consumer - arbitration clause - bank depositor agreement
Baylis v. Wachovia Bank, ED Pa., November 25, 2008
In customer's suit against a bank for allowing a wrongful attachment of her account, the court granted the bank's motion to compel arbitration, because of a depositor agreement that the bank customer said she never received. The court found that the custody "agreed to the terms of the depositor agreement, including the arbitration of disputes, because she continued to use her accounts." The customer said that she never got the depositor agreement and therefore could not have entered into a contract with the bank. She also argued that the agreement was a contract of adhesion and thus unenforceable.
A depositor agreement was allegedly mailed to the customer in 2003. The agreement included the following: 25. Arbitration of Disputes/Waiver of Jury Trial and Participation in Class Actions. If either you or we request, any irresolvable dispute or claim concerning your account or your relationship to us will be decided by binding arbitration under the expedited procedures of the Commercial Financial Disputes Arbitration Rules of the American Arbitration Association (AAA), and Title 9 of the US Code.
proof of mailing, presumption of receipt - The court accepted the affidavit of mailing of a 3rd party company which had a contract with the bank to mail notices to depositors. The court said that the "affidavit credibly recites that the affiant's company...was retained in 2003 to mail notices to bank depositors... [and] stated he found plaintiff's name in the database used to generate the mailing. The contents of the mailing included a letter to depositors and the new Deposit Agreement." The court accepted this as creating a presumption of receipt under F.R.Civ.P 6(e).
The court rejected depositor's attempt to overcome the presumption, distinguishing Carnathan v. Ohio National Life Insurance Co., No. 06-999, 2008WL 2578919, at *5 (M.D. Pa. June 26, 2008), which held the plaintiff in that case had offered sufficient evidence to overcome the presumption of receipt when he detailed his business’s handling of incoming mail and invoices. " The court distinguished Carnathan "both by the quantum of evidence offered to rebut the presumption and by the rights at stake. In Carnathan, the court found only the plaintiff had offered sufficient evidence to preserve the issue for trial. Id. If the Carnathan court had granted summary judgment, the plaintiff would have lost a disability policy for which he had diligently paid for 13 years....In this case, Baylis has offered less evidence of non-receipt to overcome the presumption and she retains all of her rights to be made whole in arbitration. For that reason, I find Baylis received the 2003 mailing of the depositor agreement including Paragraph 25 compelling arbitration."
not a contract of adhesion - Citing 3rd Circuit law, the court said that a "contract is “not unconscionable merely because the parties to it are unequal in bargaining position.” Alexander v. Anthony Int’l, L.P., 341 F.3d 256, 265 (3d Cir. 2003). The dominant party must use its position to impose “terms that unreasonably favor one party to which the disfavored party does not truly assent.” Id. The Third Circuit held an arbitration clause is not unconscionable, even in a contract of adhesion, because “plaintiffs who sign valid arbitration agreements . . . retain the full range of . . . substantive rights.” Gay v. CreditInform, 511 F.3d 369, 391-92 (3d Cir. 2007) (holding a depositor to the terms incorporated by reference on a signature card). A consumer who objects to the terms of a contract of adhesion “certainly could have decided to forego obtaining [the bank’s] services.” Id. at 391 n.15.
Baylis’s contract with Wachovia is not unconscionable and she could have terminated her agreement with Wachovia had she objected to the arbitration clause. Because I find Baylis received the depositor agreement and entered into the contract by continuing to use her account, I conclude Baylis agreed to arbitrate any dispute with Wachovia. I will grant Wachovia’s Motion to Compel Arbitration.