LA Legal Solutions Defeats Motion to Compel Arbitration, Changing Precedent for Consumer Litigation

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Recently, LA Legal Solutions defeated a motion to compel arbitration. The defense, US Bank, attempted to remove the case from Federal Court and place it in private arbitration, which would have deprived our client of a jury trial, based on the allegation that our client agreed to the arbitration clause in his credit cardmember agreement. Our client does not recall ever seeing the arbitration agreement, and never signed any arbitration agreement.

US Bank argued that our client was notified of the arbitration clause in his monthly statement, meaning his monthly statement contained clear language informing him that by using his credit card, he agreed to be bound by modifications to any future cardmember agreement, which included an arbitration clause.

However, US Bank was unable to produce the original cardmember agreement signed by our client in 2010. Since they could not produce the original cardmember agreement, and could not prove our client actually saw or signed any future cardmember agreement containing an arbitration clause (or a clause that said the agreement could be modified at any time), the Court denied the motion to compel arbitration, and our client will get to have his day in court.

This case indicates a rather significant change in precedent, as now, credit card companies cannot say cardholders are bound by future modifications in card members’ agreements solely using the credit card itself if the company cannot also prove the client saw or signed the agreement, and cannot produce the original agreement.

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