Jared Johnson, Individually and on behalf of all others similarly situated v. Commonwealth Federal Credit Union

CourtDistrict Court, E.D. Kentucky
DecidedMay 20, 2026
Docket3:25-cv-00042
StatusUnknown

This text of Jared Johnson, Individually and on behalf of all others similarly situated v. Commonwealth Federal Credit Union (Jared Johnson, Individually and on behalf of all others similarly situated v. Commonwealth Federal Credit Union) is published on Counsel Stack Legal Research, covering District Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jared Johnson, Individually and on behalf of all others similarly situated v. Commonwealth Federal Credit Union, (E.D. Ky. 2026).

Opinion

EUANSITTEERDN S DTAISTTERSI CDTIS OTFR IKCETN CTOUUCRKTY CENTRAL DIVISION FRANKFORT JARED JOHNSON, Individually and on ) behalf of all others similarly situated, ) ) Civil No. 3:25-cv-00042-GFVT Plaintiff, ) ) v. ) MEMORANDUM OPINION ) & COMMONWEALTH FEDERAL CREDIT ) ORDER UNION, ) ) Defendant.

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This matter is before the Court on the Defendant’s Motion to Compel Arbitration and Stay Proceedings. [R. 9.] Commonwealth Credit Union requests that this court stay proceedings and compel arbitration. For the reasons that follow, the Motion will be DENIED. I Plaintiff Jared Johnson first became a member with Commonwealth Credit Union in 2016. [R. 9-1 at 5; R. 26 at 2; R. 9-8 at 2.] Upon doing so, Johnson entered into a membership agreement – the 2016 Member Service Agreement – with Commonwealth, setting forth the terms and conditions of his membership. [R. 9-8 at 2; R. 26-1 at 1.] The Member Service Agreement consisted of two separate documents. The first was a one-page Account Card upon which Johnson provided his personal information, and which contained an acknowledgement that, by signing, Johnson had received the full version of the MSA and agreed to abide by its terms as the governing document of his membership. The Account Card expressly purported to incorporate by reference “this Member Service Agreement[.]” [Id.] The second document was the full Member Service Agreement, which contained approximately thirty pages of terms, conditions, and required disclosures. The Member Service Agreement did not, at this time, contain an arbitration provision. [R. 9-3.] Johnson signed the Account Card on July 1, 2016, and his membership commenced.1 [R. 26-1.] Several years later, in 2020, Commonwealth amended its Member Service Agreement. Among the new terms and conditions was an arbitration clause, which contained a class action waiver. [R. 9-1 at 6-8; R. 26 at 4; R. 9-5.] Commonwealth claims that, at this time, a copy of the new Member Service Agreement was sent, via U.S. Mail, to the listed addresses of all members, along with instructions on how to access and review the revised version. [R. 30-2 (notice); R. 30- 3 at 1-2.] The scope of the arbitration clause was broad and explicitly pertained to “[c]laims or disputes between you and us arising out of or relating to the account(s) you have with us, transactions involving the account(s), safe deposit box, and any related service with us.” [R. 9-5

at 30-31.] It also contained a clause prohibiting the pursuit of either class action litigation or class-wide arbitration. [Id.] It further provided that the member “[has] the right to opt-out of this agreement to arbitrate if you tell us within 30 days of the opening of the account(s) you have with us or the receipt of this notice, whichever is later.” [Id.] Commonwealth does not contend that this updated version somehow applied automatically to existing members, such as Johnson. The following year, however, Johnson elected to modify his account to participate in Commonwealth’s “Round Up Checking Account” program.[R. 9-6 at 2; R. 26-1 at 2.] To facilitate this transition, Johnson executed a “Conversion Card” on March 25, 2021. [Id.] The Conversion Card, much like the 2016 Account Card, was

succinct and purported to incorporate by reference other documents. [R. 9-9 at 2-3.] The bulk of the Conversion Card provided general information about the Round Up Checking Account

1 Commonwealth contends that Johnson received and signed another account card in 2019 which again purported to incorporate by reference the Member Service Agreement. This fact, even if true, does not alter the analysis. Ultimately, even if he did so, the MSA did not contain an arbitration provision until the modifications were made in program and other relevant financial and tax-related information. At the bottom, however, it provided: By opening an account and signing the Account Card, you acknowledge that you have received and agree to the additional terms and conditions as stated in the Membership and Account Agreement, General Fee Schedule, and Rate Sheet which are incorporated by reference into this Disclosure.

[R. 9-9 at 3.] Johnson asserts that he did not receive a copy of these documents concurrent with the Conversion Card. [R. 26-1.] The Conversion Card did not mention a document called “Member Service Agreement” and did not otherwise mention arbitration. Johnson also claims that he was not provided with a copy of the Member Service Agreement at this time, or any other. [Id.] Put simply, Johnson contends that he signed the Conversion Card with no knowledge of the 2020 MSA, or its accompanying arbitration provision. Johnson filed this class action suit on August 22, 2025, contending that Commonwealth disclosed its members’ nonpublic personal information and personally identifiable financial information to third parties, including Google, LLC, in violation of state and federal law. [R. 1.] In lieu of an answer, Commonwealth filed the instant motion to compel arbitration and stay proceedings on October 28, 2025. [R. 9.] This motion is now fully briefed and ripe for judicial review. II The Federal Arbitration Act “establishes a liberal policy favoring arbitration agreements.” Parker v. Tenneco, Inc., 114 F.4th 786, 792 (6th Cir. 2024) (quoting Epic Sys. Corp. v. Lewis, 584 U.S. 497, 505 (2018)). “This policy is not an open invitation for the Court to ‘devise novel rules to favor arbitration over litigation,’ but rather an ‘acknowlegement of the FAA’s commitment … to place [arbitration] agreements upon the same footing as other contracts.” Johnson v. HCL Am., Inc., 2025 U.S. Dist. LEXIS 229391, at *5-6 (E.D. Ky. Nov. 18, 2025) (quoting Morgan v. Sundance, Inc., 596 U.S. 411, 418 (2022); Granite Rock Co. v. Int’l Broth. of Teamsters, 561 U.S. 287, 302 (2010)). Where a valid arbitration agreement exists, a party can seek to compel arbitration, and stay the case in the interim, pursuant to the FAA. 9 U.S.C. §§ 3-4. This presumption, however, is not boundless. Relevant here, the “presumption in favor of arbitration,” relates only to the scope of valid, existing arbitration agreements; it does not mean there is a presumption when addressing whether the parties entered into a valid agreement to arbitrate in the first place. Southard v. Newcomb Oil Co., LLC, 7 F.4th 451, 454 (6th Cir. 2021) (citing Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 302-03 (2010)). Rather, in following the FAA’s stated purpose of placing arbitration agreements on the same footing as other contracts, questions about the formation of an arbitration agreement are resolved by

reference to principles of standard contract law. Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d 967, 972 (6th Cir. 2007) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-44 (1995); see also Hergenreder v. Bickford Senior Living Grp., LLC, 56 F.3d 411, 416-17 (6th Cir. 2011) (same). The Sixth Circuit has determined that district courts addressing a motion to compel arbitration must engage in a three-step analysis. It “must assure itself that (1) the parties agreed to arbitrate; (2) the claims asserted fall within the scope of the arbitration agreement and (3) Congress did not intend for those claims to be non-arbitrable.” Bruce v. Adams & Reese, LLP, 168 F.4th 367, 375 (6th Cir. 2026) (quoting Memmer v.

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