WonderingInWI

Citi's "Arbitration Limits" clause

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Hi there,

 

This forum has been so helpful to me previously (I used arbitration to make Kohn Law Firm give up on a 5K Care Credit debt), I am hoping you guys have insight into my current dilemma.

 

I am being sued in my county's Small Claims Court for an alleged 2k Citi card debt. I thought I was good to go with my MTC but have read a few posts here indicating some courts have taken:

 

 

 

"Individual claims filed in a small claims court are not subject to arbitration, as long as the matter stays in small claims court,"

to refuse MTCs.

 

Sure seems like the OC is wanting to have his cake and eat it, too.

My question is: How often are JDB's aware of this little nugget and how often are courts refusing MTCs based on it?

 

I've really no option but to give it a go with my MTC, just wondered if others have experience with this.

 

 

 

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6 hours ago, WonderingInWI said:

I am being sued in my county's Small Claims Court for an alleged 2k Citi card debt.

Who is the plaintiff?  Citi or a buyer?

 

6 hours ago, WonderingInWI said:

"Individual claims filed in a small claims court are not subject to arbitration, as long as the matter stays in small claims court,"

What's the date of the agreement?

Citi had delegation language from 2001 until late 2016 or early 2017 (depending on the style of account).

The delegation language looks like this;

Quote

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

Citi removed this language a couple of years ago.  But if the agreement that governs the account in question does contain this language, then the court can't consider the small claims cut-out.

The Supreme Court re-enforced this interpretation earlier this year in Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. ___, 139 S. Ct. 524.

See also;

U.S. Supreme Court Holds That Arbitrators, Not Courts, Decide Arbitrability Under Contractual Delegations—Even When the Answer Is Obviously “No”

SCOTUS Rejects Exception to Compelling Arbitration—Delegation clause means arbitrator decides scope—no plausible argument required

Supreme Court Gives Teeth to Delegation Clauses in Arbitration Provisions

U.S. Supreme Court Rejects ‘Wholly Groundless’ Exception to Delegation Clauses in Arbitration Agreements

If the agreement that governs the account in question does not contain the delegation language, then you might not have this leverage unless delegation is somehow incorporated by reference to the rules of the arbitration forum — as was the case in Schein.

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On 8/14/2019 at 7:14 PM, Pericles said:

Who is the plaintiff?  Citi or a buyer?

The OC is Citi. Calvary is the JDB.

 

On 8/14/2019 at 7:14 PM, Pericles said:

What's the date of the agreement?

Citi had delegation language from 2001 until late 2016 or early 2017 (depending on the style of account).

The delegation language looks like this;

My agreement is 2016. There is no delegation language. Therefore, it seems, the small claims cut-out is potentially problematic. My previous experience with Midland was that the law firm they employed was rather clueless about the arbitration clause. I am not sure if Calvary is more savvy. 

Thank you for bringing the Schein case to my attention. I am doing a tedious search on PACER but can't seem to find a single ruling on the small claims cut-out. Are you aware of anything related to this?

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On 8/17/2019 at 8:51 AM, WonderingInWI said:
My agreement is 2016. There is no delegation language. Therefore, it seems, the small claims cut-out is potentially problematic.

What's the incorporation (adopted by reference) language like?
For agreements that reference both the AAA and JAMS, it usually looks something like this;

Quote

The arbitration will follow procedures and rules of the arbitration firm in effect on the date the arbitration is filed unless those procedures and rules are inconsistent with this Agreement, in which case this Agreement will prevail.


For agreements that reference just the AAA;

Quote

Arbitration shall be conducted by the American Arbitration Association (“AAA”) according to this arbitration provision and the applicable AAA arbitration rules in effect when the claim is filed (“AAA Rules”), except where those rules conflict with this arbitration provision. 


The following is quoted from Rent-A-Center delegation of arbitrability to the arbitrator is alive and well ...;

In Hughes v. Ancestry.com, 2019 WL 2260666 (May 28, 2019), Ancestry.com and the customer agreed to arbitrate disputes, except for certain claims not involved in the case. The parties’ arbitration agreement adopted by reference AAA’s Consumer Arbitration Rules, including Rule R-14(a), which provides that “[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”

In order for some citi agreement to be inconsistent with the adopted-by-reference language, it would have to state the contrary of that language, something like;
only a court decides "claims related to the validity, enforceability, coverage or scope of the arbitration clause".

 

On 8/17/2019 at 8:51 AM, WonderingInWI said:
I am doing a tedious search on PACER but can't seem to find a single ruling on the small claims cut-out. Are you aware of anything related to this?

Probably most of the relevant cases are decided in "small claims" court and not challenged beyond that.

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Thanks, Pericles,

My agreement is the one naming only AAA as arbiter.

My tiny ray of hope is that, in WI, we start in Small Claims Court, overseen by a Court Commissioner. If the Commissioner rules against you, the appeal goes to Circuit Court where a judge presides. 

My previous experience was that the Commissioner denied my MTC and entered a judgement against me. The Circuit Court judge accepted the MTC.

 

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If the appeal goes to circuit court, you can raise both the adopted-by-reference delegation, and the "so long as the matter remains in such court" arguments.

Assuming that the buyer raises the cut-out at all.  Depending on the rules in your jurisdiction, if the appeal is not de novo, any objection based on the cut-out might be waived if not raised in the lower court.

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8 hours ago, WonderingInWI said:

The appeal from Small Claims to Circuit Court in my county is De Novo.

I think that is the way throughout the state. At least in my county, which has the added benefit of having the most pro-consumer judges in the state.  

I once had a case heard by THE most consumer friendly Circuit Court judge in the state.  I was happy with that case. 

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On 8/14/2019 at 7:14 PM, Pericles said:

Who is the plaintiff?  Citi or a buyer?

 

What's the date of the agreement?

Citi had delegation language from 2001 until late 2016 or early 2017 (depending on the style of account).

The delegation language looks like this;

Citi removed this language a couple of years ago.  But if the agreement that governs the account in question does contain this language, then the court can't consider the small claims cut-out.

The Supreme Court re-enforced this interpretation earlier this year in Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. ___, 139 S. Ct. 524.

 

I researched and found the Citi card agreement I believe governs my case and it does contain the delegation language. 
 

I carefully read Schein v Archer. My understanding is that the Court ruled on whether or not a court could determine the merits of an arbitration case, find them “wholly groundless,” and, on that basis, decline a MTC. The unanimous decision was that the arbitrator decides threshold arbitrability, not the court.

 I am not understanding how the Schein decision applies to Citi’s small claims cut out. A judge who declines a MTC based on this verbiage, is simply recognizing what is in the contract, not opining on the  merits of the arbitration case. 
 

Am I interpreting this too narrowly?

Has anybody out there used Schein to argue for a MTC Citi?

 

 

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4 hours ago, WonderingInWI said:

Am I interpreting this too narrowly?

No, you're definitely on to something.

It's correct that the court always decides whether an arbitration agreement exists.

So, it's possible that even if the governing citi agreement has the delegation language quoted above, that the court could find that the cut out language means that there is no agreement to arbitrate.

But if the court does that, has it decided a claim regarding the application or interpretation of the arbitration provision  — a claim of the sort which the delegation provision states is subject to arbitration?  This is an arguable point which is highly dependent on the delegation language.

Poor Henry Schein lost that argument.   If you remember, scotus stopped short of actually deciding whether the contract delegated the arbitrability question to an arbitrator;

“The Court of Appeals did not decide that issue…. On remand, the Court of Appeals may address that issue in the first instance, as well as other arguments that Archer and White has properly preserved.”

So, what happened after scotus remanded the case back to the 5th cir. coa to address that issue?

On August 14 the Fifth Circuit in Henry Schein, Inc. v. Archer & White Sales, No. 16-41674, held that the parties did not clearly delegate arbitrability;

Quote

“The most natural reading of the arbitration clause at issue here states that any dispute, except actions seeking injunctive relief, shall be resolved in arbitration in accordance with the AAA rules. The plain language incorporates the AAA rules – and therefore delegates arbitrability – for all disputes except those under the carve-out. Given that carve-out, we cannot say that the Dealer Agreement evinces a ‘clear and unmistakable’ intent to delegate arbitrability. We are mindful of the Court’s reminder that ‘[w]hen the parties’ contract delegates the arbitrability question to an arbitrator, the courts must respect the parties’ decision as embodied in the contract.’ But we must also heed its warning that courts ‘should not assume that the parties agreed to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so.’ The parties could have unambiguously delegated this question, but they did not, and we are not empowered to re-write their agreement”

Some questions to consider;

Is the citi delegation language applicable to the cut out, and is the citi delegation language any more "clear and unmistakable" than the delegation language in Schein?  Remember, the Schein agreement had no express delegation language, it relied on implied delegation through incorporation of the AAA rules.

On remand from scotus, the 5th cir. coa said that "the parties could have unambiguously delegated this question, but they did not".  Does the citi delegation language do any better?

Making this sort of argument in a lower (small claims) state court is bound to be an uphill climb regardless.

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When you say cut out language, you are referring to the one in bold below correct? Is that the cut out language?

[Synchrony Bank

What claims are subject to arbitration

1. If either you or we make a demand for arbitration, you and we must arbitrate any dispute or claim between you or any other user of your account, and us, our affiliates, agents and/or Wal-mart Stores, Inc. if it relates to your account, except as noted below. 2. We will not require you to arbitrate: (1) any individual case in small claims court or your state’s equivalent court, so long as it remains an individual case in that court; or (2) a case we file to collect money you owe us. However, if you respond to the collection lawsuit by claiming any wrongdoing, we may require you to arbitrate. 3. Notwithstanding any other language in this section, only a court, not an arbitrator, will decide disputes about the validity, enforceability, coverage or scope of this section or any part thereof (including, without limitation, the next paragraph of this section and/or this sentence). However, any dispute or argument that concerns the validity or enforceability of the Agreement as a whole is for the arbitrator, not a court, to decide.]

 

Unless I am understanding it incorrectly, despite that bolded language, the first sentence "if either you or we make a demand for arbitration, you and we must arbitrate any dispute or claim between you or any other user of your account, and us ...", doesn't that mean they have to arbitrate regardless. This sentence says must. The second sentence says will not require you to arbitrate, not that you cannot arbitrate, but not require you to. Am I misunderstanding the language.

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Note the language:  We won't REQUIRE you to arbitrate . . .   Meaning they can't force you to arbitrate.  But you want arbitration.   I don't see their language as a prohibition when you want to arbitrate, in those two cases.

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That's the way it reads to me too. If I am not mistaken though, I read somewhere here that a recent poster said the judge denied their MTC based on the small claims language like the one above. To me the judge was wrong in denying it since the first sentence says must arbitrate and the second says will not require. 

I am just trying to make sure I am understanding the language correctly in case I come across this in my case since I have requested to compel arbitration against Midland on a synchrony account. I want to be prepared in case of a court hearing.

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2 hours ago, Okiemom said:

When you say cut out language, you are referring to the one in bold below correct? Is that the cut out language?

The citi carve-out (cut out) language is in the first post to this thread.

The citi carve-out language is vastly different than the non-mutual limitation language in synchrony agreements.  The citi language also sometimes has delegation, whereas the synchrony language does not.

A court really shouldn't have any trouble with interpretation of the synchrony language, though it has happened quite a bit.  As others have said, the best way to argue that the synchrony language is not any limitation whatsoever on the "you" party [as defined], is to restate the entirety of the language but with all of the pronouns replaced with the concrete party names to which those pronouns refer in the instant case.

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1 hour ago, Pericles said:

The citi carve-out (cut out) language is in the first post to this thread.

The citi carve-out language is vastly different than the non-mutual limitation language in synchrony agreements.  The citi language also sometimes has delegation, whereas the synchrony language does not.

A court really shouldn't have any trouble with interpretation of the synchrony language, though it has happened quite a bit.  As others have said, the best way to argue that the synchrony language is not any limitation whatsoever on the "you" party [as defined], is to restate the entirety of the language but with all of the pronouns replaced with the concrete party names to which those pronouns refer in the instant case.

Awesome. Thank you for the clarification. I see the difference now. Looks like Citi took the language in synchrony's 2nd sentence and revised it to their benefit didn't they? Wow.

I will have to hunt down the citi agreement for my account opened in 2009 or 2010 to see what it says. If it has that same language. I haven't had luck finding it yet and online searches for old versions of the agreement doesn't pull up a copy. I figure they will be filing suit in a few months as I just received notice that LVNV owns the account by email. Not mail, but email which seems like a dumb way for them to do collections. I don't hardly check the e-mail address they sent it to as it's mostly spam. It's not my main account anymore.

If anyone knows where to find an old version of citi agreements, I'd greatly appreciate.

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I’m in this same boat with Citi. Which version of the agreement would be the one applicable to my account? The last one they issued before selling the debt?

 

I called Citi and they don’t have a agreement to send me since they sold the debt. That also doesn’t seem right.

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On 11/3/2019 at 12:44 PM, catlady22 said:

I’m in this same boat with Citi. Which version of the agreement would be the one applicable to my account? The last one they issued before selling the debt?

 

My understanding from what I've read here is that the agreement in force when the original creditor (Citi) closed the account is the one that applies.

On 11/3/2019 at 12:44 PM, catlady22 said:

 

 

I called Citi and they don’t have a agreement to send me since they sold the debt. That also doesn’t seem right.

Per the Consumer Finance website (link in previous post),

"If none of these reasons apply and you still cannot find an agreement, call them to request a copy of your agreement. Under federal law, your credit card issuer is required to provide a copy of your agreement upon request."

The website provides a link to file a complaint if they refuse to comply.

 

I would call Citi again and let them know you are aware that federal law mandates they provide the agreement in force when they closed your account. Tell them you will notify the CFPB of their violation if they refuse.

I assume this is also something you could use as a violation of consumer protection laws.

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2 hours ago, WonderingInWI said:

My understanding from what I've read here is that the agreement in force when the original creditor (Citi) closed the account is the one that applies.

Per the Consumer Finance website (link in previous post),

"If none of these reasons apply and you still cannot find an agreement, call them to request a copy of your agreement. Under federal law, your credit card issuer is required to provide a copy of your agreement upon request."

The website provides a link to file a complaint if they refuse to comply.

 

I would call Citi again and let them know you are aware that federal law mandates they provide the agreement in force when they closed your account. Tell them you will notify the CFPB of their violation if they refuse.

I assume this is also something you could use as a violation of consumer protection laws.

Yep, I called back and they said they can’t send me that agreement, even when I said I was going to file a complaint. Okie dokie!

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