Articles Federal Court Grants ZEK's Motion to Compel Arbitration Following Trial May 28, 2025 The Southern District of New York holds arbitration provision in client agreement governing a brokerage account is enforceable requiring customer to arbitrate his claims New York, NY — Zeichner Ellman & Krause LLP ("ZEK"), a full-service New York-headquartered law firm, recently succeeded in winning a motion to compel arbitration on behalf of a large money center bank ("Bank") following a trial. Bruce S. Goodman, a ZEK partner in the litigation group, and a member of the firm's Israel practice, was trial counsel. In a significant legal victory, the Bank successfully enforced its arbitration agreement in a case pending in the United States District Court for the Southern District of New York ("SDNY"). The lawsuit was brought by the Bank's customer ("Plaintiff"), who alleged a technical glitch in the Bank's app caused him to inadvertently purchase $400,000 in stock. Despite the clear arbitration provision in the Bank's client agreement—requiring all disputes be resolved through FINRA arbitration—Plaintiff challenged its enforceability. He claimed he never opened the brokerage account, instead asserting the Bank "gifted" him the account, and that he never agreed to any terms, including the arbitration clause. While arbitration clauses in consumer contracts are routinely upheld under the Federal Arbitration Act, the Court held a three-day evidentiary trial in October 2024 to resolve the threshold question of whether an agreement to arbitrate had been formed. The Court heard testimony from six witnesses, including four Bank witnesses. In a detailed and decisive ruling issued in April 2025, the SDNY found in the Bank's favor. The Court concluded that Plaintiff did, in fact, open the account online and affirmatively accepted the arbitration provision. The Court found Plaintiff's testimony not credible and held that "[t]he evidence at trial overwhelmingly established that plaintiff’s account only could have been opened by plaintiff himself after completing the online application and in the process agreeing to the arbitration provision." The Court ordered Plaintiff to pursue his claims through FINRA arbitration, as required by the client agreement. Commenting on the outcome, Mr. Goodman noted, “this ruling is a strong reaffirmation of the enforceability of online arbitration agreements—even in the face of a customer’s denial of assent. It reflects the continued strength of public policy favoring arbitration and provides clear support for firms enforcing digital agreements in today's financial landscape.” Related Services: Litigation, Banking Litigation
Federal Court Grants ZEK's Motion to Compel Arbitration Following Trial May 28, 2025 The Southern District of New York holds arbitration provision in client agreement governing a brokerage account is enforceable requiring customer to arbitrate his claims New York, NY — Zeichner Ellman & Krause LLP ("ZEK"), a full-service New York-headquartered law firm, recently succeeded in winning a motion to compel arbitration on behalf of a large money center bank ("Bank") following a trial. Bruce S. Goodman, a ZEK partner in the litigation group, and a member of the firm's Israel practice, was trial counsel. In a significant legal victory, the Bank successfully enforced its arbitration agreement in a case pending in the United States District Court for the Southern District of New York ("SDNY"). The lawsuit was brought by the Bank's customer ("Plaintiff"), who alleged a technical glitch in the Bank's app caused him to inadvertently purchase $400,000 in stock. Despite the clear arbitration provision in the Bank's client agreement—requiring all disputes be resolved through FINRA arbitration—Plaintiff challenged its enforceability. He claimed he never opened the brokerage account, instead asserting the Bank "gifted" him the account, and that he never agreed to any terms, including the arbitration clause. While arbitration clauses in consumer contracts are routinely upheld under the Federal Arbitration Act, the Court held a three-day evidentiary trial in October 2024 to resolve the threshold question of whether an agreement to arbitrate had been formed. The Court heard testimony from six witnesses, including four Bank witnesses. In a detailed and decisive ruling issued in April 2025, the SDNY found in the Bank's favor. The Court concluded that Plaintiff did, in fact, open the account online and affirmatively accepted the arbitration provision. The Court found Plaintiff's testimony not credible and held that "[t]he evidence at trial overwhelmingly established that plaintiff’s account only could have been opened by plaintiff himself after completing the online application and in the process agreeing to the arbitration provision." The Court ordered Plaintiff to pursue his claims through FINRA arbitration, as required by the client agreement. Commenting on the outcome, Mr. Goodman noted, “this ruling is a strong reaffirmation of the enforceability of online arbitration agreements—even in the face of a customer’s denial of assent. It reflects the continued strength of public policy favoring arbitration and provides clear support for firms enforcing digital agreements in today's financial landscape.” Related Services: Litigation, Banking Litigation