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In denying a motion to compel arbitration, a federal district court in Mississippi found no evidence of a "voluntary and knowing" waiver of the right to trial. The Court also found that the "mailbox rule" was inapplicable because the party seeking arbitration failed to make the requisite showing.
In Robertson v. J.C. Penney Co., Inc., No. 2:06cv3-KS-MTP, 2007 WL 1200103 (S.D. Miss. Apr. 19, 2007), the Robertsons held a credit card account with J.C. Penney for over twenty years, when the account was sold to Monogram Credit Card Bank (Monogram).
When a dispute arose over a paid bill that was mistakenly turned over to a collection agency, the Robertsons sued. Monogram sought arbitration; the Robertsons denied ever agreeing to arbitrate.
When Monogram acquired the account from J.C. Penney, they allegedly sent notice of the transfer to the Robertsons along with a new card agreement that contained an arbitration clause. The notice stated that use of the credit card would indicate acceptance of the terms of the new agreement. The Robertsons used their card, but denied ever receiving the notice or the new agreement.
The Court noted that under the "mailbox rule," people are presumed to have received materials where proof is provided that a properly addressed letter was placed in a U.S. post office mail receptacle. However, the Court found such proof was lacking in the present case. Accordingly, the Robertsons could not be presumed to have received the information, and so the existence of a valid arbitration agreement was not proven.
Moreover, the Court went on to state that under Mississippi law, even if receipt of the notice and agreement had been established, a valid agreement to arbitrate would still not have been established.
Contrary to most other jurisdictions, Mississippi does not accept "implied consent" to arbitrate, but requires "full knowledge" and "intentional surrender" of the right to have a dispute heard in court. Here, no such waiver had been shown, and Monogram's motion to compel arbitration was therefore denied.
The Court applied the Federal Arbitration Act (FAA) to decide the question of whether a valid arbitration agreement had been formed, but did not explicitly discuss whether the FAA preempted Mississippi law requiring the heightened "full knowledge" standard to be met in order to enforce an arbitration agreement.
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