Filipkowski v. Bethpage Federal Credit Union

• Decision Date: 04 March 2021
• Docket Number: 20-CV-1754(JS)(AKT)
• Parties: JO-ANNE FILIPKOWSKI, individually, and on behalf of others similarly situated, Plaintiff, v. BETHPAGE FEDERAL CREDIT UNION and DOES 1-100, Defendants.
• Court: U.S. District Court — Eastern District of New York

JO-ANNE FILIPKOWSKI, individually,and on behalf of others similarly situated, Plaintiff, v. BETHPAGE FEDERAL CREDIT UNION and DOES 1-100, Defendants.

20-CV-1754(JS)(AKT)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

March 4, 2021

MEMORANDUM & ORDER

APPEARANCES

For Plaintiff:

Kevin P. Roddy, Esq.

Wilentz, Goldman & Spitzer, P.A.

90 Woodbridge Center Drive, Suite 900

Woodbridge, New Jersey 07095

Taras Kick, Esq., pro hac vice

The Kick Law Firm, APC

815 Moraga Drive

Los Angeles, California 90049

For Defendant

Bethpage Federal

Credit Union:

Craig Andrew Convissar, Esq.

Katten Muchin Rosenman LLP

575 Madison Avenue

New York, New York 10022

Stuart M. Richter, Esq., pro hac vice

Katten Muchin Rosenman LLP

2029 Century Park East

Los Angeles, California 90067

SEYBERT, District Judge:

Plaintiff Jo-Anne Filipkowski ("Plaintiff"), individually, and on behalf of others similarly situated, commenced this proposed class action against Defendant Bethpage Federal Credit Union ("Defendant" or "Bethpage") alleging that Defendant wrongfully charged Plaintiff, and members of the proposed class, fees related to their checking accounts. (Compl., ECF No. 1.) Before the Court is Defendant's motion to compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., and an agreement between the parties. (Mot., ECF No. 11; Def. Br., ECF No. 13; Def. Reply, ECF No. 20.) Plaintiff opposes the motion. (Pl. Opp., ECF No. 19.) For the reasons that follow, Defendant's motion to compel arbitration is GRANTED and this matter is STAYED.

BACKGROUND

I. Consideration of Declarations and Evidence Submitted in Reply

As a preliminary matter, the Court considers the declarations and evidence submitted by Defendant in reply. (See Pl. Ltr., ECF No. 25; Def. Ltr. Opp., ECF No. 26.) "[N]otwithstanding the traditional rule that it is improper for a party to submit evidence in reply that was available when it filed its motion," the Court exercises its discretion and finds it "entirely appropriate to consider" the reply declarations that directly respond to evidence proffered in Plaintiff's opposition -- namely, the argument that Defendant failed to establish that it mailed an arbitration agreement to Plaintiff with her account statement, discussed infra. Yorke v. TSE Grp. LLC, No. 18-CV-5268, 2019 WL 3219384, at *2 (S.D.N.Y. July 17, 2019) (collecting cases for the proposition that evidence may be considered in reply when it is responsive to claims raised in opposition briefs); Ruggiero v. Warner-Lambert Co., 424 F.3d 249, 252 (2d Cir. 2005) (noting that district courts have discretion to consider or disregard arguments and evidence raised for the first time in a reply brief); Lucina v. Carnival PLC, No. 17-CV-6849, 2019 WL 1317471, at *4 n.1 (E.D.N.Y. Mar. 22, 2019) (declining to strike affidavits and evidence submitted in reply "because they respond to material questions raised in" an affirmation in opposition to a motion to compel arbitration).

Moreover, there is little prejudice to Plaintiff where, as here, she could have, but did not, claim "surprise . . . and sought leave to file a responsive sur-reply." Ruggiero, 424 F.3d at 252; Bayway Ref. Co. v. Oxygenated Mktg. & Trading A.G., 215 F.3d 219, 227 (2d Cir. 2000) (finding the district court properly accepted evidence submitted in reply where, among other things, the opposing party knew the evidence could refute its argument but "chose not to introduce any evidence" of its own and did not seek leave to file a sur-reply to respond to the new evidence). Accordingly, the facts are drawn from the Complaint, the declarations, and exhibits submitted in connection with the Motion, including Plaintiff's opposition and Defendant's reply.¹

II. Plaintiff's Member Account with Bethpage

Plaintiff is a member of Defendant, a federally chartered credit union. (Compl. ¶¶ 5-6.) Defendant's relationship with its members is governed by various versions of a member account agreement (the "Member Agreement"). (Siblano Decl. ¶ 2.) As relevant here, Plaintiff and Defendant entered into a "Membership Account Information" contract, a version of the Member Agreement effective September 1, 2014 (the "2014 Agreement"). (Compl. ¶ 30; Siblano Decl. ¶ 10; 2014 Agmt., Siblano Decl., Ex. C, ECF No. 12-3.) The 2014 Agreement provides, among other things, that "you agree to be bound by the terms and conditions set forth in this [2014] Agreement, as the same may be amended from time to time." (2014 Agmt. at 1.) Plaintiff and Defendant also entered into a "Consumer Member Account Agreement," a version of the Member Agreement effective October 20, 2017 (the "2017 Agreement"). (Compl. ¶ 29; Siblano Decl. ¶ 10; 2017 Agmt., Siblano Decl., Ex. D, ECF No. 12-4.) The 2017 Agreement provides that if Defendant "notified you of a change in any term of your account and you continue to have your account after the effective date of the change, you have agreed to the new term(s)." (2017 Agmt. at 9 (under "AMENDMENTS AND TERMINATION").) It further provides that "[w]ritten notice we give you is effective when it is deposited in the United States Mail with proper postage and addressed to your mailing address we have on file." (Id. (under "NOTICES").)

III. The October 2019 Arbitration Agreement

In October 2019, Defendant amended its Member Agreement to add an arbitration clause (the "Arbitration Agreement"). (Siblano Decl. ¶ 4; Arbitration Agmt., Siblano Decl., Ex. A, ECF No. 12-1; Siblano Dep., Roddy Decl., Ex. F, ECF No. 19-7, at 65:7-11.) Defendant represents that by October 7, 2019, it mailed members a copy of the Arbitration Agreement in the same envelope as the September 2019 account statements, among other documents. (Siblano Decl. ¶ 5; Smith Decl. ¶¶ 6, 9; USPS Mail Receipt, Smith Decl., Ex. 3, ECF No. 23-3.) For members who opted to receive monthly account statements and notices via regular mail, like Plaintiff,² Defendant outsourced the printing and mailing process to third-party vendors. Here, Defendant used Official Offset Corporation ("Official") to print the inserts that accompanied monthly account statements, such as the Arbitration Agreement, a privacy notice, and a fee schedule. (Siblano Dep. at 91:22-92:17; Official Oct. 10, 2019 Invoices, Roddy Decl., Ex. E, ECF No. 19-6, at ECF pp. 97 (privacy notice), 99 (Arbitration Agreement), 100 (fee schedule).) Once printed, Official provided those inserts to Taylor Communications ("Taylor"), another third-party vendor, for mailing. (Smith Decl. ¶ 8.) Specifically, Defendant used Taylor to (1) print the monthly account statements and (2) mail the statements along with additional notices and inserts it received from Official. (Siblano Dep. at 66:20-67:2.)

Taylor's envelope stuffing process is automated such that Plaintiff's account statement contains an "intelligent mail barcode" ("IMB") above her name and address that reflects the number of sheets of paper used to print the statement and the number of inserts included in the mailing. (Smith Decl. ¶¶ 13-14.) The IMB on Plaintiff's account statement reads, among other things, "1-2 2.3." (Id. ¶ 14; see Sept. 2019 Acct. Statement, Siblano Decl., Ex. B., ECF No. 12-2, at 1.) "1-3" refers to the number of sheets of paper used to print the September 2019 statement and "2.3" refers to the inserts added to the mailing. (Smith Decl. ¶ 14.) The "2.3" corresponds to the fee schedule and the Arbitration Agreement, which are identified "as S2 and S3 in the 'Insert Selection Criteria' column on the Bethpage" mailing profile form submitted to Taylor. (Id.; Mailing Profiling Form, Smith Decl., Ex. 2, ECF No. 23-2, at 1.) Moreover, the top right corner of the September 2019 account statement reads: Attention: Important notices are included

with this statement.

1. Consumer Member Privacy Notice

2. Fee Schedule

3. Arbitration Agreement

(Sept. 2019 Acct. Statement at 1.)

Following this procedure, Defendant maintains that it mailed Plaintiff's September 2019 account statement, along with a copy of the Arbitration Agreement, in the first week of October 2019. (Siblano Decl. ¶¶ 3-5.) Plaintiff counters that "to the best of [her] recollection," she "never received a binding arbitration agreement or pamphlet from [Defendant], neither enclosed with [her] September 2019 account statement nor otherwise." (Filipkowski Decl. ¶ 2.)

IV. The Terms of the Arbitration Agreement

The Arbitration Agreement provides that if informal settlement is not possible,

[A]ny and all Claims that are threatened, made, filed or initiated after the Effective Date (defined below) of this Arbitration and Waiver of Class Action provision ("Arbitration Agreement"), even if the Claims arise out of, affect or relate to conduct that occurred prior to the Effective Date, shall, at the election of either you or us, be resolved by binding arbitration . . . .

(2019 Agmt. at 1). The Arbitration Agreement contains a "Class Action Waiver" providing that "ANY ARBITRATION OF A CLAIM WILL BE ON AN INDIVIDUAL BASIS." (Id. at 2 ¶ 4.) The "Right to Opt-Out" provision states:

You have the right to opt-out of this Arbitration Agreement and it will not affect any other terms and conditions of your Account Agreement or your relationship with the Credit Union. To opt out, you must notify the credit union in writing of your intent to do so within 30 days after the Effective Date. Your opt-out will not be effective and you will be deemed to have consented and agreed to the Arbitration Agreement unless your notice of intent to opt out is received by the credit union in writing . . . .

(Id. at 2 ¶ 6.) While 209 Bethpage members opted out of the Arbitration Agreement, Plaintiff did not. (Dour Decl. ¶ 2; Siblano Decl. ¶ 8.) Out of those 209 individuals, 177 members elected to receive statements and notices by mail. (Dour Decl. ¶ 2.)

DISCUSSION

I. Legal Standard

The FAA, 9 U.S.C. §§ 1-16, "reflects a liberal federal policy favoring arbitration agreements and places arbitration agreements on the same footing as other contracts."...