United States District Court, S.D. New York
OPINION AND ORDER
PAUL OETKEN UNITED STATES DISTRICT JUDGE
Chaya Weiss filed this suit in New York state court alleging
that Defendant American Express National Bank
(“AMEX”) failed to conduct a reasonable
investigation into and imposed charges for unauthorized
charges to her credit card, in violation of federal and New
York law. (See Dkt. No. 1-1 (“Compl.”).)
On May 22, 2019, AMEX removed the case to federal court.
(See Dkt. No. 1.) Before the Court now is
AMEX's motion to compel arbitration. (See Dkt.
No. 8.) For the reasons that follow, the motion is denied.
is the holder of a credit-card account with Defendant AMEX.
(Compl. ¶ 7.) That account, AMEX contends, is governed
by an agreement (the “Cardholder Agreement” or
the “Agreement”) that was mailed to Weiss at the
time her card was issued. (See Dkt. No. 8 at 1; Dkt.
No. 9-1 (“Agmt.”).) Under the Agreement, either
signing or failing to return the credit card constitutes
assent to its terms. (See Agmt. pt. 2 at 1.) The
Agreement contains an arbitration clause, which states:
You or we may elect to resolve any claim by individual
arbitration . . . . If arbitration is chosen by any party,
neither you nor we will have the right to litigate that claim
in court . . . . Before beginning arbitration, you or we must
first send a claim notice. Claims will be referred to either
JAMS or AAA, as selected by the party electing arbitration .
. . . You or we may . . . elect to arbitrate any claim at any
time unless it has been filed in court and trial has begun or
final judgment has been entered.
(See Agmt. pt. 2 at 5.) It is undisputed that Weiss
neither returned the credit card nor expressed a desire to
opt out of the arbitration agreement, and that she thereafter
used the credit card.
2018, a dispute arose between Weiss and AMEX regarding
certain charges placed on her card. In 2019, Weiss filed the
present suit in New York state court alleging violations of
federal and New York law arising out of those disputed
charges. (See generally Compl.) After the suit was
filed but before the complaint was served, AMEX filed a
different suit in New York state court, seeking to collect
the debt owed on the credit card. (See Dkt. No.
22, 2019, AMEX removed this case, invoking this Court's
subject matter jurisdiction, and on June 7, 2019, AMEX moved
to compel arbitration and to stay or dismiss the case,
pursuant to the Federal Arbitration Act (“FAA”),
9 U.S.C. §§3, 4.
FAA ‘requires courts to enforce privately negotiated
agreements to arbitrate . . . in accordance with their
terms.'” Nat'l Union Fire Ins. Co. of
Pittsburg v. Beelman Truck Co., No. 15 Civ. 8799, 2016
WL 4524510, at *2 (S.D.N.Y. Aug. 24, 2016) (alteration in
original) (quoting Volt Info. Scis., Inc. v. Bd. of Tr.
of Leland Stanford Junior Univ., 489 U.S. 468, 478
(1989)). The court's evaluation is limited to: “i)
whether a valid agreement or obligation to arbitrate exists,
and ii) whether one party to the agreement has failed,
neglected or refused to arbitrate.” LAIF X SPRL v.
Axtel, S.A. de C.V., 390 F.3d 194, 198 (2d Cir. 2004).
Where these requirements are met, the court must issue
“an order directing the parties to proceed to
arbitration in accordance with the terms of the
agreement.” 9 U.S.C. § 4. These “threshold
question[s]” of arbitrability are generally answered by
applying state contract law. Nicosia v. Amazon.com,
834 F.3d 220, 229 (2d Cir. 2016).
moves to compel arbitration based on the arbitration clause
in the Cardholder Agreement. Weiss raises three arguments in
opposition. First, she argues that AMEX has failed to carry
its burden of showing an enforceable arbitration clause
governs the dispute (see Dkt. No. 15 at 2-7);
second, she claims that AMEX may not rely on the arbitration
clause, given its filing of the collection action
(see Dkt. No. 15 at 8-9); and third, she argues that
even if a valid agreement governs the dispute and AMEX may
rely on it, AMEX may not seek to compel arbitration because
it has not sent a claim notice of its election to arbitrate,
as required by the contract (see Dkt. No. 15 at 7).
Because the Court is persuaded by the third of these
arguments, it is unnecessary to address the others.
Agreement's arbitration clause permits either party to
unilaterally elect arbitration. “Before beginning
arbitration, ” however, the party “must
send a claim notice.” (Agmt. pt. 2 at 5 (emphasis
added).) That notice, moreover, must identify either JAMS or
AAA as the party's preferred arbitrator. (Id.)
In the absence of a such a notice, though, the parties are
not required to submit disputes to arbitration and instead
may litigate in a judicial forum. (See id.) Put
differently, the clause vests each party with an option to
arbitrate, but to exercise that option, the party must send
the requisite claim notice.
Koeltl's decision in Marcus v. Frome is
instructive. See275 F.Supp.2d 496 (S.D.N.Y. 2003).
In Marcus, the parties' dispute “f[ell]
squarely within the scope of claims that would be subject to
[their] arbitration clause.” Id. at 505. Yet
there, as here, the arbitration clause did not mandate
arbitration, but rather permitted either party to
unilaterally elect arbitration. See Id. Observing
that, given the optional nature of the arbitration provision,
the provision did not “take effect” until
“one side . . . [made] an arbitration demand, ”
the court held that in the absence of such a demand,
“there is no basis to compel the parties to seek
arbitration.” Id; see also Wachovia Bank, N.A. v.
Bluffwalk Ctr. L.P., No. 08 Civ. 212, 2008 WL 2787399,