  

                                                                  

court's decision." (emphasis added)).  



          19  

                                                                                                       

                    Johnson Assoc. Corp. v. HL Operating Corp. , 680 F.3d 713, 717 (6th Cir.  

                                                                                              

2012) (quoting S & R Co. of Kingston v. Latona Trucking, Inc., 159 F.3d 80, 86 (2d Cir.  

                           

 1998)); see  also  Gray  Holdco,  Inc.  v.  Cassady,  654  F.3d  444,  452  (3d  Cir.  2011)  

                                                                              

(holding "that the clause in the [agreement] allowing either party to seek injunctive relief  

until the arbitration award is rendered d[id] not override the applicability of the . . .  

analysis which examines whether a party, by its participation in litigation, has waived its  

right to invoke arbitration"); Republic Ins. Co. v. PAICO Receivables, LLC , 383 F.3d  

         

341, 348-49 (5th Cir. 2004) ("The inclusion of a 'no waiver' clause in a contract does  

                                  

not eliminate the district court's inherent power to control its docket.  In this case the  

Settlement Agreement's 'no waiver' clause is not sufficient to overcome the district  

court's  exercise  of  its  inherent  authority  in  light  of  Republic's  extensive  use  of  the  

judicial  process.");  Thomas  Oehmke  &  Joan  Brovins,  Causes  of  Action  Involving  

Arbitrable Disputes , 32 CAUSES OF  ACTION   2d 385  33 (2006 & Oct. 2016 Update)                   

(discussing Republic Ins.); JAY   GRENIG , 1 ALT .   DISP .   RESOL .    23.32 (3d ed. 2015)  

(emphasizing as "important" that "[a] 'no waiver' clause in an arbitration provision of  

a settlement agreement is not sufficient to overcome a court's exercise of its inherent  

authority to find that a party has waived its right to arbitrate" (citing Republic Ins.,  

                                                                     

383 F.3d 341 (5th Cir. 2004))).   



                                                             -29-                                                        7141
  


----------------------- Page 30-----------------------

litigation is nearly complete."20  



                     Citibank chose to file its debt-collection action in Alaska's courts, where  



Civil Rule 82 and the efficient default-judgment process allowed it to increase Hudson's  



                                        

consumer debt by what it claimed to be thousands of dollars in attorney's fees.  It opted  



                                                                                                                        21 

                                                                                                                            When  

against arbitration, where its right to Rule 82 fees would be at best problematic. 



                                                                                                                           

challenged in Hudson's instant suit, Citibank demanded that the attorney's fees issue it  



                                                                                                   

had already litigated to an easy judgment in Alaska's courts be arbitrated instead.  But  



                                                                                                            

under the "closely related" test of waiver as the court explains it today, I would hold that  



                                                                    

Citibank is not entitled to relitigate the issue in a new forum under a new set of rules; the  



parties' contract has no effect on this conclusion.  I therefore dissent.   



          20        Johnson Assoc. , 680 F.3d at 717 (alteration in original) (quoting                                S & R Co.,  



159 F.3d at 86).  



          21        According to Citibank, it could recover Rule 82 fees in arbitration because  

                                                                      

the agreement allows it to recover "court costs or any other fees as allowed by law."  

                                                                                                           

According  to  Hudson,  it  is  Citibank's  position  that  South  Dakota  law  applies,  and  

Citibank  acknowledges  that  an  "award  of  attorney's  fees  is  not  the  norm"  in  South  

                                                   

Dakota but argues that they are permitted.  Regardless of the forum and the applicable  

                                                                                      

law, Citibank admits that "there may [have been] a difference in the amount of fees  

Citibank might . . . have recovered if it pursued Hudson's undisputed debt in arbitration."  

                                                                        



                                                               -30-                                                          7141
  

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