McCormick v. Best Buy, Co, Inc.

Filing 31

-CLERK TO FOLLOW UP---DECISION AND ORDER GRANTING Defendant's 18 MOTION to Compel Arbitration and to Stay Proceedings. The parties are directed to proceed to arbitration, and all proceedings in this action are stayed until such time as the parties have advised the court that the arbitration has been completed. Signed by Hon. John T. Curtin on 1/6/2016. (JEC)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

TIMOTHY McCORMICK,
Plaintiff,
-vs-

15-CV-46-JTC

CITIBANK, NA,
Defendant.

Plaintiff Timothy McCormick brought this action against Best Buy Co., Inc. (“Best
Buy”), seeking actual and statutory damages for violations of the Telephone Consumer
Protection Act (“TCPA”), 47 U.S.C. § 227, based on allegations that Best Buy used an
automated telephone dialing system to repeatedly call plaintiff’s cellular telephone, without
his prior express consent, regarding his Best Buy credit card account (see Dkt. No.1). Best
Buy filed an answer with affirmative defenses, including the defense that plaintiff’s TCPA
claim is subject to binding arbitration pursuant to the arbitration clause in the written
agreement governing the Best Buy credit card account, issued by Citibank, N.A.
(“Citibank”) (See Dkt. No. 12, ¶ 34). Subsequently, by order entered August 10, 2015 (Dkt.
No. 16), the court approved the parties’ joint stipulation substituting Citibank as the proper
defendant in the case (Dkt. No. 15).
Citibank has now moved for an order pursuant to the Federal Arbitration Act (“FAA”),
9 U.S.C. § 1 et seq., compelling arbitration of plaintiff’s claims and staying proceedings in

this court pending completion of arbitration. See Dkt. No. 18.1 For the reasons that follow,
defendant’s motion is granted.

BACKGROUND
Plaintiff opened his Best Buy account in 2012 when he purchased a television at
one of Best Buy’s retail stores in Western New York. See Dkt. No. 26 (McCormick Aff.),
¶¶ 3, 4. He acknowledges that, upon receipt of the Best Buy credit card, he received a
copy of the cardholder agreement governing the account, which was originally issued by
Capital One Financial Corp. (“Capital One”). Plaintiff made regular payments to Best Buy
Credit Services until the balance on the television purchase was paid off. Id. ¶¶ 5 - 7, 10.
As set forth in the Affidavit of Citibank employee Susan Kwiatek, Citibank purchased
the Best Buy credit card portfolio from Capital One in February 2013. See Dkt. No. 18-1
(Kwiatek Aff.), ¶ 5. In October 2013, Citibank sent plaintiff a mailing containing an
explanatory letter and “Notice of Change in Terms and Right to Opt Out” advising him that
the Best Buy credit card program had been transferred to Citibank, and that among other
changes, the card agreement governing his account was being replaced with a new one,
a copy of which was enclosed with the mailing. See Dkt. No. 18-2, p. 20. The letter also
advised plaintiff that his Best Buy credit card account number would remain the same; he
should keep using the same card; and he should continue to make his payments payable
to Best Buy Credit Services. Id. at 19.

1

In the context of motions to compel arbitration brought under the FAA, the court applies a
standard similar to that applicable for a motion for summary judgment. Bensadoun v. Jobe Riat, 316
F.3d 171, 175 (2d Cir. 2003).

-2-

The arbitration clause in the Card Agreement governing credit card accounts issued
by Citibank provides:
ARBITRATION
PLEASE READ THIS PROVISION OF THE AGREEMENT CAREFULLY.
IT PROVIDES THAT ANY DISPUTE MAY BE RESOLVED BY BINDING
ARBITRATION. ARBITRATION REPLACES THE RIGHT TO GO TO
COURT, INCLUDING THE RIGHT TO A JURY AND THE RIGHT TO
PARTICIPATE IN A CLASS ACTION OR SIMILAR PROCEEDING. IN
ARBITRATION, A DISPUTE IS RESOLVED BY AN ARBITRATOR
INSTEAD OF A JUDGE OR JURY. ARBITRATION PROCEDURES ARE
SIMPLER AND MORE LIMITED THAN COURT PROCEDURES.
Agreement to Arbitrate: Either you or we may, without the other’s consent,
elect mandatory, binding arbitration for any claim, dispute, or controversy
between you and us (called “Claims”).
Claims Covered
What Claims are subject to arbitration? All Claims relating to your
account, a prior related account, or our relationship are subject to arbitration,
including Claims regarding the application, enforceability, or interpretation of
this Agreement and this arbitration provision. All Claims are subject to
arbitration, no matter what legal theory they are based on or what remedy
(damages, or injunctive or declaratory relief) they seek. This includes Claims
based on contract, tort (including intentional tort), fraud, agency, your or our
negligence, statutory or regulatory provisions, or any other sources of law;
Claims made as counterclaims, cross-claims, third-party claims,
interpleaders or otherwise; and Claims made independently or with other
claims. A party who initiates a proceeding in court may elect arbitration with
respect to any Claim advanced in that proceeding by any other party. Claims
and remedies sought as part of a class action, private attorney general or
other representative action are subject to arbitration on an individual
(non-class, non-representative) basis, and the arbitrator may award relief
only on an individual (non-class, non-representative) basis.
Whose Claims are subject to arbitration? Not only ours and yours, but
also Claims made by or against anyone connected with us or you or claiming
through us or you, such as a co-applicant, authorized user of your account,
an employee, agent, representative, affiliated company, predecessor or
successor, heir assignee, or trustee in bankruptcy.
***

-3-

Broadest Interpretation. Any 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. This arbitration provision
is governed by the Federal Arbitration Act (the “FAA”).
Dkt. No. 18-2, pp. 10-11.
Also in October 2013, Citibank sent plaintiff a monthly billing statement which
contained the following notice:
IMPORTANT INFORMATION REGARDING CHANGES TO YOU BEST
BUY© CREDIT CARD ACCOUNT
–As of September 6, 2013, your Best Buy Credit Card Account is owned by
Citibank, N.A.
–Changes to your account terms, including binding arbitration, are explained
in a package being mailed to you separately.
Id. at 25.
Plaintiff denies receipt of the October 2013 mailing from Citibank containing the
letter, Notice of Change in Terms and Right to Opt Out, and Card Agreement. He
acknowledges that he used the Best Buy credit card in October 2014 to purchase a cell
phone (see Dkt. No. 26, ¶ 9), as confirmed by his October 2014 monthly billing statement
(see Dkt. No. 18-2, pp. 30-33). He alleges in his complaint that, in December 2014 and
January 2015, Best Buy violated the TCPA by using an automated dialing system to call
him repeatedly on his cell phone without his consent, apparently attempting to collect the
unpaid balance on plaintiff’s Best Buy credit card account.2 See Dkt. No. 1, ¶¶ 15-21.
By the present motion, Citibank seeks an order compelling arbitration of plaintiff’s
TCPA claims in accordance with the arbitration clause of the Card Agreement, and staying

2

According to Citibank, plaintiff’s Best Buy account has been charged off for non-payment of
balance due as of May 21, 2015. See Dkt. No. 18-1, ¶ 12.

-4-

all other proceedings in this action pending the outcome of arbitration. Plaintiff contends
that he should not be compelled to arbitrate his TCPA claims against Citibank because he
did not receive a copy of the Citibank Card Agreement, and therefore did not agree or
otherwise consent to be bound by the terms of the arbitration clause. See Item 16-2.

DISCUSSION
The Federal Arbitration Act.
Citibank’s motion is brought under the FAA, which creates a “body of federal
substantive law of arbitrability, applicable to any arbitration agreement within the coverage
of the Act.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
The FAA provides that an arbitration provision in “a contract evidencing a transaction
involving commerce … shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
Further, the FAA “establishes a national policy favoring arbitration when the parties
contract for that mode of dispute resolution” and “supplies not simply a procedural
framework applicable in federal courts” but “also calls for the application, in state as well
as federal courts, of federal substantive law regarding arbitration.” Preston v. Ferrer, 552
U.S. 346, 349 (2008).
The primary purpose of the FAA “is to ensure that private agreements to arbitrate
are enforced according to their terms.” In re Am. Exp. Fin. Advisors Sec. Litig., 672 F.3d
113, 127 (2d Cir. 2011) (citing Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford, Jr.
Univ., 489 U.S. 468, 479 (1989). The Supreme Court has recognized that, despite the
“liberal federal policy favoring arbitration agreements,” Moses H. Cone, 460 U.S. at 24,
-5-

“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.” Steelworkers v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 582 (1960), quoted in Howsam v. Dean Witter Reynolds,
Inc., 537 U.S. 79, 83 (2002). However, “any doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration.” Moses H. Cone, 460 U.S. at 24–25.
Accordingly, federal policy requires courts “to construe arbitration clauses as broadly as
possible …,” In re Am. Exp. Fin. Advisors Sec. Litig., 672 F.3d at 128; Collins & Aikman
Prods. Co. v. Bldg. Sys., Inc., 58 F.3d 16, 19 (2d Cir. 1995), and the agreement to arbitrate
should be enforced “unless it may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the asserted dispute.” AT & T
Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650 (1986).
In the Second Circuit, courts employ the following four-part inquiry to determine
whether to order the parties in litigation to arbitrate the claims asserted in the action, and
to stay court proceedings pending arbitration:
[F]irst, [the court] must determine whether the parties agreed to arbitrate;
second, it must determine the scope of that agreement; third, if federal
statutory claims are asserted, it must consider whether Congress intended
those claims to be nonarbitrable; and fourth, if the court concludes that
some, but not all, of the claims in the case are arbitrable, it must then
determine whether to stay the balance of the proceedings pending
arbitration.
Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 844 (2d Cir. 1987) (internal citations
omitted); see also Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 76 (2d Cir. 1998);
Fedotov v. Peter T. Roach & Associates, P.C., 2006 WL 692002, at *1 (S.D.N.Y. Mar. 16,
2006).

-6-

1.

Agreement to Arbitrate

“Because an agreement to arbitrate is a creature of contract, … the ultimate
question of whether the parties agreed to arbitrate is determined by state law.” Bell v.
Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002) (citing First Options of Chicago, Inc. v.
Kaplan, 514 U.S. 938, 944 (1995)). Here, the parties ostensibly disagree as to whether
determination of this issue is governed by the law of New York (where the contract was
entered) or South Dakota (pursuant to the choice of law provision in the Card Agreement).
Since there is no conflict between the relevant substantive law of contracts as applied in
these states, however, the court need not engage in a choice of law analysis. See, e.g.,
Ali v. Fed. Ins. Co., 719 F.3d 83, 91 n. 12 (2d Cir. 2013) (“Because there is no conflict
between the relevant substantive law …, we dispense with any choice of law analysis.”);
Int'l Bus. Machines Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir. 2004) (“In the
absence of substantive difference, … a New York court will dispense with choice of law
analysis; and if New York law is among the relevant choices, New York courts are free to
apply it.”).
Under New York law, regular use of a credit card constitutes sufficient evidence of
the card user's consent to the terms of the agreement governing the account. Salerno v.
Credit One Bank, NA, 2015 WL 6554977, at *4 (W.D.N.Y. Oct. 29, 2015) (citing cases).
The same holds true under South Dakota law. See, e.g., Fedotov v. Peter T. Roach &
Associates, P.C., 2006 WL 692002, at *2 (S.D.N.Y. Mar. 16, 2006) (use of credit card after
mailing of Card Agreement binds user to arbitration clause; citing S.D. Codified Laws § 54-

-7-

11-9 (providing “[t]he use of an accepted credit card ... creates a binding contract between
the card holder and the card issuer”).
As discussed above, there is uncontested evidence presented on this motion to
sufficiently establish that Citibank mailed the Card Agreement, along with the Notice of
Change in Terms and Right to Opt Out, to plaintiff in October 2013, and plaintiff used the
Best Buy card to purchase a cell phone in October 2014. “In doing so, the plaintiff agreed
to the terms of the Arbitration Agreement.” Anonymous v. JP Morgan Chase & Co., 2005
WL 2861589, at *4 (S.D.N.Y. Oct. 31, 2005). Additionally, the matters set forth in the
sworn affidavit of Susan Kwiatek, and the documents attached thereto, provide compelling
circumstantial evidence of Citibank’s compliance with its customary policy upon acquisition
of a merchant credit card portfolio to provide current account holders with a printed copy
of the new agreement governing the account, along with the separate written Notice of
Change in Terms and Right to Opt Out, as well as additional notice as provided in the next
monthly periodic billing statement. See Dkt. No. 18-1, ¶¶ 5-11; Dkt. No. 18-2; see also
Kurz v. Chase Manhattan Bank USA, N.A., 319 F. Supp. 2d 457, 463 (S.D.N.Y. 2004)
(actual receipt of mailing need not be proven; “[p]roof of mailing may be accomplished by
presenting circumstantial evidence, including evidence of customary mailing practices used
in the sender's business.”) (quoting Marsh v. First USA Bank, N.A., 103 F. Supp. 2d 909,
917-18 (N.D.Tex. 2000) (crediting testimony of bank's vice president for operations about
company's mass mailing process and quality assurance controls).
Based on this record, the court finds that upon using the Best Buy credit card for
purchases following Citibank’s mailing of the Card Agreement with written notice of change
of ownership and terms of the account, plaintiff agreed to be bound by the arbitration
-8-

clause of the Card Agreement requiring that all disputes relating to the account be
submitted to arbitration governed by, and enforceable under, the FAA. Accordingly, the
first element of the four-part arbitrability inquiry is satisfied.

2.

Scope of the Arbitration Clause

As set forth above, the arbitration clause of Citibank’s Card Agreement is extremely
broad, encompassing “[a]ll Claims relating to [the] account, a prior related account, or our
relationship …, including Claims regarding the application, enforceability, or interpretation
of this Agreement and this arbitration provision.” Dkt. No. 18-2, p. 10. The clause applies
to all “Claims based on contract, tort (including intentional tort), fraud, agency, your or our
negligence, statutory or regulatory provisions, or any other sources of law …,” and includes
not only claims made by or against Citibank and the account holder, “but also Claims made
by or against anyone connected with us or you or claiming through us or you, such as a
co-applicant, authorized user of your account, an employee, agent, representative,
affiliated company, predecessor or successor ….” Id. at 10, 11. The Agreement also
expressly provides 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. This arbitration provision is governed by the [FAA].” Id. at 11.
Considering the breadth of this language, and in light of the strong federal policy
requiring courts “to construe arbitration clauses as broadly as possible …,” In re Am. Exp.
Fin. Advisors Sec. Litig., 672 F.3d at 128, the court cannot conclude with positive
assurance that the arbitration provision of the Citibank Card Agreement “is not susceptible
of an interpretation that covers the claims asserted” in the complaint regarding Citibank’s
-9-

liability under the TCPA for its communications with plaintiff relating to his Best Buy credit
card account. AT & T Techs., Inc., 475 U.S. at 650. Accordingly, the court finds that the
second element of the arbitrability inquiry is satisfied.

3.

Arbitrability of TCPA Claims

Because plaintiff asserts a federal statutory claim, the court must consider “whether
Congress evinced an intention to preclude a waiver of judicial remedies for the statutory
rights at issue.” Green Tree Fin. Corp.Ala. v. Randolph, 531 U.S. 79, 90 (2000). At this
step of the inquiry, “the party seeking to avoid arbitration bears the burden of establishing
that Congress intended to preclude arbitration of the statutory claims at issue.” Id. at 9192; see also Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 227 (1987); Spinelli
v. Nat'l Football League, 2015 WL 1433370, at *11 (S.D.N.Y. Mar. 27, 2015).
Plaintiff has made no showing in this regard. Moreover, 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. See, e.g., Tuttle v.
Sallie Mae, Inc., 2014 WL 545379, at *7 (N.D. Ind. Feb. 11, 2014) (citing Cyganiewicz v.
Sallie Mae, Inc., 2013 WL 5797615, at *5–6 (D.Mass. Oct. 24, 2013)); Cayanan v. Citi
Holdings, Inc., 928 F. Supp. 2d 1182, 1207-08 (S.D. Cal. 2013) (citing cases).
Accordingly, the court finds that plaintiff has not met her burden of establishing a
congressional intent to preclude waiver of judicial remedies for TCPA claims.

-10-

4.

Stay Pending Arbitration

Having determined that plaintiff’s TCPA claim is within the scope of and subject to
the broad arbitration clause of the Card Agreement, and because Citibank has requested
a stay, section 3 of the FAA mandates that the court “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.” 9 U.S.C. § 3.
As recently recognized by the Second Circuit, a mandatory stay “comports with the FAA's
statutory scheme and pro-arbitration policy[,] enables parties to proceed to arbitration
directly, unencumbered by the uncertainty and expense of additional litigation, and
generally precludes judicial interference until there is a final award.” Katz v. Cellco P'ship,
794 F.3d 341, 346 (2d Cir. 2015).
Accordingly, the court finds that the claims set forth in the complaint in this action
are subject to the arbitration clause in the applicable Card Agreement, and the proceedings
in this action must therefore be stayed pending the outcome of arbitration.

CONCLUSION
For the foregoing reasons, defendant’s motion (Dkt. No. 18) to compel arbitration
and stay proceedings in this action is granted. Pursuant to 9 U.S.C. §§ 3 and 4, the parties
are directed to proceed to arbitration in the manner provided for in the Card Agreement,
and all proceedings in this action are stayed until such time as the parties have advised the
court, by consent motion to lift the stay or by other appropriate joint written submission, that
the arbitration has been completed.

-11-

So ordered.

\s\ John T. Curtin
JOHN T. CURTIN
United States District Judge
Dated: January 6, 015
p:\pending\2015\15-46.arb.dec23.2015

-12-