CUNA Files Brief Supporting CU's Use of Arbitration Agreement

Golden 1 Credit Union branch

The Credit Union National Association (CUNA) filed an amicus brief on behalf of Golden 1 CU in a lawsuit (Burgardt v. The Golden 1 Credit Union), where the issue is whether the credit union can compel the plaintiff (Dwaine Burgardt) to arbitrate his claims.

Golden 1 CU's membership agreement did not include an arbitration provision when the plaintiff joined, but Golden 1 later added it and the plaintiff did not opt-out. The plaintiff later filed a putative class-action lawsuit in Sacramento, CA related to non-sufficient funds fees.

California's state superior court denied Golden 1’s motion to compel arbitration, and this decision was affirmed by the state's appellate court. CUNA’s brief was filed in support of Golden 1’s petition that the U.S. Supreme Court review the appellate court's decision.

CUNA’s brief supports Golden 1 CU's position that it can add an arbitration provision through mutual assent, specifically by giving members notice of the proposed provision and the opportunity to opt-out.

The brief notes that “operational uncertainty abounds in determining the enforceability of arbitration agreements added through mutual assent, including the notice-and-opportunity-to-opt-out process used by The Golden 1 Credit Union.”

It adds the standards fabricated by the courts are “confusing, often conflicting, and lack even-handed reasoning that comport with the Federal Arbitration Act’s equal-treatment principle.”

CUNA also notes that limiting credit unions’ use of arbitration agreements will harm access to the safe and affordable services credit unions provide, including services provided to those who lack access to traditional banking.

CUNA and the California and Nevada Credit Union Leagues will continue keeping credit union leaders posted on these developments going forward.

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