Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—W.D.N.Y.: Best Buy credit card holder must arbitrate TCPA claims, (Jan 11, 2016)

By Jody Coultas, J.D.

Telephone Consumer Protection Act (TCPA) claims filed by a consumer against CitiBank, N.A. were subject to the arbitration provision contained within a credit card agreement, according to the federal district court in Buffalo, New York (McCormick v. CitiBank, N.A., January 8, 2016, Curtin, J.).

The consumer alleged that Best Buy used an automated telephone dialing system to repeatedly call his cellular telephone without his prior express consent in violation of the TCPA. Best Buy argued the claim should be dismissed because it was subject to binding arbitration pursuant to the arbitration clause in the written agreement governing the Best Buy credit card account, issued by Citibank. Citibank was substituted as the proper defendant in the case, and moved to compel based on the Federal Arbitration Provision (FAA).

When the consumer received the Best Buy credit card, he was given a copy of the cardholder agreement issued by Capital One Financial Corp. Citibank purchased the Best Buy credit card portfolio from Capital One, and sent the consumer a “Notice of Change in Terms and Right to Opt Out” and a new agreement. The calls at issue were made after the consumer received the new agreement, which contained an arbitration provision.

To determine whether to order arbitration, and to stay court proceedings pending arbitration, courts look at: (1) whether the parties agreed to arbitrate; (2) the scope of that agreement; (3) whether Congress intended the federal statutory claims at issue to be non-arbitrable; and (4) whether to stay the balance of the proceedings pending arbitration if only some of the claims are arbitrable.

Citibank’s motion to compel arbitration was granted by the court. There was uncontested evidence that Citibank mailed the new agreement to the consumer in October 2013, and that the consumer used the card to purchase a cell phone in October 2014. Regular use of a credit card constitutes sufficient evidence of the card user's consent to the terms of the agreement governing the account. By using the credit card for purchases after receiving the new agreement, the consumer agreed to be bound by the arbitration clause, the court ruled.

The clause—which applied to all claims based on contract, tort, fraud, agency, negligence, statutory or regulatory provisions, or any other sources of law—applied to the TCPA claims. The court found that the arbitration provision covered the issue of Citibank’s liability under the TCPA for its communications relating to his Best Buy credit card account.

Congress did not intend to preclude waiver of judicial remedies for TCPA claims, according to the court. The few courts that have considered the issue have found nothing in the text or legislative history of the TCPA to suggest that Congress intended TCPA claims to be non-arbitrable.

Because the claims were subject to the arbitration clause, the proceedings were stayed pending the outcome of arbitration by the court.

The case is No. 15-CV-46-JTC.

Attorneys: Seth Andrews (Law Offices of Kenneth Hiller, PPLC) for Timothy McCormick. Meghan M. Breen (Lemery Greisler LLC) for Citibank, NA.

Companies: CitiBank, N.A.

Cases: ConsumerProtection NewYorkNews