Clookey v. Citibank, N.A.

Filing 25

MEMORANDUM-DECISION and ORDER - That Citiban's 11 motion to compel arbitration and stay the action (Dkt. No. 11) is GRANTED. That the parties file a status report within six months of this order or notify the court within seven (7) days fo the outcome of the arbitration, whichever is sooner. Signed by Judge Gary L. Sharpe on 12/9/2015. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________
JAY CLOOKEY,
8:14-cv-1318
(GLS/DJS)

Plaintiff,
v.
CITIBANK, N.A.,

Defendant.
________________________________
APPEARANCES:
OF COUNSEL:
FOR THE PLAINTIFF:
Thompson Consumer Law Group,
RUSSELL S. THOMPSON, ESQ.
PLLC
5235 East Southern Avenue D106-618
Mesa, AZ 85206
FOR THE DEFENDANTS:
Stroock, Stroock Law Firm
2029 Century Park East
Los Angeles, CA 90067
Lemery, Greisler Law Firm
50 Beaver Street
2nd Floor
Albany, NY 12207

JULIA B. STRICKLAND, ESQ.
MARCOS D. SASSO, ESQ.

PAUL A. LEVINE, ESQ.
MEGHAN M. BREEN, ESQ.

Gary L. Sharpe
District Judge
MEMORANDUM-DECISION AND ORDER
I. Introduction

Plaintiff Jay Clookey commenced this action against defendant
Citibank, N.A. alleging violations of the Fair Credit Reporting Act (FCRA).1
(Compl., Dkt. No. 1.) Pending is Citibank’s motion to compel arbitration
and to stay the action. (Dkt. No. 11.) For the reasons that follow, the
motion is granted and the action is stayed pending arbitration.
II. Background2
Clookey is the holder of a Citi Simplicity Visa credit card. (Dkt.
No. 11, Attach. 1 ¶ 5; Dkt. No. 21, Attach. 1 ¶¶ 2-3.) Clookey applied for
this credit card online by agreeing to terms and conditions provided on
Citibank’s website. (Dkt. No. 21, Attach. 1 ¶ 2.) After Clookey was
approved, Citibank issued him the credit card account on October 8, 2013.
(Id.; Dkt. No. 11, Attach. 1 ¶ 5.) Citibank subsequently mailed Clookey a
welcome letter and a Card Agreement with the credit card to follow. (Dkt.
No. 11, Attach. 2 at 2-14.) Clookey acknowledged that he received the
credit card and welcome letter, but does not recall whether he received a
Card Agreement. (Dkt. No. 21, Attach. 1 ¶¶ 3-4.)

1

See 15 U.S.C. §§ 1681-1681x.

2

On a motion to compel arbitration, the court employs the same standard as a
summary judgment motion and will review the record to determine whether Clookey has raised
a triable issue of fact. See Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003).

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The Card Agreement provided that it was “the contract between [the
consumer] and [Citibank] regarding the account” and that “[i]t applie[d] if
[the consumer] use[d] or authorize[d] use of the card or [if he or she] d[id
not] close the account within [thirty] days after [Citibank] issue[d] the card.”
(Dkt. No. 11, Attach. 2 at 8.) The Card Agreement also contained a
choice-of-law clause designating South Dakota law, where Citibank is
located, and an arbitration clause. (Id. at 11-12.) The arbitration clause
permitted arbitration of all claims made by Citibank or the consumer
“arising out of or related to [the consumer’s] account, a previous related
account or [the] relationship [between Citibank and the consumer].” (Id. at
11.) The clause also stated that claims may “be arbitrated only on an
individual basis[,]” and “neither [the consumer] nor [Citibank] may pursue a
[c]laim as part of a class action.” (Id.) Clookey has actively used his Citi
Simplicity account since he received the credit card in October 2013. (Dkt.
No. 11, Attach. 1 ¶¶ 7-8; Dkt. No. 11, Attach. 2 at 16-23.)
Clookey alleges that he received an email from Citibank in
September 2014 stating that he may be eligible for a credit limit increase.
(Compl. ¶¶ 16-17.) The email explained that Citibank determined eligibility
by the consumer’s income and mortgage or rental payment, and a credit
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bureau inquiry was not required. (Id. ¶ 17.) Clookey requested a credit
limit increase. (Id. ¶ 18.) Despite being informed otherwise, Clookey
alleges that Citibank obtained or “pulled” his credit report. (Id. ¶¶ 11, 1920.)
On October 28, 2014, Clookey filed a class action complaint alleging
Citibank pulled his and similarly situated consumers’ credit reports when
they applied for credit limit increases under false pretenses in violation of
FCRA. (See generally Compl.) In lieu of an answer, Citibank filed the now
pending motion to compel arbitration and to stay the action. (Dkt. No. 11.)
III. Standard of Review
When evaluating a motion to compel arbitration under the FAA, the
court will employ “a standard similar to that applicable for a motion for
summary judgment.” Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir.
2003) (citations omitted). Accordingly, “[i]f there is an issue of fact as to
the making of the agreement for arbitration, then a trial is necessary.” Id.
(citing 9 U.S.C. § 4); see Schnabel v. Trilegiant Corp., 697 F.3d 110, 118
(2d Cir. 2012). A party opposing arbitration cannot simply deny a movant’s
showing, but must submit evidence sufficient to raise a disputed fact. See
Oppenheimer & Co. Inc. v. Neidhardt, 56 F.3d 352, 358 (2d Cir. 1995).
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IV. Discussion
A.

Arbitrability of FCRA Claims
Citibank argues that the Card Agreement is a binding contract with

Clookey and his FCRA claims must be referred to arbitration because they
fall within the scope of the arbitration clause. (Dkt. No. 11, Attach. 3 at 58.) Clookey maintains that he never accepted the terms of the Card
Agreement. (Dkt. No. 21 at 8-15.) Rather, he contends that he only
agreed to the terms and conditions in his online application for the credit
card, which he maintains did not contain arbitration or choice-of-law
clauses. (Id. at 11-12.) Clookey asserts that his use of the credit card is
not acceptance of the Card Agreement. (Id. at 12-15.)
“In addition to manifesting a policy strongly favoring arbitration when
contracted for by the parties to a dispute, the [Federal Arbitration Act
(FAA), 9 U.S.C. §§ 1-16,] establishes a ‘body of federal substantive law of
arbitrability[,] applicable to any arbitration agreement within the coverage of
the Act.’” Citigroup, Inc. v. Abu Dhabi Inv. Auth., 776 F.3d 126, 129 (2d
Cir. 2015) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,

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460 U.S. 1, 24 (1983)).3 Thus, “any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration.” Moses H.
Cone Mem’l Hosp., 460 U.S. at 24-25. However, “‘arbitration is a matter of
contract and a party cannot be required to submit to arbitration any dispute
which he has not agreed so to submit.’” LJL 33rd St. Assocs., LLC v.
Pitcairn Props. Inc., 725 F.3d 184, 192 (2d Cir. 2013) (quoting United
Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960)).

“In deciding whether a dispute is arbitrable, [the court] must answer
two questions: (1) whether the parties agreed to arbitrate, and, if so, (2)
whether the scope of [that] agreement encompasses the claims at issue.”
Bank Julius Baer & Co., Ltd. v. Waxfield Ltd., 424 F.3d 278, 281 (2d Cir.
2005) (internal quotation marks and citation omitted), abrogated on other
grounds by Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287
(2010). If federal statutory claims are alleged, the court must also assess
whether Congress intended to exempt such claims from arbitration. See
JLM Industries, Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 169 (2d Cir. 2004).

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Neither party disputes that the arbitration clause is governed by the FAA, as the Card
Agreement clearly involved interstate commerce. See 9 U.S.C. §§ 1, 2; Allied-Bruce Terminix
Cos. v. Dobson, 513 U.S. 265 (1995).

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The court can easily dispose of two of the three inquiries. First,
Citibank asserts, and Clookey does not contest, that if there is an
agreement to arbitrate, the dispute arising from pulling Clookey’s credit
report falls within its scope. (Dkt. No. 11, Attach. 3 at 10-12.) The Card
Agreement’s broad arbitration clause undoubtedly captures the present
dispute. (Id., Attach. 2 at 11.) Second, courts have repeatedly held that
allegations of FCRA violations may proceed to arbitration. See, e.g., Gaul
v. Chrysler Fin. Serv. Ams. LLC, No. 1:13-CV-433, 2013 WL 3828549, at
*2 (N.D.N.Y. July 23, 2013); DeGraziano v. Verizon Commc’n, Inc., 325 F.
Supp. 2d 238, 245 (E.D.N.Y. 2004).
Whether the parties formed an initial contract to arbitrate requires
further discussion. “Arbitration is entirely a creature of contract.” Sole
Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100, 104 (2d
Cir. 2006). To determine whether Clookey and Citibank contracted to
arbitrate, courts apply state-law principles governing contract formation.
See Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002); Mehler v.
Terminix Int’l Co. L.P., 205 F.3d 44, 48 (2d Cir. 2000). Here, the Card
Agreement’s choice-of-law provision invokes South Dakota law. (Dkt.
No. 11, Attach. 2 at 11.) Clookey, on the other hand, argues that New
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York law should apply. (Dkt. No. 21 at 6-7.) In this case, whether South
Dakota or New York law applies is immaterial to this dispute as the
application of either demands the same result—Clookey and Citibank
entered into the Card Agreement containing an arbitration clause. See,
e.g., Schnabel, 697 F.3d at 119 (holding a choice-of-law analysis is legally
insignificant when both states apply “substantially similar rules”).
Both states require an objective manifestation of mutual assent to
form a binding contract. See Liebig v. Kirchoff, 851 N.W.2d 743, 752
(S.D. 2014); Express Indus. & Terminal Corp. v. N.Y. State Dep’t of
Transp., 93 N.Y.2d 584, 589 (1999). Specifically regarding consumer
credit cards, both South Dakota and New York define the use of a credit
card as acceptance of a credit card agreement. See S.D. Codified Laws
§ 54-11-9 (providing “[t]he use of an accepted credit card . . . creates a
binding contract between the card holder and the card issuer”); Kelly v.
Unifund CCR Partners Assignee of Palisades Collection LLC, No.
09CV08510, 2009 U.S. Dist. LEXIS 126059, at *4 (S.D.N.Y. Oct. 7, 2009)
(citing Feder v. Fortunoff, Inc., 114 A.D.2d 399 (2d Dep’t 1985)) (holding,
under New York law, “[t]he issuance of a credit card constitutes an offer of
credit, and the use of the card constitutes acceptance of the offer”).
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Here, Clookey used his Citi Simplicity Visa credit card since October
2013, demonstrating that he accepted Citibank’s Card Agreement. (Dkt.
No. 11, Attach. 1 ¶¶ 7-8; Dkt. No. 11, Attach. 2 at 16-23.) Clookey
maintains that he only accepted the terms and conditions presented on
Citibank’s website when he applied for the credit card. (Dkt. No. 21 at 8.)
However, his assertion is contradicted by record evidence. After Clookey
applied and Citibank approved his application, Citibank sent him a
welcome letter that contained the Card Agreement. (Dkt. No. 11,
Attach. 2 at 2-14.) The Card Agreement explicitly stated that it was the
contract that governed the account and would apply after the consumer
used the account or did not cancel the account within thirty days. (Id.
at 8.)
Clookey acknowledges receipt of the welcome letter and the credit
card, (Dkt. No. 21, Attach. 1 ¶ 3), but does not recall whether he received
the Card Agreement, (id. ¶ 4). New York and South Dakota recognize a
presumption of receipt when a mailing is properly sent through regular
office procedures. See Ma v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
597 F.3d 84, 92 (2d Cir. 2010) (citing New York law); see also Cox v.
Brookings Int’l Life Ins. Co., 331 N.W.2d 299, 301 (S.D. 1983). Citibank is
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entitled to this presumption because it submitted an affidavit of Cathleen
Walters, a Senior Vice President for a Citibank subsidiary, attesting that
the Card Agreement was mailed to Clookey with the welcome letter on
October 8, 2013. (Dkt. No. 11, Attach. 1 ¶¶ 5-6.) Walters also attached a
copy of the mailing to her affidavit containing Clookey’s address. (Id.,
Attach. 2 at 2-14.) Clookey fails to rebut this presumption, and the court
must presume he received the Card Agreement especially after
acknowledging receipt of the welcome letter contained in the same
mailing. (Dkt. No. 21, Attach. 1 ¶ 3.)
Instead, Clookey argues that the Card Agreement unilaterally
modified the website’s terms and conditions, which he identifies as the
original agreement. (Dkt. No. 21 at 11-15.) Specifically, Clookey
contends that Citibank did not provide reasonable notice that the Card
Agreement contained new contractual terms governing the account. (Id.
at 13-14.) Whether the Card Agreement is treated as the original
agreement or a modification of the website’s terms and conditions is
legally insignificant. Clookey received the Card Agreement which
explicitly stated that it was the contract governing his account with
Citibank, and the contract applied if Clookey used or continued to use the
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card. (Dkt. No. 11, Attach. 2 at 8.) Because Clookey used and continued
to use the credit card, under either New York or South Dakota law, he
assented to the terms of the Card Agreement, including the arbitration
clause.
B.

Individual or Class Arbitration
Citibank also argues that the text of the arbitration clause mandates

that Clookey’s claims be arbitrated individually rather than as a class.
(Dkt. No. 11, Attach. 3 at 13-14.) The relevant clause language provides:
[c]laims brought as part of a class action, private
attorney general or other representative action can
be arbitrated only on an individual basis. The
arbitrator may award relief only on an individual
basis, and neither [the consumer] nor [Citibank] may
pursue a [c]laim as part of a class action or other
representative action.
(Id., Attach. 2 at 11.) Clookey makes no argument in opposition.
“The principal purpose of the FAA is to ensure that private
arbitration agreements are enforced according to their terms.” AT&T
Mobility LLC v. Concepcion, 563 U.S. 333, 344 (2011) (internal quotation
marks and citations omitted). Thus, “a party may not be compelled . . . to
submit to class arbitration unless there is a contractual basis for
concluding that the party agreed to do so.” Stolt-Nielsen S.A. v.
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AnimalFeeds Int’l Corp., 559 U.S. 662, 684 (2010). Accordingly, courts
have rejected class arbitration if an arbitration agreement was silent on
the issue. See id. at 687; see also Anwar v. FairField Greenwich Ltd., 950
F. Supp. 2d 633, 637 (S.D.N.Y. 2013); Sanders v. Forex Capital Mkts.,
LLC, No. 11 Civ. 0864, 2011 WL 5980202, at *10 (S.D.N.Y. Nov. 29,
2011). If an agreement could reasonably be interpreted to authorize class
arbitration, at least one district court in the Circuit has held that such issue
should be referred to the arbitrator. See Edwards v. Macy’s Inc., No.
14CV-8616, 2015 WL 4104718, at *12 (S.D.N.Y. Jun. 30, 2015).
Here, unlike silent or unclear arbitration clauses, the Card
Agreement addresses class arbitration and expressly precludes it. (Dkt.
No. 11, Attach. 2 at 11.) The arbitration clause explicitly states that
“[c]laims brought as part of a class action . . . can be arbitrated only on an
individual basis.” (Id.) Consequently, Clookey must arbitrate his FCRA
claims individually. See Jock v. Sterling Jewelers Inc., 646 F.3d 113, 12021 (2d Cir. 2011) (noting that “the primary purpose when enforcing
arbitration agreements is to give effect to the intent of the parties”)
(internal quotation marks and citation omitted). This threshold issue is
properly decided by the court rather than an arbitrator because the clear
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language of the clause is not susceptible to an interpretation that
contemplates class arbitration. Contra Edwards, 2015 WL 4104718,
at *12.
C.

Stay of the Action Pending Arbitration
Finally, the proceedings are stayed pending arbitration. See

9 U.S.C. § 3. Citibank has requested a stay, (Dkt. No. 11, Attach. 3 at 1415), and the court concludes that all of Clookey’s FCRA claims are subject
to arbitration. See Katz v. Cellco P’ship, 794 F.3d 341, 347 (2d Cir. 2015)
(recognizing a Circuit split over whether to stay or dismiss an action
subject to arbitration and holding “that the text, structure, and underlying
policy of the FAA mandate a stay of proceedings when all of the claims in
an action have been referred to arbitration and a stay requested”); see
also Empire State Ethanol & Energy, LLC v. BBI Int’l, No. 1:08-CV-623,
2009 WL 790962, at *10 (N.D.N.Y. Mar. 20, 2009).
V. Conclusion
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that Citibank’s motion to compel arbitration and stay the
action (Dkt. No. 11) is GRANTED; and it is further
ORDERED that the parties file a status report within six months of
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this order or notify the court within seven (7) days of the outcome of the
arbitration, whichever is sooner; and it is further
ORDERED that the Clerk provide a copy of this MemorandumDecision and Order to the parties.
IT IS SO ORDERED.
December 9, 2015
Albany, New York

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