OPINION AND ORDER
WILLIAM C. CONNER, Senior District Judge.
Plaintiff Daniel Kurz brings this action for statutory and actual damages against defendant Chase Manhattan Bank USA, N.A., alleging numerous violations of: (1) the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq. and regulations promulgated thereunder; (2) the Fair Credit Billing Act ("FCBA"), 15 U.S.C. § 1666 et seq. and regulations promulgated thereunder; (3) the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691 et seq. and regulations promulgated thereunder; and (4) the New York Credit Billing Act, N.Y. Gen. Bus. Law §§ 701-07.
Defendant is a federally chartered banking corporation with offices in New York. (Complt.¶ 3.) Plaintiff first opened the credit account at issue with Manufacturers Hanover Trust Company in the mid-1970s. (Kurz Affm. ¶ 2.) The account agreement at that time was entitled "Retail Installment Credit Agreement" and was governed by New York law (the "original agreement"). (Id. ¶ 3.) It further provided that any amendment or modification of the agreement "may apply to, and affect, amounts owed on the date the amendment or modification is effective as well as amounts due for Cash Advances or Purchases made subsequent to such date." (Id. ¶ 3 & Ex. A, ¶ 13.) Ultimately, following a series of bank mergers and credit agreement amendments over the next two decades, in 1996, plaintiff's account was converted into a Chase MasterCard account with defendant. (Id. ¶¶ 4-6.) Since that time, plaintiff has had something less than the widely-advertised "right relationship" with defendant, which resulted in a successful action brought by plaintiff and other individuals alleging numerous TILA, FCBA and ECOA violations that was tried before Judge McMahon of this Court in July 2003. (Complt.¶ 4.) In that action, defendant unsuccessfully asserted counterclaims against plaintiff for breach of contract, deceit and fraud, money had and received, conversion and unjust enrichment. (Id. ¶ 7.) Thereafter, plaintiff commenced the present action on July 28, 2003, alleging, inter alia, that the counterclaims were retaliatory and violated TILA, FCBA, ECOA and New York statutes. Defendant has now moved to compel arbitration and dismiss the present action pursuant to an arbitration clause in the credit agreement between the parties. Additional facts will be set forth as necessary.
Standard of Review
The FAA provides, in relevant part: "A written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA manifests "a `liberal federal policy favoring arbitration agreements.'" Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). Indeed, the FAA "establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Id. at 24-25, 111 S.Ct. 1647. Therefore, even where an arbitration agreement requires the arbitration of disputes involving a federal statute, the parties to a valid arbitration agreement are compelled to arbitrate "`so long as the prospective litigant effectively may vindicate [his or her] statutory cause of action in the arbitral forum ....'" Gilmer, 500 U.S. at 28, 111 S.Ct. 1647 (quoting Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, Inc., 473 U.S. 614,
The Second Circuit has enumerated the following factors to be considered when deciding whether to compel arbitration: (1) whether the parties agreed to arbitrate; (2) the scope of that agreement; (3) whether Congress intended the plaintiff's statutory claims to be nonarbitrable; and (4) if not all claims are arbitrable, the court must determine whether to stay proceedings on the balance of the claims. See Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 75-76 (2d Cir.1998) (citing Genesco, Inc. v. T. Kakiuchi & Co., Ltd., 815 F.2d 840, 844 (2d Cir.1987)); Bird v. Shearson Lehman/Am. Express, Inc., 926 F.2d 116, 118 (2d Cir.1991). In the present case, the parties' dispute centers only on the first and second considerations.
Whether the Parties Agreed to Arbitrate
Whether the parties agreed to arbitrate is determined by state contract law. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (noting that state law governs determination of whether parties agreed to arbitrate); see also 9 U.S.C. § 2 (an agreement to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract"). This inquiry raises the threshold question of which state's law of contracts applies in the present case.
Which State's Law Governs the Agreement?
Plaintiff appears to argue, albeit without benefit of any supporting legal analysis, that whether the parties agreed to arbitrate their disputes should be resolved under New York law because he denies receipt of any notice amending the original agreement's choice-of-law provision to state that the agreement was governed by Delaware law. (Pl. Mem. Opp. Mot. Compel at 1-2.) Indeed, plaintiff's arguments about the enforceability of the arbitration clause are grounded in New York statutory and case law, and he does not address relevant Delaware law in his Memorandum. (Id. at 5-6.) Defendant argues in response that New York law does not apply because the choice-of-law provision in the cardholder agreement, mailed to plaintiff in and effective since 1996, expressly prescribes that the law of Delaware shall govern.
We conclude that Delaware law governs this dispute because Judge McMahon's determination on this issue in the prior action is entitled to collateral estoppel effect and thus may not be relitigated before this Court. In the prior action, plaintiff was one of several named plaintiffs that brought claims against defendant alleging numerous violations of TILA, FCBA and N.Y. Gen. Bus. Law §§ 703, 349-50. Defendant moved pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the plaintiffs' complaint for failure to state a claim. In ruling on that motion, Judge McMahon dismissed the plaintiffs' New York statutory claims with prejudice and concluded that they could not be sustained because "the credit
The Second Circuit has held that for the doctrine of collateral estoppel to apply, four elements must be satisfied:
Cent. Hudson Gas & Elec. Corp. v. Empresa Naviera Santa S.A., 56 F.3d 359, 368 (2d Cir.1995).
We conclude that all four elements of this test are satisfied. The issue, namely which state's law governs claims arising under the credit card contract between plaintiff and defendant, is identical. The issue was litigated before and decided by Judge McMahon in the prior proceeding, and plainly is necessary to a merits determination in both the prior case and in this matter. Finally, plaintiff had a "full and fair opportunity" to litigate the choice-of-law issue in the prior proceeding as he could have, but elected not to avail himself of de novo appellate review of the Rule 12(b)(6) dismissal. See, e.g., Gmurzynska v. Hutton, 355 F.3d 206, 210 (2d Cir.2004) (stating standard of review of Rule 12(b)(6) dismissals); Grieve v. Tamerin, 269 F.3d 149, 154 (2d Cir.2001) ("If [the plaintiff] wished to contend that the district court was wrong, his remedy was to appeal. When he failed to do so, the Southern District's decision became final and, by operation of collateral estoppel, conclusive on the issue ...."); see also Johnson v. Watkins, 101 F.3d 792, 795 (2d Cir.1996) ("If a party has not had an opportunity to appeal an adverse finding, then it has not had a full and fair opportunity to litigate that issue.... Hence, collateral estoppel will not bar reconsideration of an issue if there is an inability to obtain review or there has been no review, even though an appeal was taken." (citation omitted)). Thus, we now determine whether plaintiff agreed to arbitrate under Delaware law.
Whether There is An Agreement to Arbitrate
Plaintiff argues that there is no agreement to arbitrate because he never received the arbitration amendment itself, there is inadequate proof of its mailing, and in any event he ceased using the account within a month of receiving the March 2002 monthly billing statement that contained a reference to the "new arbitration agreement." (Pl. Mem. Opp. Mot. Compel at 4-5.) Defendants contend in response that there is adequate proof of mailing and that continued charges on the account by plaintiff and his family after March 2002 constitute acceptance of the arbitration agreement under Delaware law. (Def. Reply Mem. Supp. Mot. Compel at 5-8.)
Before we address the parties' arguments with respect to the mailing and acceptance of the arbitration amendment,
DEL. CODE ANN. tit. 5, § 952(a) (emphasis added). In order to effect a unilateral amendment pursuant to the statute, a bank must follow procedures that permit the borrower to opt-out by sending to the bank at a provided address written notice of the borrower's rejection of the amendment. Id. § 952(b)(1)-(2); see also Edelist v. MBNA Am. Bank, 790 A.2d 1249, 1257-58 (Del.Super.2001). The statute gives the borrower a minimum of fifteen days to give notice of rejection to the bank, and also provides that use of the account after that fifteen-day period constitutes acceptance, even if the borrower has provided notice of rejection. Del. Code. Ann. § 952(b)(2).
Whether Plaintiff Received the Arbitration Amendment Notice
Plaintiff argues that he is not bound by the arbitration amendment because he never received it, despite the mention of it in the March 2002 billing statement that defendant mailed to him. (Pl. Mem. Opp. Mot. Compel at 4-5.) We conclude that plaintiff did receive the arbitration amendment.
It is well settled that evidence of proper mailing gives rise to a rebuttable presumption of receipt. See, e.g., Marsh v. First USA Bank, N.A., 103 F.Supp.2d 909, 918 (N.D.Tex.2000). Actual receipt need not be proven; as "[p]roof of mailing may be accomplished by presenting circumstantial evidence, including evidence of customary mailing practices used in the sender's business." Id. at 917-18 (crediting testimony of bank's vice president for operations about company's mass mailing process and quality assurance controls); accord Fields v. Howe, No. IP-01-1036-C-B/S,
Plaintiff denies any recollection of receiving the arbitration amendment, and contends that defendant is not entitled to the presumption of receipt because it has not proffered sufficient evidence of proper mailing. (Pl. Mem. Opp. Mot. Compel at 4-5.) We disagree. Defendant has proffered the affidavit of Brian McGovern, a vice president in its marketing department, who described the operation of the "permanent message system" that defendant utilizes to track customer account activity, which includes mailings of notifications and agreements to the customers. (McGovern Aff. ¶¶ 3, 11.) McGovern averred that the message system indicated that a form notice numbered 25808 was to be sent to plaintiff on March 27, 2002. (Id. ¶ 11.) Form 25808 was the arbitration amendment notice at issue in this case. (Id.) McGovern stated that this notice was sent to plaintiff along with his March 2002 billing statement that had a payment due date of April 19, 2002. (Id. ¶ 12.) That statement itself contained a message in bold print advising plaintiff: "IMPORTANT: PLEASE READ ENCLOSED INSERT FOR NEW ARBITRATION AGREEMENT AND OTHER CHANGES TO YOUR ACCOUNT."
Defendant has proffered sufficient circumstantial evidence of mailing and is entitled to the presumption of receipt. Indeed, plaintiff does not ever actually deny receiving the agreement; he only states somewhat equivocally that "I don't believe I even received" it. (Kurz Affm. ¶ 20.) Moreover, plaintiff has conceded knowledge of the message on the statement about the arbitration agreement by stating that he reduced his own use of the account because of it.
Whether Plaintiff Agreed to the Arbitration Amendment
Under Del. Code Ann. tit. 5, § 952, a credit card issuer seeking unilaterally to add an arbitration clause to the agreement must provide notice and an opt-out provision. Edelist, 790 A.2d at 1257-58. Failure to comply with the terms of the opt-out provision and continued charges to the account operate as acceptance of the arbitration amendment under Delaware law. Id. at 1258-59; see also Marsh, 103 F.Supp.2d at 919 (concluding that the plaintiffs were contractually bound by a mailed arbitration amendment when they did not follow the amendment's prescribed written opt-out procedure and continued to use their credit cards); Joseph v. M.B.N.A. Am. Bank, N.A., 148 Ohio App.3d 660, 664, 775 N.E.2d 550 (2002) ("M.B.N.A. included an opt-out clause for [the plaintiff], but he did not use it. Consequently, he must be held to the amendment of the credit card agreement.").
The arbitration amendment enclosed with the March 2002 statement concluded with an opt-out notice that provided in relevant part:
(McGovern Aff., Ex. 4 at 11-12.) Plaintiff did not opt out in writing, and use of the account continued through July 31, 2002, with the billing statement dated August 27, 2002.
We conclude that plaintiff agreed to the arbitration amendment because use of the credit card account continued through July 31, 2002, several months after the opt-out deadline passed. (McGovern Aff., Ex. 3.) Although plaintiff has averred that he stopped making direct charges to the account by April 25, 2002 and cancelled his periodic billings to the account, see supra note 4, his wife and daughter in Israel continued to make charges to the account as authorized users through July 31, 2002, several months after plaintiff received the March 2002 statement. (Kurz Affm. ¶¶ 22-24.) We, therefore,
Whether Plaintiff's Claims Are Subject to Arbitration
Plaintiff next argues that his claims are not subject to arbitration under the plain language of the agreement because no single claim seeks more than $25,000. (Pl. Mem. Opp. Mot. Compel at 6-7.) The arbitration agreement provides in relevant part:
(McGovern Aff., Ex. 4, ¶ 2 (emphasis added).) Plaintiff argues that because he is willing to waive equitable relief and none of his individual claims is for more than $25,000 excluding interest, costs and fees,
Plaintiff's argument is contrary to the language of both the agreement and the purpose of the FAA. It is contrary to the agreement, which specifies that "claim" is to be given its broadest possible meaning and that it may refer to more than one possible claim. Moreover, acceptance of this argument would fly in the face of the FAA's "`liberal federal policy favoring arbitration agreements,'" Gilmer, 500 U.S. at 25, 111 S.Ct. 1647, and the well established maxim that "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp., 460 U.S. at 24-25, 103 S.Ct. 927. Accordingly, we conclude that plaintiff's claims, all of which arise from or relate to his agreement with defendant and upon which a complete recovery would yield more than $50,000 in damages and penalties, must be resolved in the arbitral forum and we, therefore, grant the motion to compel arbitration. We deny, however, defendant's motion to dismiss plaintiff's Complaint and instead order the action transferred to this Court's suspense docket pending the disposition of the arbitration proceedings.
For all of the foregoing reasons, defendant's motion to compel arbitration is granted. Defendant's motion to dismiss plaintiff's Complaint is denied. This action is transferred to the Court's suspense docket pending the disposition of the arbitration proceedings. The parties are directed to proceed with arbitration as soon as is practicable.
(McGovern Aff., Ex. 2, ¶ 4.)