HELENA – The Montana Supreme Court says a credit-card issuer cannot amend a cardholder agreement to add an arbitration clause, merely by enclosing a “bill stuffer” notice with the cardholder’s monthly bill.
The court in a 5-1 ruling said the practice “does not provide sufficient notice to the consumer” about a change that would restrict his or her access to the courts.
The Justices reversed a District Court ruling that granted Herbergers’ motion to compel arbitration and to dismiss the lawsuit, and sent the case back to the District Court for further proceedings.
The ruling came in a case brought against the Herbergers department stores by a Kalispell woman, Santana Kortum, who is an attorney.
“We conclude that making a change in a credit agreement by way of a “bill stuffer” does not provide sufficient notice to the consumer on which acceptance of the unilateral change to a contract can be expressly or implicitly found.” Justice James C. Nelson wrote for the court. “Consequently, Herbergers’ unilateral attempt to amend its original cardholder agreement to include an arbitration clause was ineffective.
Concurring in the opinion were Justices John Warner, Patricia Cotter, W. William Leaphart and Brian Morris. Chief Justice Mike McGrath did not participate in the ruling.
Justice Jim Rice, writing in dissent, quoted a 2003 Illinois ruling: “This case serves as a reminder that people should read their mail — especially when it comes from their credit card companies.”
Kortum “had a duty to read the notices Herbergers mailed to her regarding alterations to her contract, just as she had a duty to read the contract’s original terms, or risk the consequences created by her failure to do so,” Rice wrote.
“While Article II, Section 26 of the Montana Constitution provides a right to a jury trial, every individual enjoys the fundamental freedom to contract, which allows parties to craft terms governing their private conduct,” Rice said.
Mike Meloy, a Helena lawyer not involved in the case, said Thursday that the court did not break any new ground in the Herbergers ruling.
“I think this ruling is consistent with the court’s ruling in the past, that in order for a person to contract away a constitutional right for a jury trial, there has to be an express manifestation of that. … It can’t be imposed unilaterally by one of the parties without the other’s consent,” Meloy told The Associated Press.
Kortum and other attorneys involved in the case did not respond to a reporter’s phone and e-mail queries Thursday afternoon.
Efforts to reach officials of The Bon Ton Stores Inc. in York, Pa., which owns Herbergers, were unsuccessful, as were efforts to seek comment from a trade group, the National Association of Credit Management in College Park, Md.
Peter Garuccio, a spokesman for the American Bankers Association in Washington, D.C., declined to comment because he hadn’t seen the ruling.