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, 

Petitioner, 

v. 

CITIBANK (SOUTH DAKOTA) NA

ALASKA LAW OFFICES, INC., and

CLAYTON WALKER, 

Respondents. 

______________________________

CYNTHIA STEWART, on behalf of 

herself and all others who are similarl

situated, 

Petitioner, 

v. 

MIDLAND FUNDING LLC, 

ALASKA LAW OFFICES, INC., 

and CLAYTON WALKER, 

Respondents.

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Supreme Court Nos. S-14740/14826 

(Consolidated) 

Superior Court No. 3AN-11-09196 CI 

O P I N I O N 

No. 7141 – December 16, 2016 

Superior Court No. 3AN-11-12054 CI 

Petition for Review from the Superior Court of the State of 

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

Judge. 
 

 

 

 

 

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 

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

case Midland Funding LLC purchased the account from Citibank. 

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1 
 

 

 

 

 

 

 

 

 

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 

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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, 

whichever is less.2 Alaska Law Offices requested 10% attorney’s fees, arguing that its 

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). 

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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 

Hudson3

 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). 

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question of law and fact.5 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 

whether the superior court applied the correct legal standard to the undisputed facts.6 On 

questions of law we are “not bound by the lower court’s decision.” 7 Rather, we apply 

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

reason, and policy.’ ”8 

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. MiniTankers 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
 
 

 

 

 

 

 

 

 

 

 

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 

should be applied to determine if Citibank waived its right to demand arbitration.9 The 

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
 
 

 

 

 

 

 

 

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

application of state law. 11 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 

establish a uniform federal law over contracts which fall within its scope.”13 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 

default in proceeding with such arbitration.”15 If waiver by litigation conduct arises 

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
 
 

 

 

 

 

under § 3 of the Arbitration Act, federal law applies. 16 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 

of any contract.” 17 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 

courts generally apply state law while using waiver language only.19 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 

of the right to arbitrate by participation in litigation.”20 In many cases there is little 

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 Real 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
 
 

 

 

 

 

 

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

a crucial one.21 

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 

not a defense that gives rise to “the revocation of [a] contract” under § 2. 22 Waiver is a 

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

the right to revoke the contract.23 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 

some subset of those defenses.”24 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 made by a 

party’s express declaration, or it may be implied from representations that fall short of 

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

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

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in the “subset” of revocation defenses.25 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 

enforceability of contracts generally.’ ”27 But in Arthur Andersen the Court was not 

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

to invoke § 3 to enforce the Federal Arbitration Act arbitration clause in an agreement.28 

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. 

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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))). 

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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 

the agreement to arbitrate.” 32 The essential question is whether, based on the totality of 

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

arbitration33 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...) 

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inferred.” 35 All doubts regarding the occurrence of waiver should be resolved in favor 

of arbitration.36 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 

stay is not in default in proceeding with such arbitration.”37 

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). 

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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 

inconsistent with the existing right to arbitrate another claim.39 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
 
 

 

 

 

 

 

 

 

 

 

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

“same facts and legal issues.” 41 Another way of saying this is that the claims are 

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

common to both.” 42 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 

claims unrelated.43 

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 

a magnitude that it fundamentally transforms the litigation. 44 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
 
 

 

 

 

 

 

 

 

 

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 

provision.46 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 

post-litigation attorney’s fees motions.47 

Other courts considering similar fact patterns have likewise held that a debtcollection 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, 

waive the right to arbitration.”48 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...) 

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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 

Fields.”50 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 

of a later-filed consumer-protection claim.51 We agree with these courts. 

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

52 

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 

promissory notes for the pending orders.53 Unfortunately for Midwest Window, Amcor 

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

on the notes. 54 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. 

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contract and fraud, which Amcor moved to arbitrate. 55 Midwest Window re-opened the 

promissory-note case and the court consolidated the two cases.56 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 case from the Ohio 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
 
 

 

 

 

 

 

 

 

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
 
 

 

 

 

 

 

agreement may not be subjected to procedures for which they did not bargain. In StoltNielsen S.A. v. AnimalFeeds International Corp., the Supreme Court decided whether 

class arbitration was available when the contract was silent on the issue.59 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 

expectations of the parties.”60 But because the arbitration agreement was silent on the 

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 

agreed to do so.”61 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 

question for arbitration.64 For example, in Ferguson v. Corinthian Colleges, the Ninth 

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...) 

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

a student loan controversy was initially a question for the arbitrator.65 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). 

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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 

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 

Attorney[’]s fees” in an unspecified amount. 1 After securing a default, Citibank filed an 

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 

amount at issue in its lawsuit and thereby waived the right to arbitrate the Rule 82 claim.2 

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
 

I 
 

 

 

 

 

 

 

 

 

 

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 

whether the relevant claims are “closely related,” as the court agrees:3 In determining 

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 

of a separate action or in a different court.”4 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

would necessarily have to resolve fact issues common to both.”6 

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
 
 

 

 

 

overlap.” 7 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 

points out — had a wholly separate evidentiary and legal basis.8 The proper focus of 

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

and Hudson’s UTPA claim raised in response to it.9 The evidentiary overlap between 

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

fact issues common to both,”11 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). 

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[ ] fee they would have charged, making them unreasonable. 12

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

Rule 82 attorney’s fees claim.13 

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 

Citibank did not anticipate a challenge based specifically on the UTPA. 14 But I caution 

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-cv14362, 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
 
 

 

 

 

 

 

 

 

 

 

 

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 

claim.”15 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 

same forum.16 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
 
 

 

 

 

 

 

 

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 

has long encouraged;17 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” 

regardless of waiver principles that would otherwise apply.18 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
 
 

 

 

 

 

 

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 

ordinary analysis undertaken to determine if a party has waived its right to arbitration.”19 

“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))). 

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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 

against arbitration, where its right to Rule 82 fees would be at best problematic.21 When 

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