Miley v. Citibank, N.A.

Background

The case was removed from state court based on the court’s diversity jurisdiction. Cornel and Charqweshia Miley asserted claims against Citibank, N.A., concerning a Citibank Double Cash credit card issued to Cornel Miley. Citibank moved under the Federal Arbitration Act to require the claims to be decided in arbitration.

Arbitration Agreement

The credit-card agreement contained an arbitration provision covering “all Claims,” defined broadly as any claim, dispute, or controversy between the cardholder and Citibank arising out of or related to the account or their relationship, regardless of the legal theory or remedy. The court held that the Mileys’ claims plainly fell within that provision.

The court rejected the plaintiffs’ arguments against arbitration. It stated that the legality of the agreement’s payment provisions did not affect the threshold question of whether the claims were subject to arbitration. Applying South Dakota law under the agreement’s choice-of-law clause, the court held that the agreement was valid even though the parties had not signed it, because using an accepted credit card created a binding contract under South Dakota law. The court also found no unfairness in enforcing the arbitration provision because it included an opt-out mechanism that the plaintiffs did not use.

The court further held that the provision was enforceable against Charqweshia Miley even though the opinion describes her as a nonsignatory, because her claims were based on the contract containing the arbitration provision. The provision also covered claims made by or against people connected with, or claiming through, the contracting parties.

Ruling and Case Status

Judge Jesse M. Furman granted Citibank’s motion to compel arbitration. Because all claims were subject to arbitration and Citibank requested a stay, the court stayed the action pending resolution of the arbitration. The court did not dismiss the case. Instead, it directed the Clerk to administratively close the case, without prejudice to either side moving by letter motion to reopen it within 30 days after the arbitration proceedings concluded. The Clerk was also directed to mail the opinion and order to the plaintiffs.