Clookey v. Citibank, N.A.

• Decision Date: 09 December 2015
• Docket Number: 8:14-cv-1318 (GLS/DJS)
• Parties: JAY CLOOKEY, Plaintiff, v. CITIBANK, N.A., Defendant.
• Court: U.S. District Court — Northern District of New York

JAY CLOOKEY, Plaintiff, v. CITIBANK, N.A., Defendant.

8:14-cv-1318 (GLS/DJS)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

December 9, 2015

APPEARANCES:

FOR THE PLAINTIFF:

Thompson Consumer Law Group,

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

OF COUNSEL:

RUSSELL S. THOMPSON, ESQ.

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.)

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 creditbureau 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, 19-20.)

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).

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 5-8.) 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.,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).

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 NewYork 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").

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...