United States Federal Judge Again Rejects Citibank's Motion to Force Customers to Arbitration in Connection With a Citibank Miles Reward Program

NEW YORK, June 11, 2014 /PRNewswire/ -- The following is a statement from The Law Office of James C. Kelly:

Bertram Hirsch and Igor Romonav sued Citibank, N.A. C, in a nationwide class action in the Unites States District Court, Southern District of New York, charging that the bank wrongfully reported to the IRS that customers had received income as a result of accepting American Airlines miles reward offers for opening up certain Citibank accounts.  United States Federal Judge Deborah A. Batts is presiding over the case.  The plaintiffs allege that Citibank failed to disclose that it would report receipt of airline miles to the IRS.  In addition, they allege that Citibank failed to disclose they would report the value of the airline miles received at 150% more than the actual value of the airline miles.

Citibank moved to stay the class action and compel arbitration, claiming that plaintiffs entered into a contract with Citibank, when they opened up their accounts, which contained a provision requiring all disputes to go to mandatory binding arbitration if any party so elected, and contained clauses which voided customers' rights to a jury trial and to participate in a class action.

On March 28, 2013, Judge Batts denied Citibank's motion to compel, finding that there was no evidence before her to show that there was a meeting of the minds.  Citibank appealed Judge Batts' decision to the Second Circuit Court of Appeals, where the Second Circuit Court requested, among other things, that Judge Batts oversee a trial to determine if the parties entered into a binding arbitration agreement.  

After reviewing extensive discovery, including witness testimony before Judge Batts, depositions in New York and Los Angeles, California, and document discovery, Judge Batts found that the plaintiffs did not agree to arbitration (a copy of Judge Batts' decision can be found here).

The case is being prosecuted by James C. Kelly, from The Law Office of James C. Kelly, and Samuel P. Sporn, from Schoengold & Sporn, P.C.

The class action against Citibank is now entering discovery concerning the merits of plaintiffs' allegation, which Judge Batts ordered to be completed by October 31, 2014.  Plaintiffs' attorneys will announce updates as the lawsuit continues.

If you have any information or questions you can contact James C. Kelly or Samuel Sporn at jkelly@jckellylaw.com or sporn@spornlaw.com.

SOURCE The Law Office of James C. Kelly