The Supreme Court of California has ruled a predispute arbitration provision that requires a consumer to waive the right to seek public injunctive relief is unenforceable.  In McGill v. Citibank, N.A., No. S224086 (Cal., April 6, 2017), a California woman, McGill, opened a credit card issued by Citibank in 2001.  At the time she opened the credit card account, McGill also agreed to purchase the bank’s credit protector plan designed to waive her credit card balance in the event of her unemployment, serious illness, or injury.

Although McGill’s initial credit card account agreement did not contain an arbitration provision, Citibank made a change in terms in October 2001.  The new terms provided for mandatory arbitration of all claims or disputes associated with the account and prohibited consumers from engaging in collective action.  Because McGill did not elect to utilize an opt-out provision that was included in Citibank’s new terms, the arbitration agreement became effective in November 2001.  In 2005, Citibank once again changed its terms and McGill did not opt out of the new agreement.

In 2008, McGill unfortunately became unemployed.  As a result, she filed a claim for benefits under the credit protector plan.  Unsatisfied with the results of her claim, McGill filed a putative class-action lawsuit against Citibank in California.  In her complaint, McGill accused the credit card issuer of violating numerous state laws and engaging in deceptive advertising practices.

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