New York Federal Court Finds “Compelling Circumstantial Evidence” of Credit Union Mailing Sufficient for Agreement to Arbitrate

The United States District Court, Eastern District of New York, recently found that where a credit union is able to show “compelling circumstantial evidence” that it sent an Arbitration Agreement to one of its members, such mailing is sufficient to constitute “an agreement to arbitrate” under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, even where the member alleges that she did not receive the mailing. Filipkowski v. Bethpage Fed. Credit Union, 2021 WL 826016 (E.D.N.Y. Mar. 4, 2021). Here, a member (“Plaintiff”) of a federally chartered credit union (“Defendant”) brought a putative class action against Defendant, alleging that it wrongfully charged the class members fees relating to their checking accounts. Defendant brought a motion to compel arbitration pursuant to the FAA and an agreement between the parties. Plaintiff had previously signed a Member Agreement with Defendant which stated, among other things, that Plaintiff agreed to be bound by the terms and conditions set forth in the agreement and that if the member was notified of a change in any term of the agreement and continued to use its account after the effective date of the change, this constituted the member’s agreement to the term. Lastly, the agreement said that “written 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.” In October 2019, Defendant amended its Member Agreement to add an arbitration clause, which provided that claims between members and Defendant “shall, at the election of either you or us, be resolved by binding arbitration”, and that “any arbitration of a claim will be on an individual basis.” Defendant represented that it had mailed its members a copy of the Arbitration Agreement by mail along with their September 2019 account statements, allowing them to opt-out of the agreement in writing if they liked. Plaintiff stated that “to the best of [her] recollection,” she “never received a binding arbitration agreement or pamphlet . . . neither enclosed with [her] September 2019 account statement nor otherwise.” Defendant, although it had outsourced its mailings to a third-party vendor, in turn represented that an “intelligent mail barcode” contained on Plaintiff’s account statement showed that she had received all of the documents.

Defendant’s motion to compel arbitration was granted. The Court stated that New York recognizes “a presumption that a party received documents when mailed to the party’s address in accordance with regular office procedures.” The Court found that Defendant was entitled to this presumption, and that Plaintiff’s mere contention that she did not receive the documents was not sufficient to rebut this presumption. Moreover, the Court found that although Defendant had outsourced the mailing to third-party vendors, and therefore lacked “first-hand knowledge” of the mailing, Defendant’s showing of “compelling circumstantial evidence” that the agreement was mailed was sufficient to show an agreement to arbitrate under the FAA. Lastly, analyzing the broad language of the arbitration clause at issue, the Court found that the scope of the Arbitration Agreement included Plaintiff’s claims in this matter. Therefore, Defendant was entitled to compel arbitration.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, Desiree McDonald at dmcdonald@riker.com, or Andrew Raimondi at araimondi@riker.com.