Outcome:
The appellate court upheld the trial court’s decision.
Donnelly v. Teachers Federal Credit Union, Case No.: 2022-00113 in the Supreme Court of New York, Appellate Division – Second Department
The Supreme Court of the State of New York, Appellate Division: Second Judicial Department affirmed a lower court’s ruling in a class action lawsuit against Teachers Federal Credit Union (TFCU). The appellate court upheld the trial court’s denial of TFCU’s motion to compel arbitration and stay all proceedings, as well as its motion to dismiss the complaint for lack of standing. The lawsuit, initiated in 2020, alleges breaches of the account agreement by TFCU, including the imposition of illegal fees related to checking accounts. TFCU’s attempts to enforce an arbitration provision added to the account agreement in December 2019 were rejected, as the plaintiff had expressly opposed this amendment through her counsel. Additionally, the court determined that TFCU’s refund of the disputed fees did not invalidate the plaintiff’s standing to pursue the class action.
This ruling represents a significant victory for consumers, reinforcing their rights even against corporate maneuvers to compel arbitration or nullify valid complaints through unilateral refunds aimed at preventing class claims. The court’s decision underscores the importance of maintaining consumer protections and ensuring that individuals can hold corporations accountable for alleged breaches, despite attempts to sidestep judicial scrutiny. By upholding the plaintiff’s standing and rejecting TFCU’s arbitration amendment, the appellate court has set a precedent that may influence similar cases in the future, promoting fairness and transparency in financial institutions’ dealings with their customers.