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McGill v. Citibank, N.A.

Supreme Court of California

April 6, 2017, Filed



 [***630]  [**87]   CHIN, J.—In previous decisions, this court has said that the statutory remedies available for a violation of the Consumers Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq.), the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.), and the false advertising law (id., § 17500 et seq.) include public injunctive relief, i.e., injunctive relief that has the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public. (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 315–316 [133 Cal. Rptr. 2d 58, 66 P.3d 1157] (Cruz); Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1077 [90 Cal. Rptr. 2d 334, 988 P.2d 67] (Broughton).) The question we address in this case is the [*952]  validity of a provision in a predispute arbitration agreement that waives the right to seek this statutory remedy in any forum. We hold that such a provision is contrary to California public policy and is thus unenforceable under California law. We further hold that the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) does not preempt this rule of California law or require enforcement of the waiver provision. We therefore reverse the judgment of the Court of Appeal.

I. Factual [****3]  Background

In 2001, plaintiff Sharon McGill opened a credit card account with defendant Citibank, N.A. (Citibank), and purchased a “credit protector” plan (Plan). Under the Plan, Citibank agreed to defer or to credit certain amounts on McGill's credit card account when a qualifying event occurred, such as long-term disability, unemployment, divorce, military service, or hospitalization. Citibank charged a monthly premium for the Plan based on the amount of McGill's credit card balance.

McGill's original account agreement did not contain an arbitration provision. In October 2001, Citibank sent her a “Notice of Change in Terms Regarding Binding Arbitration to Your Citibank Card Agreement” (2001 Notice), which amended the original agreement by adding the following arbitration provisions: “Either you or we may, without the other's consent, elect mandatory, binding arbitration for any claim, dispute, or controversy between you and us (called ‘Claims’).” “All Claims relating to your account or a prior related account, or our relationship are subject to arbitration, including Claims regarding the application, enforceability, or interpretation of this Agreement and this arbitration provision. [****4]  All Claims are subject to arbitration, no matter what legal theory they are based on or what remedy (damages, or injunctive or declaratory relief) they seek. This includes Claims based on  [**88]  contract,  [***631]  tort (including intentional tort), fraud, agency, your or our negligence, statutory or regulatory provisions, or any other sources of law; … and Claims made independently or with other claims … . Claims and remedies sought as part of a class action, private attorney general or other representative action are subject to arbitration on an individual (non-class, non-representative) basis, and the arbitrator may award relief only on an individual (non-class, non-representative) basis.” “This arbitration provision is governed by the Federal Arbitration Act (the ‘FAA’).” “Claims must be brought in the name of an individual person or entity and must proceed on an individual (non-class, non-representative) basis. The arbitrator will not award relief for or against anyone who is not a party. If you or we require arbitration of a Claim, neither you, we, nor any other person may pursue the Claim in arbitration as a class action, private attorney general action or other representative action, [****5]  nor may such Claim be pursued on your or our behalf in any litigation in any court.”

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2 Cal. 5th 945 *; 393 P.3d 85 **; 216 Cal. Rptr. 3d 627 ***; 2017 Cal. LEXIS 2551 ****

SHARON McGILL, Plaintiff and Respondent; v. CITIBANK, N.A., Defendant and Appellant.

Prior History:  [****1] Superior Court of Riverside County, No. RIC1109398, John W. Vineyard, Temporary Judge.1 Court of Appeal, Fourth Appellate District, Division Three, No. G049838.

McGill v. Citibank, N.A., 232 Cal. App. 4th 753, 181 Cal. Rptr. 3d 494, 2014 Cal. App. LEXIS 1167 (Cal. App. 4th Dist., Dec. 18, 2014)


arbitration, injunctive relief, arbitration provision, false advertising, arbitration agreement, parties, general public, class action, high court, requests, invalid, unenforceable, injunction, deceptive, unfair, practices, waive, enjoining, purports, alleges, asserts, italics, generally applicable, unfair competition, statutory remedy, advertising, misleading, consumers, preempts, card

Antitrust & Trade Law, Trade Practices & Unfair Competition, State Regulation, Claims, Consumer Protection, Deceptive & Unfair Trade Practices, State Regulation, Torts, Business Torts, Unfair Business Practices, Elements, Scope, False Advertising, Unfair Business Practices, Business & Corporate Compliance, Pretrial Matters, Alternative Dispute Resolution, Arbitration, Remedies, Governments, Legislation, Interpretation, Civil Procedure, Special Proceedings, Class Actions, Statutory Remedies & Rights, Contracts Law, Contract Conditions & Provisions, Arbitration Clauses, Arbitration, Federal Arbitration Act, Arbitration Agreements, Contracts Law, Defenses, Arbitrability, Preliminary Considerations, Federal & State Interrelationships