521 P.3d 1145
Kan. Ct. App.2022Background
- Duling opened a MACU account in 2018; her signed membership agreement contained an "Amendments and Termination" clause allowing MACU to change terms with "reasonable notice," and stating continued account use after an effective date manifested agreement to changes.
- The original membership agreement did not include arbitration or a class-action waiver.
- On December 7, 2020, MACU mailed a cover letter and an arbitration/class-waiver provision stating the new provision would be effective December 28, 2020; the letter said members had until January 6, 2021 to opt out and that continued use would indicate assent.
- The arbitration provision’s opt-out instruction conflicted with the cover letter: it allowed opt-out "within 30 days of the opening of your account or the mailing of this notice, whichever is sooner," creating ambiguity (Duling’s account opened in 2018).
- Duling filed a putative class action in October 2021 alleging improper insufficient-funds fees; MACU moved to compel arbitration, relying on the December 7 notice and Duling’s continued account use.
- The district court denied MACU’s motion, finding the arbitration clause a new, material term not clearly adopted and the opt-out deadline ambiguous; the Kansas Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Duling) | Defendant's Argument (MACU) | Held |
|---|---|---|---|
| Whether MACU could unilaterally add an arbitration clause under the membership agreement | Duling: original contract did not contemplate arbitration; unilateral addition without mutual assent is invalid | MACU: change-of-terms clause authorized adding new terms if members receive notice and fail to opt out | Held: Even assuming MACU could add terms, the change required mutual assent; notice/opt-out protections prevent unilateral imposition without assent |
| Whether the December 7 cover letter + attached provision formed a clear offer to modify the contract | Duling: the documents were insufficient and misleading; opt-out instructions conflicted; no clear offer | MACU: cover letter was a clear offer giving a Jan 6, 2021 opt-out deadline | Held: Offer language was ambiguous when read with the arbitration provision’s opt-out clause; ambiguity defeats a finding of a clear offer |
| Whether Duling’s continued use of her account after notice constituted acceptance | Duling: could not assent to an expired or unclear opt-out; inaction is not acceptance where acceptance was impossible or ambiguous | MACU: failure to opt out and continued use is affirmative acceptance per the notice | Held: Because the opt-out deadline was ambiguous, continued use did not reasonably manifest assent; silence did not constitute acceptance here |
| Effect of ambiguous opt-out language and drafter’s responsibility | Duling: ambiguity should be construed against MACU; ambiguity prevents enforcement | MACU: ambiguity should be resolved in harmony with the cover letter (Jan 6, 2021) | Held: Ambiguities are construed against the drafter (MACU); opt-out language ambiguous and therefore unenforceable as showing assent |
Key Cases Cited
- Anderson v. Dillard's, Inc., 283 Kan. 432 (Kan. 2007) (standards for reviewing existence of arbitration agreement)
- AT&T Techs., Inc. v. Communications Workers, 475 U.S. 643 (U.S. 1986) (party cannot be required to arbitrate absent an agreement)
- Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (U.S. 2022) (arbitration is a forum-selection device that changes procedure, not substantive rights)
- Mohr v. State Bank of Stanley, 244 Kan. 555 (Kan. 1989) (negative factual findings and burdens of proof implications)
- Wachter Mgmt. Co. v. Dexter & Chaney, Inc., 282 Kan. 365 (Kan. 2006) (offeror controls manner of acceptance; shrinkwrap/amendment principles)
- Clutts v. Dillard's, Inc., 484 F. Supp. 2d 1222 (D. Kan. 2007) (mutual promises to arbitrate supply consideration)