A federal district court in Ohio ruled that a corporate employee who held and used a corporate credit card was bound by an arbitration clause in the cardmember agreement because the employee cardholder assented to the terms of the agreement through his use of the card.

In Heiges v. JP Morgan Chase Bank, N.A., No. 3:07CV1157, 2007 WL 3166769 (D. Ohio Oct. 26, 2007), Heiges worked for Bay Area Products, Inc. During his employment, Heiges opened a corporate credit card account with Chase Bank. The cardmember agreement contained an arbitration clause.

When Bay Area went out of business, there was an unpaid balance on the card, and Chase allegedly reported information that damaged Heiges' credit rating. As a result, Heiges sued Chase for allegedly violating the Fair Credit Reporting Act and Fair Credit Billing Act. In response, Chase moved to stay further proceedings pending arbitration.

In opposing the motion, Heiges argued that he never agreed to arbitrate because he never signed any agreement accepting liability in his personal capacity. He also raised several arguments against the validity of the arbitration clause.

The Court rejected Heiges' argument that he was not bound by the cardmember agreement because there was no signed agreement between him and Chase. Under Ohio law, credit card agreements are contracts whereby the issuance and use of the card creates a legally binding agreement. By simply using the card, Heiges agreed to be bound by the agreement and all its terms.

The Court also rejected Heiges' argument that he, in his individual capacity, was never a party to the agreement. The Court noted that under Ohio law, parties bind themselves by the plain and ordinary language used in the contract unless those words lead to manifest absurdity.

The credit card agreement unambiguously stated that all persons named would be held liable and be bound by the agreement and its terms. Further, the agreement unambiguously stated that any person named on the card is to be regarded as a cardmember. As the Court explained, Heiges' subjective understanding that only the business was assuming liability could not overcome the language of the agreement.

Having determined that the arbitration clause was valid and that Heiges was bound by cardmember agreement, the Court granted Chase's motion for a stay.