Muñoz-Sims v. Schroeder
Marcia Leola Muñoz-Sims v. Derek Schroeder, Branch Manager, One Main Financial; One Main Financial, LLC; One Main Financial Solutions; and Triton Insurance Company
- John Tunheim
- 0:24-cv-04544
- U.S. District Court · District of Minnesota
- 3
In Muñoz-Sims v. Schroeder, Judge Tunheim granted plaintiff Marcia Leola Muñoz-Sims's request to appeal without paying the filing fee, finding she cannot afford it and that her appeal is not made in bad faith, even though the court believes it is unlikely to succeed.
Pro se litigants and self-represented appellants who cannot afford court filing fees, particularly in cases where a district court has stayed proceedings pending arbitration.
What happened
In Muñoz-Sims v. Schroeder, Marcia Leola Muñoz-Sims, a self-represented plaintiff, sued Derek Schroeder, One Main Financial, LLC, One Main Financial Solutions, and Triton Insurance Company under the Fair Credit Reporting Act. The defendants asked the court to pause the lawsuit and send the dispute to arbitration, as required by an agreement between the parties. The court previously granted that request, finding the arbitration contract was procedurally unfair (meaning it was entered under unequal bargaining conditions) but not substantively unfair (meaning its actual terms were not so one-sided as to be unenforceable). Muñoz-Sims then filed an appeal with the Eighth Circuit Court of Appeals.
Muñoz-Sims asked to proceed with her appeal without paying the required court filing fee — a status called proceeding without prepayment of fees, allowed under federal law for people who cannot afford it. To qualify, a person must show they cannot pay the fee and that the appeal is made in good faith, not as a frivolous or harassing tactic. The court reviewed her financial application and assessed whether her appeal had a legitimate, non-abusive purpose.
Judge Tunheim granted the application, finding that Muñoz-Sims demonstrated she cannot afford the filing fee and that her appeal, while unlikely to succeed, was not filed in bad faith. The court noted two reasons it considers the appeal unlikely to succeed: the legal reasoning in its prior orders, and the fact that under a recent U.S. Supreme Court ruling, orders sending cases to arbitration with a stay (rather than a dismissal) are generally not immediately appealable. Nonetheless, because bad faith was not shown, Judge Tunheim ruled that Muñoz-Sims has the right to be heard on appeal and granted her request.
The detailed version
This opinion resolves a narrow procedural motion in Muñoz-Sims v. Schroeder, Civil No. 24-4544, in the U.S. District Court for the District of Minnesota, decided December 2, 2025, by District Judge John R. Tunheim.
Background
Plaintiff Marcia Leola Muñoz-Sims, proceeding pro se (self-represented), brought consolidated actions under the Fair Credit Reporting Act (FCRA) against defendants Derek Schroeder (identified as Branch Manager of One Main Financial), One Main Financial, LLC, One Main Financial Solutions, and Triton Insurance Company. The defendants moved to compel arbitration and stay the lawsuit pursuant to an arbitration agreement. On August 4, 2025, Judge Tunheim granted that motion, finding the arbitration agreement was procedurally unconscionable (formed under procedurally unfair conditions) but not substantively unconscionable (its substantive terms were not oppressively one-sided). See Muñoz-Sims v. Schroeder, 2025 WL 2210932 (D. Minn. Aug. 4, 2025). The case was stayed — meaning paused, not dismissed — pending arbitration.
Notice of Appeal
On August 15, 2025, Muñoz-Sims filed a Notice of Appeal to the U.S. Court of Appeals for the Eighth Circuit. The docket entry described the appeal as relating to the court's order granting the Motion to Consolidate, but the court, applying the rule that pro se filings must be liberally construed (read broadly in favor of the filer, per Erickson v. Pardus, 551 U.S. 89, 94 (2007)), interpreted the notice as also covering the order compelling arbitration.
Motion at Issue
On September 8, 2025, Muñoz-Sims filed an application to proceed in forma pauperis (IFP) on appeal — a request to be excused from paying the appellate court filing fee due to financial hardship. This is governed by 28 U.S.C. § 1915.
Legal Standard
Under 28 U.S.C. § 1915(a)(1), IFP status requires the applicant to demonstrate financial inability to pay the filing fee. Under § 1915(a)(3), IFP status must be denied if the court finds the appeal is not taken in good faith — meaning it has no non-frivolous basis.
Court's Analysis and Ruling
Judge Tunheim found both requirements satisfied. First, Muñoz-Sims's application demonstrated she could not afford the filing fee. Second, despite the court's assessment that her appeal is unlikely to succeed, it found no bad faith. The court explained the appeal is unlikely to succeed for two reasons: (1) its prior orders' reasoning, and (2) the question of immediate appealability. The court cited the U.S. Supreme Court's decision in Smith v. Spizzirri, 601 U.S. 472 (2024), which held that the Federal Arbitration Act (FAA) requires courts to stay — not dismiss — cases subject to arbitration. Because the case was stayed rather than dismissed, no final judgment was entered. Under 9 U.S.C. § 16(b), an order compelling arbitration accompanied by a stay is generally not immediately appealable unless the district court certifies a controlling question of law under 28 U.S.C. § 1292(b), which was not done here. Therefore, the court expressed doubt that the Eighth Circuit has jurisdiction to hear the appeal at this time. Nevertheless, because the court could not find the appeal was filed in bad faith, it granted IFP status.
Disposition
Muñoz-Sims's Application to Proceed In Forma Pauperis on Appeal [Docket No. 60] was GRANTED.
Reviewer note from the AI+
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