2023 WI App 57

COURT OF APPEALS OF WISCONSIN

PUBLISHED OPINION

Case No.: 2022AP887

Complete Title of Case: 

JEFFERY PRUETT,

 PLAINTIFF-RESPONDENT,

 V.

WESTCONSIN CREDIT UNION,

 DEFENDANT-APPELLANT.

Opinion Filed: October 24, 2023

Submitted on Briefs: February 22, 2023

Oral Argument: 

JUDGES: Stark, P.J., Hruz and Gill, JJ.

Concurred:

Dissented:

Appellant

ATTORNEYS: On behalf of the defendant-appellant, the cause was submitted on the 

briefs of John L. Pollock of Litchfield Cavo, LLP, Milwaukee, and

James R. Branit and Jason E. Hunter of Litchfield Cavo, LLP, 

Chicago, Illinois, pro hac vice. 

Respondent

ATTORNEYS: On behalf of the plaintiff-respondent, the cause was submitted on the 

brief of Nathan E. DeLadurantey of DeLadurantey Law Office, LLC, 

Brookfield, and Vess A. Miller of Cohen & Malad, LLP, Indianapolis, 

Indiana, pro hac vice. 
2023 WI App 57

COURT OF APPEALS

DECISION

DATED AND FILED

October 24, 2023

Samuel A. Christensen

Clerk of Court of Appeals

NOTICE

This opinion is subject to further editing. If 

published, the official version will appear in 

the bound volume of the Official Reports. 

A party may file with the Supreme Court a 

petition to review an adverse decision by the 

Court of Appeals. See WIS. STAT. § 808.10 and 

RULE 809.62. 

Appeal No. 2022AP887 Cir. Ct. No. 2021CV158

STATE OF WISCONSIN IN COURT OF APPEALS

JEFFERY PRUETT,

 PLAINTIFF-RESPONDENT,

 V.

WESTCONSIN CREDIT UNION,

 DEFENDANT-APPELLANT.

APPEAL from an order of the circuit court for Dunn County: LUKE 

WAGNER, Judge. Affirmed. 

Before Stark, P.J., Hruz and Gill, JJ. 

¶1 STARK, P.J. Jeffery Pruett filed a class action complaint alleging 

that WESTconsin Credit Union (WCU) had improperly charged and collected fees 
No. 2022AP887

2

from its members.

1

 In response, WCU filed a motion to compel arbitration based 

upon an Arbitration and Class Action Waiver Agreement (the Arbitration Clause) 

that WCU added to its Membership and Account Agreement (the Agreement) in 

2021. The Arbitration Clause provided that either WCU or a member may compel 

arbitration in a dispute between the parties, subject to some exceptions not relevant 

here, and withdrew the right for its members to participate in a class action, as either 

a class representative or a class member. The Arbitration Clause applied to “any 

dispute between us concerning your Membership, your accounts, or the services or 

products related to your accounts[,]” meaning, as WCU argues, the amendment had 

retroactive application. (Emphasis added.) WCU alleges that Pruett received notice 

of the Arbitration Clause, and it further argues that Pruett agreed to the amendment 

by failing to opt out of its application using the specified procedure—i.e., Pruett’s 

silence and continued use of his account signaled his assent to the Arbitration 

Clause. 

¶2 WCU appeals from the circuit court order denying its motion to 

compel arbitration pursuant to WIS. STAT. § 788.02 (2021-22).2 The issues on 

appeal, according to WCU, are whether: (1) WCU’s contractual authority to change 

the terms of the Agreement permitted it to add the Arbitration Clause; (2) Pruett’s 

failure to opt out of the Arbitration Clause and his continued use of his WCU 

account constituted his agreement to the terms of the Arbitration Clause; (3) the 

Arbitration Clause applies retroactively to claims that accrued before WCU added 

the clause; (4) the retroactive application of the Arbitration Clause is unreasonable 

 

1

 WCU is a Wisconsin credit union with its headquarters in Menomonie, Wisconsin. 

Pruett has been a WCU member since 1991.

2

 All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise 

noted.
No. 2022AP887

3

and in violation of the contractual duty of good faith and fair dealing; and (5) the 

language in the Agreement is sufficiently clear to allow an opportunity for a member 

to timely opt out of the Arbitration Clause.

¶3 We conclude that WCU’s contractual authority to change the terms of 

the Agreement did not permit it to add the Arbitration Clause, which we determine 

contained new terms that the parties did not address or contemplate in the original 

contract. Further, Pruett did not affirmatively assent to the Arbitration Clause by 

his failure to opt out of its provisions and continued use of his account; therefore, 

the clause cannot be enforced against Pruett. For the reasons that follow, we affirm 

the circuit court’s decision.

BACKGROUND

¶4 Pruett commenced this class action lawsuit on July 19, 2021, alleging 

that WCU improperly charged its members certain overdraft fees between 2017 and 

2020. Pruett’s complaint alleged multiple counts of breach of contract, unjust 

enrichment, and a violation of the Wisconsin Deceptive Trade Practices Act, under 

WIS. STAT. § 100.18. Pruett sought monetary damages, restitution, and injunctive 

and declaratory relief. The merits of those claims are not before us on appeal.

¶5 Instead, this appeal concerns the terms and conditions of the 

Agreement and whether WCU’s 2021 modification of that Agreement requires that 

the merits of this dispute be resolved by arbitration of only Pruett’s claims, rather 

than by the circuit court in this class action lawsuit. As WCU explains, its 

relationship with its members is governed by its bylaws as well as the terms and 

conditions of the Agreement. It is undisputed that Pruett opened his account with 

WCU in 1991, and he agreed to comply with the terms and conditions of the 

Agreement at that time. It is also undisputed that at the time Pruett opened his 
No. 2022AP887

4

account and at the time the improper fees alleged in the complaint were assessed, 

there was no arbitration agreement between Pruett and WCU.3 The Agreement did, 

however, include a “Notice of Amendments” section (hereinafter, change-of-terms 

provision), which stated:

Except as prohibited by applicable law, we may change the 

terms of this Agreement. We will notify you of any change 

in terms, rates, or fees as required by law. We reserve the 

right to waive any term of this Agreement. Any such waiver 

shall not affect our right to future enforcement.

¶6 WCU claims that on or about April 27, 2021, it sent “notice of 

changes to its membership agreement to its members,” which “advised members 

that WCU was implementing an Arbitration and Class Action Waiver 

Agreement ... that would become effective 60 days after the member’s receipt of 

the Notice.” WCU claims that the Arbitration Clause was permitted under the 

“Notice of Amendments” clause of the May 2018 version of the Agreement in effect 

at the time. The mailing sent to members included: (1) “a document titled 

‘Important Information Regarding Your Account at [WCU]’” (the Notice); (2) the 

amended Agreement; and (3) “the amended Electronic Fund Transfers Agreement 

and Disclosure.” The Notice was sent to WCU’s members “at the valid, deliverable 

mailing address on file for each member.”

¶7 The Notice informed members of “important changes” with the 

Agreement, including the added Arbitration Clause.

4

 The Notice provided:

 IMPORTANT: The Arbitration and Class Action 

Waiver Agreement provision is effective within 60 days of 

this notice (the “Effective Date”) unless you opt-out in 

 

3

 The record includes both a December 2016 and a May 2018 version of the Agreement, 

neither of which reference arbitration.

4

 The changes also included “[e]nhanced language” about overdraft and nonsufficient fund 

fees charged by WCU.
No. 2022AP887

5

accordance with the specified opt-out process described at 

Section 35c of the enclosed Account Agreement Arbitration 

and Class Action Waiver Agreement. THE 

ARBITRATION AND CLASS ACTION WAIVER 

AGREEMENT APPLIES TO ALL CLAIMS THAT 

ARE FILED OR INITIATED ON OR AFTER THE 

EFFECTIVE DATE, EVEN IF THE CLAIM ARISES 

OUT OF, AFFECTS, OR RELATES TO CONDUCT 

THAT OCCURRED PRIOR TO THE EFFECTIVE 

DATE. If a claim is filed or initiated prior to the Effective 

Date, the Arbitration and Class Action Waiver Agreement 

will not apply to such claim.

 YOU WILL INDICATE YOUR AGREEMENT TO 

THE ARBITRATION AGREEMENT AND CLASS 

ACTION WAIVER BY (1) FAILING TO OPT-OUT AS 

EXPLAINED AT SECTION 35C OF THE ENCLOSED 

ACCOUNT AGREEMENT ARBITRATION AND CLASS 

ACTION WAIVER AGREEMENT, AND 

(2) CONTINUING YOUR MEMBERSHIP WITH 

WESTCONSIN CREDIT UNION. ALL CHANGES ARE 

EFFECTIVE AS OF APRIL 26, 2021.

¶8 The Arbitration Clause, in turn, detailed the terms of the added 

provision and the opt-out procedure. Section 35.a. provided, in pertinent part, that

[e]xcept if you opt-out as provided in subsection (C) below, 

either you or us may elect, without the other’s consent, to 

require that any dispute between us concerning your 

Membership, your accounts, or the services or products 

related to your accounts and Membership be resolved by 

binding arbitration, except for those disputes specifically 

excluded below.

Section 35.b. further provided, in pertinent part: “Unless prohibited by applicable 

law, arbitration will be solely brought in your individual capacity and be solely 

between you and us. Neither you nor we have the right to participate in a class 

action in court or arbitration, either as a class representative or class member.” The 

Arbitration Clause explained that “[i]f you agree to be bound by the above 

Arbitration and Class Action Waiver Agreement, then no action is needed on your 

part.” It also included the procedure for opting out:
No. 2022AP887

6

If you do not agree to be bound by this Arbitration and Class 

Action Waiver Agreement, you must send us written notice 

that you want to opt out of this provision of your Account 

Agreement within 60 days of account opening or within 60 

days of receiving this notice, whichever is sooner.

¶9 Pruett asserts that he never agreed to the Arbitration Clause. He 

averred, by affidavit, that he had “never before seen or read the Arbitration 

Documents” and that he had “never signed or seen or heard anything about 

arbitration from [WCU], and [he] never agreed to arbitration with” WCU.5 

Accordingly, it is undisputed that Pruett took no action to opt out of the Arbitration 

Clause.

¶10 On September 15, 2021, WCU filed its motion seeking to compel this 

class action litigation to individual arbitration and stay court proceedings based on 

the Arbitration Clause. As the circuit court observed, “WCU’s [m]otion attempts 

to apply the April 2021 Arbitration Clause retroactively to the fees in [Pruett’s class 

action] [c]omplaint that were assessed and collected in 2017, 2018, and 2020, to 

require [Pruett] to arbitrate his claims for actions that occurred prior to the existence 

of the Arbitration Clause.”

¶11 Pruett opposed the motion, arguing that WCU had failed to meet its 

burden to show that a valid arbitration agreement was ever formed. Specifically, 

Pruett argued that the Arbitration Clause was not a valid agreement to arbitrate for 

numerous reasons, including that: (1) “at the time of the transactions WCU’s 

agreement with customers did not contain an arbitration clause or any other 

restriction on [Pruett’s] ability to file a class action in this [c]ourt”; (2) “WCU never 

had authority under the original agreement to unilaterally add a wholly new term” 

 

5

 Although Pruett states that he never saw the Notice or amended Agreement, he does not 

dispute (or does not present evidence in response to) WCU’s assertion that the documents were 

mailed to him.
No. 2022AP887

7

because the “Notice of Amendments” clause uses “change” not “add”; (3) “the duty 

of good faith and fair dealing prevented WCU from unilaterally adding an 

arbitration provision never contemplated in the original agreement to re-capture 

rights from” Pruett; (4) “WCU never provided reasonable notice of its addition of 

the arbitration clause, so it cannot show silence or inaction constitutes assent and 

agreement”; and (5) “WCU cannot show that [Pruett] not ‘opting out’ of the new 

arbitration clause constitutes assent” based on WCU’s use of the phrase “whichever 

is sooner” because the opening of his account in 1991 would have been the “sooner” 

date, making timely opting out impossible. WCU replied, and each party submitted 

affidavits and supplemental authority involving cases outside this jurisdiction 

addressing similar factual situations.

¶12 After a nonevidentiary hearing, the circuit court entered its written 

order denying WCU’s motion to compel arbitration. The court’s decision was based 

on several factors. First, it concluded that WCU’s attempts “to apply the Arbitration 

Clause retroactively to claims that accrued before the clause came into existence” 

failed because “the language of the Arbitration Clause itself does not state that the 

clause will apply retroactively to accrued claims.” WCU argued that the Notice, 

which stated that the Arbitration Clause “applies to all claims that are filed or 

initiated on or after the effective date, even if the claim arises out of, affects, or 

relates to conduct that occurred prior to the effective date,” operated to apply the 

Arbitration Clause retroactively to Pruett’s claims. (Formatting altered.) The court 

disagreed, noting that “it is the language of the Arbitration Clause itself—not the 

cover letter—that governs the parties’ agreement.” In general, the court found 

“particularly persuasive” the reasoning of the Sixth Circuit Court of Appeals in 

Sevier County Schools Federal Credit Union v. Branch Banking and Trust Co., 

990 F.3d 470 (6th Cir. 2021), which we discuss in further detail below.
No. 2022AP887

8

¶13 Next, the circuit court concluded that WCU’s attempts to apply the 

Arbitration Clause retroactively were “not reasonable and would violate the duty of 

good faith and fair dealing.” Finally, the court determined that Pruett’s failure to 

opt out of the Arbitration Clause did not evidence his assent to be bound because 

the deadline had already passed for Pruett to opt out at the time the Notice was 

issued. WCU appeals.6

DISCUSSION

¶14 As noted above, on appeal, WCU presents five issues for our review. 

The first question before us—one of first impression in this state—is whether the 

change-of-terms provision in the parties’ Agreement provided WCU with the 

contractual authority to unilaterally add the Arbitration Clause to the parties’ 

contract.

¶15 WCU’s briefing is ambiguous as to the second question—whether 

Pruett’s failure to opt out of the Arbitration Clause and his continued use of his 

WCU account constitutes his agreement to the terms of the Arbitration Clause. 

WCU predominantly argues that the change-of-terms provision authorized it to add 

the Arbitration Clause: “Specifically, [WCU] implemented the arbitration 

provision pursuant to its previously agreed-upon authority to amend its Agreement 

and provided Pruett with notice clearly directing his attention to the addition of the 

arbitration provision, its application to ‘any dispute’ related to his membership and 

accounts, and the opt-out procedure.” In general, then, WCU relies on what the 

Agreement allowed it to do. Elsewhere, however, WCU argues that, wholly 

 

6

 A circuit court’s order denying a request to compel arbitration and stay a pending 

lawsuit—a WIS. STAT. § 788.02 special proceeding—is final for purposes of appeal. L.G. v. 

Aurora Residential Alts., Inc., 2019 WI 79, ¶¶1, 22, 26-27, 387 Wis. 2d 724, 929 N.W.2d 590.
No. 2022AP887

9

separate from the change-of-terms provision, WCU was authorized to modify its 

contract with its members pursuant to general principles of contract law: “No 

matter what the original contract provided, parties can certainly add new terms—

including arbitration provisions—by the same means they entered into a contract to 

begin with: by offer, acceptance and consideration.” While this argument 

seemingly relates more to the first question as opposed to the second, we will 

nonetheless address both questions.

¶16 As to the first question, we conclude, for the reasons that follow, that 

WCU’s contractual authority to “change the terms of this Agreement” did not 

authorize it to unilaterally add the Arbitration Clause absent evidence that the 

Arbitration Clause was the type of change contemplated by the parties at the time 

of the original Agreement. No evidence has been presented that the Arbitration 

Clause involved terms that were previously in the Agreement or were contemplated 

by the parties at its inception. Therefore, WCU did not have the contractual 

authority under the change-of-terms provision to unilaterally add the Arbitration 

Clause, and the Arbitration Clause is not a part of WCU’s contract with Pruett.

¶17 As to the second question, to the extent WCU argues that Pruett’s 

failure to opt out of the Arbitration Clause and his continued use of his WCU 

account constitutes his assent to the modified Agreement, we disagree. WCU’s 

purported offer to modify its Agreement with its members did not provide sufficient 

clarity to reasonably convey to Pruett what was required such that we can infer 

assent to the modification from his silence. Therefore, the Arbitration Clause may 
No. 2022AP887

10

not be enforced against him.7 Accordingly, the circuit court properly denied WCU’s 

motion to compel arbitration. See State v. Holt, 128 Wis. 2d 110, 124, 382 N.W.2d 

679 (Ct. App. 1985) (we may affirm based on reasoning other than that used by the 

circuit court if the court reached the proper result), superseded by statute on other 

grounds, WIS. STAT. § 940.225(7).

I. The Law of Arbitration in Wisconsin

¶18 “[A]rbitration ordinarily is understood to refer to a proceeding 

voluntarily undertaken by parties who want a dispute determined on the merits of 

the case by an impartial decision maker of their choosing, which decision the parties 

agree to accept as final and binding.” Stradinger v. Whitewater, 89 Wis. 2d 19, 31, 

277 N.W.2d 827 (1979). Accordingly, “[a]rbitration agreements are ‘a matter of 

contract.’” Midwest Neurosciences Assocs., LLC v. Great Lakes Neurosurgical 

Assocs., LLC, 2018 WI 112, ¶40, 384 Wis. 2d 669, 920 N.W.2d 767 (citation 

omitted); see also Employers Ins. of Wausau v. Jackson, 190 Wis. 2d 597, 610-11, 

527 N.W.2d 681 (1995) (“[A]rbitration is meant to be a swift and inexpensive 

process that is guided by a contractual agreement.”). As a result, arbitration 

agreements—including the validity of such agreements—are subject to principles 

of state contract law to determine whether an agreement to arbitrate has been formed 

 

7

 Given our decision on the first two questions, we conclude that it is unnecessary for us 

to separately resolve the three remaining issues. WCU argued that the Arbitration Clause 

“encompasses all claims and must therefore apply retroactively.” As noted above, the circuit court 

did not agree. Because we conclude that there was no valid agreement to arbitrate between the 

parties, we need not resolve the question of whether the Arbitration Clause would be retroactive. 

For the purpose of our decision and based on WCU’s assertions, however, we will assume, without 

deciding, that the Arbitration Clause would apply retroactively.

We resolve the two remaining issues—whether retroactive application of the Arbitration 

Clause is unreasonable and in violation of the contractual duty of good faith and fair dealing and 

whether the language in the Agreement is sufficiently clear to allow an opportunity for a member 

to timely opt out of the clause—within our review of the first two questions.
No. 2022AP887

11

in the first instance and to determine the scope of the arbitration provision as 

expressed by the language of the agreement. See Midwest Neurosciences Assocs., 

384 Wis. 2d 669, ¶45; Tinder v. Pinkerton Sec., 305 F.3d 728, 733-34 (7th Cir. 

2002); Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630 (2009); see also

Employers Ins., 190 Wis. 2d at 611 n.5 (noting that Wisconsin courts may look to 

“federal court interpretations” of the Federal Arbitration Act “as an aid in the 

resolution” of cases regarding the Wisconsin Arbitration Act).

¶19 In its briefing before this court, WCU focuses on the admittedly strong 

federal and Wisconsin policies favoring arbitration. See, e.g., Mitsubishi Motors 

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625-26 (1985); First Weber 

Grp., Inc. v. Synergy Real Est. Grp., LLC, 2015 WI 34, ¶24, 361 Wis. 2d 496, 860 

N.W.2d 498. “Wisconsin’s ‘policy of encouraging arbitration as an alternative to 

litigation,’ however, is not limitless.” Midwest Neurosciences Assocs., 384 Wis. 2d

669, ¶42 (citation omitted). “[P]arties cannot be ‘required to submit any dispute to 

arbitration unless [they have] agreed to do so’” and “only those disputes that the 

parties have agreed to so submit to arbitration are relegated to proceed in that 

forum.” Id., ¶¶40, 43 (alteration in original; citations omitted); see also AT&T 

Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648 (1986) (“[A]

party cannot be required to submit to arbitration any dispute which he [or she] has 

not agreed so to submit.” (citation omitted)); Morgan v. Sundance, Inc., 142 S. Ct. 

1708, 1713 (2022) (“‘[P]olicy favoring arbitration’ does not authorize federal courts 

to invent special, arbitration-preferring procedural rules.”). Thus, the policy 

favoring arbitration applies only where the parties have indeed agreed to arbitration. 

See Morgan, 142 S. Ct. at 1713 (“The federal policy is about treating arbitration 

contracts like all others, not about fostering arbitration.”); Applied Energetics, Inc. 

v. NewOak Cap. Mkts., LLC, 645 F.3d 522, 526 (2d Cir. 2011) (“In other words, 
No. 2022AP887

12

while doubts concerning the scope of an arbitration clause should be resolved in 

favor of arbitration, the presumption does not apply to disputes concerning whether 

an agreement to arbitrate has been made.”).

¶20 A motion to compel arbitration, therefore, “involves issues of contract 

interpretation and a determination of substantive arbitrability, questions of law we 

review de novo.” Cirilli v. Country Ins. & Fin. Servs., 2009 WI App 167, ¶10, 322 

Wis. 2d 238, 776 N.W.2d 272. A court, not an arbitrator, determines whether an 

agreement to arbitrate has been formed. Midwest Neurosciences Assocs., 384 

Wis. 2d 669, ¶¶43, 65. The burden to prove that the parties agreed to arbitration 

rests with the moving party. See id., ¶80.

II. The Change-of-Terms Provision in the Agreement Did Not Authorize WCU to 

Add the Arbitration Clause. 

¶21 First, Pruett argues that WCU did not have the authority to add the 

Arbitration Clause without his express agreement because “[t]he plain language of 

WCU’s change-of-terms [c]lause permitted WCU only to unilaterally ‘change terms 

of this Agreement,’ not to unilaterally ‘add new terms that are not the subject of this 

Agreement,’ such as the Arbitration Clause.” Conversely, WCU argues that the 

change-of-terms provision is not so limited; instead, changing or amending a 

contract “necessarily includes adding new terms or removing old terms.” According 

to WCU, the language of the change-of-terms provision was broad enough to 

encompass adding the Arbitration Clause through the notice provisions in the 

original Agreement.

¶22 Although the question before us is an issue of first impression in this 

state, the issue itself is not a novel one and has been addressed by courts in other 

jurisdictions. See State v. Muckerheide, 2007 WI 5, ¶7, 298 Wis. 2d 553, 725 
No. 2022AP887

13

N.W.2d 930 (“Although a Wisconsin court may consider case law from such other 

jurisdictions, obviously such case law is not binding precedent in Wisconsin, and a 

Wisconsin court is not required to follow it.”). As noted above, the circuit court 

relied on the Sixth Circuit’s decision in Sevier as persuasive authority in support of 

its decision to deny WCU’s motion. In Sevier, the case also involved a later-added 

arbitration provision where the account holders were notified of the amendment to 

the terms of their agreement and told that continued use of their account with the 

Branch Banking & Trust Company constituted acceptance. Sevier, 990 F.3d at 473-

74, 476-77. In reversing the district court’s order to compel arbitration, the Sixth 

Circuit explained that the district court improperly “place[d] the burden on the 

[consumers] to ... object to a company’s unilaterally adopted arbitration policy or 

risk being found to have agreed to it. This is not how contracts are formed.” Id. at 

477-78 (citation omitted). According to the court, the company’s

discretion under the original change-of-terms provision to 

amend the terms is not unlimited, but is subject to two 

requirements: (1) that any changes be reasonable, and 

(2) that [the company] exercise its discretion to make such 

changes in a manner consistent with the implied covenant of 

good faith and fair dealing.

Id. at 479.

¶23 The Sixth Circuit determined that neither of these requirements had 

been satisfied. In addressing the reasonableness of the arbitration provision, the 

Sixth Circuit observed that it “could not ‘assume ... that notice alone, without some 

affirmative evidence of the depositor’s consent, could bind a depositor to a 

significant change regarding matters that were not addressed in the original contract 

at all.’” Id. (citation omitted). The court also noted that there was no opt-out 

provision available. Id. at 480. Further, it concluded that the late addition of the 

arbitration provision violated the implied covenant of good faith and fair dealing 
No. 2022AP887

14

because the provision was a significant change—deprivation of the right to a jury 

trial and to select a judicial forum for dispute resolution—not contemplated in the 

original contract. Id. at 480-81. The company “did not act reasonably when it added 

the arbitration provision years after the Plaintiffs’ accounts were established by [its 

predecessor], thus violating the implied covenant of good faith and fair dealing in 

its attempt to use the original change-of-terms provision to force the Plaintiffs to 

arbitrate.” Id. at 480.

¶24 In reaching its decision, the Sevier court relied heavily on Badie v. 

Bank of America, 79 Cal. Rptr. 2d 273 (Cal. Ct. App. 1998). In Badie, the 

California Courts of Appeal found that a similar change-in-terms provision did not 

give the bank the right to add an arbitration provision to the account holder’s original 

agreement. Id. at 278, 291. There, too, the bank added an arbitration clause to its 

credit card agreements and gave notice via a mailing to cardholders in their monthly 

statements. Id. at 275-76. 

¶25 The Badie court explained that “a party with the unilateral right to 

modify a contract” does not have “carte blanche to make any kind of change 

whatsoever as long as a specified procedure is followed.” Id. at 281. Instead, the 

change must be “a modification whose general subject matter was anticipated when 

the contract was entered into.” Id.

Where, as in this case, a party has the unilateral right to 

change the terms of a contract, it does not act in an 

“objectively reasonable” manner when it attempts to 

“recapture” a forgone opportunity by adding an entirely new 

term which has no bearing on any subject, issue, right, or 

obligation addressed in the original contract and which was 

not within the reasonable contemplation of the parties when 

the contract was entered into. That is particularly true where 

the new term deprives the other party of the right to a jury 

trial and the right to select a judicial forum for dispute 

resolution.
No. 2022AP887

15

Id. at 284. According to the court, “there [was] nothing about the original terms 

that would have alerted a customer to the possibility that the [b]ank might one day 

in the future invoke the change of terms provision to add a clause that would allow 

it to impose [alternative dispute resolution] on the customer.” Id. at 287. To the 

contrary, “the method and forum for dispute resolution—a matter which is collateral 

to that relationship—[was] not discussed at all” in the original agreement. Id. 

Therefore, the court reasoned that it could not assume that “notice alone, without 

some affirmative evidence of the depositor’s consent, could bind a depositor to a 

significant change regarding matters that were not addressed in the original contract 

at all.” Id. at 282.

¶26 Likewise, the court in Sears Roebuck & Co. v. Avery, 593 S.E.2d 424 

(N.C. Ct. App. 2004), as cited by the circuit court and Pruett, also relied on the 

reasoning in Badie to reach the same result. In Sears, the issue was whether Sears 

Roebuck and Co. validly added an arbitration provision to the terms of its credit 

card agreement. Sears, 593 S.E.2d at 426. The original agreement “contained a 

‘Change of Terms’ provision” that stated: “As permitted by law, [Sears] has the 

right to change any term or part of this agreement, including the rate of Finance 

Charge, applicable to current and future balances. [Sears] will send me a written 

notice of any such changes when required by law.” Id. The cardholder agreement 

“made no reference to arbitration or any other dispute resolution procedures and did 

not in any manner address the forum in which a customer could have disputes 

resolved.” Id. As in this case, Sears averred that it sent this notice to the defendant 

of the addition of an arbitration provision to the defendant’s credit card agreement, 

but the defendant claimed that she was “unaware of any correspondence regarding 

changes to her account.” See id.
No. 2022AP887

16

¶27 Applying Arizona law, as required by the credit card agreement, the 

North Carolina Court of Appeals held, based on its review of Arizona appellate 

decisions regarding standardized contracts and modifications to those contracts, that 

“the Arizona appellate courts would adopt the same reasoning as the Badie court 

and would reach the same result.” Sears, 593 S.E.2d at 428-29. The court observed 

that, according to one commentator, “a breach of the requirement of good faith 

occurs ‘when discretion is used to recapture opportunities forgone upon 

contracting’” and that “[c]onsistent with good faith, a party may exercise a 

discretionary power ‘for any purpose within the reasonable contemplation of the 

parties at the time of formation—to capture opportunities that were preserved upon 

entering the contract, interpreted objectively.’” Id. at 432 (citing Steven J. Burton, 

Breach of Contract and the Common Law Duty to Perform in Good Faith, 94 HARV.

L. REV. 369, 373 (1980)). This position, according to the court, is “consistent with 

the definition of bad faith set out in the Restatement (Second) of Contracts 2d § 205 

cmt. d (1981)[,]” which includes “abuse of a power to specify terms.” Sears, 593 

S.E.2d at 432 (citation omitted).

¶28 As a result, the court concluded that reading the “Change of Terms” 

provision to “permit Sears to add wholly new terms to its cardholder agreement” 

“arguably would render the contract illusory” because one party would have the 

power to unilaterally add any provisions. Id. Thus, it held that “the parties did not 

intend that the ‘Change of Terms’ provision in the original agreement would allow 

Sears to unilaterally add completely new terms that were outside the universe of the 

subjects addressed in the original cardholder agreement.” Id. at 434. Therefore, 

“[b]ecause the arbitration clause was a wholly new term that did not fall within the 

universe of subjects included in the original agreement, [Sears] did not have 
No. 2022AP887

17

authority under its ‘Change of Terms’ provision to condition continued use of its 

credit card on acceptance of the arbitration clause.” Id.

¶29 In Maestle v. Best Buy Co., No. 79827, 2005-Ohio-4120, 2005 WL 

1907282 (Ohio Ct. App. Aug. 11, 2005), also cited by Pruett, the Ohio Court of 

Appeals reached the same conclusion. There, the original cardholder agreement 

was amended, based on a change-of-terms provision, to include a “comprehensive 

arbitration provision.” Id. at *1. The Maestle court ultimately concluded that the 

change-of-terms provision did not authorize the addition of an arbitration clause, for 

two reasons. First, “since the amendment provision referenced only changes to 

payments, charges, fees and interest,” the cardholders could not anticipate amending 

the agreement to add an arbitration clause. Id. at *6. Second, “nowhere in the 

contract is there a clause addressing forums of dispute.” Id. Accordingly, the court 

concluded that “there was no ‘meeting of the minds’ as to inclusion of the arbitration 

clause at the inception of the contract.” Id.

¶30 The court in Follman v. World Financial Network National Bank, 

721 F. Supp. 2d 158 (E.D.N.Y. 2010), as Pruett notes, reached the same result. That 

case, too, involved a credit card account cardholder agreement. Id. at 159. As the 

cardholder agreement contained a choice-of-law provision, the United States 

District Court for the Eastern District of New York applied Ohio law, including the 

Maestle decision, to determine whether a valid arbitration agreement existed 

between the parties. Follman, 721 F. Supp. 2d at 161. In doing so, it noted that 

“Maestle is properly read as imposing substantive limitations on the type of terms 

that may be added or amended pursuant to a change-of-terms provision in a 

cardholder agreement.” Follman, 721 F. Supp. 2d at 164. Importantly, the court 

failed to find differences in the phrasing of the change-of-terms provisions 

significant: “Unlike the change-of-terms provision before the Maestle court, the 
No. 2022AP887

18

instant provision specifies that defendant may ‘add,’ in addition to change, the terms 

of the cardholder agreement. The change-of-terms provision in Maestle, on the 

other hand, only permitted the Bank to ‘change or amend,’ but not add, terms.” 

Follman, 721 F. Supp. 2d at 165. According to the court, “the issue is not whether 

defendant may add new terms, but whether the terms added are the types of terms

the contract contemplated defendant could add.” Id.

¶31 Further, the court refused to find a term in the original cardholder 

agreement that “set out a cardholder’s liability for defendant’s attorneys’ fees and 

court costs” sufficient to “have permitted plaintiff to anticipate the substantive 

amendment to her rights that the added arbitration amendment effected.” Id. at 165-

66. According to the court, while the original cardholder agreement explained the 

defendant’s rights in the event that it enforced those rights against a cardholder, the 

agreement did not “address a cardholder’s dispute resolution rights against [the] 

defendant” and therefore did not “address the same substantive rights that the 

arbitration provision addresses.” Id. at 166. Thus, the court concluded that since 

“the arbitration provision falls outside the scope of the universe of terms 

contemplated by the original agreement, the change-of-terms provision did not 

authorize defendant to add it. Accordingly, the arbitration amendment is not part of 

the agreement between the parties, and defendant may not enforce the provision 

against plaintiff.” Id.

¶32 Finally, Pruett cites to Canteen v. Charlotte Metro Credit Union, No. 

21-CVS-6056, 2021 WL 7967397 (N.C. Super. Ct. Sept. 7, 2021). In Canteen, the 

court addressed a substantially identical change-of-terms provision to the provision 

at issue in this case. The court found that the use of the word “change” in the 

provision referred to a “change in the terms of this Agreement,” but the provision

did not “use the word ‘add’ or indicate any power to unilaterally make a new 
No. 2022AP887

19

agreement.” Id. at *5. According to the court, even if the distinction between 

“change” and “add” rendered the provision ambiguous, the ambiguity would be 

resolved against the drafter of the agreement—the credit union. Id. at *6. The court 

further concluded that the credit union “unilaterally added the arbitration provision 

without obtaining any affirmative assent”; therefore, the court could not

assume that [the plaintiff’s] silence constituted assent 

because adding a clause stripping accountholders of the right 

to a jury trial, which was not addressed in the original 

agreement, is not objectively reasonable and was done to 

“recapture a foregone opportunity,” particularly where [the 

credit union] is attempting to enforce the clause retroactively 

to past transactions and existing claims.

Id. at *7 (citations omitted).

8

¶33 Based on the persuasive reasoning in the aforementioned cases, and 

under the standard principles of contract law in Wisconsin, we agree with Pruett that 

WCU’s change-of-terms provision in its Agreement did not authorize it to 

unilaterally add the Arbitration Clause. “Contract interpretation generally seeks to 

give effect to the parties’ intentions.” Tufail v. Midwest Hosp., LLC, 2013 WI 62, 

¶25, 348 Wis. 2d 631, 833 N.W.2d 586. Thus, we begin with the language of the 

Agreement. “Where the terms of a contract are clear and unambiguous, we construe 

the contract according to its literal terms,” construing it “according to its plain or 

ordinary meaning” and “consistent with ‘what a reasonable person would 

understand the words to mean under the circumstances.’” Id., ¶¶26, 28 (citation 

omitted). “We presume the parties’ intent is evidenced by the words they chose, if 

those words are unambiguous.” Id., ¶26 (citation omitted). If, however, the terms 

 

8

 After the parties’ briefing in this case was complete, the North Carolina Court of Appeals 

reversed the superior court’s decision in Canteen v. Charlotte Metro Credit Union, No. 21-CVS6056, 2021 WL 7967397 (N.C. Super. Ct. Sept. 7, 2021). See Canteen v. Charlotte Metro Credit 

Union (Canteen II), 881 S.E.2d 753 (N.C. Ct. App. 2022). We discuss Canteen II in more detail 

below.
No. 2022AP887

20

of the contract are ambiguous—in other words, “fairly susceptible of more than one 

construction”—then “evidence extrinsic to the contract itself may be used to 

determine the parties’ intent.” Id., ¶27 (citation omitted).

¶34 As noted above, the change-of-terms provision states that WCU “may 

change the terms of this Agreement.” At issue, then, is the meaning of the word 

“change.” The common definition of the word “change” suggests that something 

must already exist in order for it to be changed: “to make different in some 

particular,” “to make radically different,” “to give a different position, course, or 

direction to,” “to replace with another,” “to make a shift from one to another,” and 

“to undergo a modification of.” Change, MERRIAM-WEBSTER, 

https://www.merriam-webster.com/dictionary/change (last visited October 10, 

2023). Thus, according to the plain meaning of the change-of-terms provision in 

the Agreement, the parties agreed that WCU was authorized to “make different,” 

“replace,” or modify the terms that existed already in “this Agreement.” The 

change-of-terms provision does not state that WCU may “add new terms.”

¶35 WCU disagrees, arguing that the “language explicitly advises 

members that [WCU] could change the terms of the Agreement at any time” and 

that Pruett’s “contention that ‘change’ and ‘amendment’ of the Agreement means 

only alterations of existing terms is absurd.”9 In support, WCU cites to Rudolph v. 

Wright Patt Credit Union, 175 N.E.3d 636 (Ohio Ct. App. 2021). There, the 

 

9

 WCU supports this contention by speculating that “[t]he Founding Fathers would be 

surprised to learn that the procedure for adopting ‘amendments’ to the Constitution in Article V 

was limited to changing already existing provisions in the Constitution.” WCU continues, “Clearly, 

an amendment to the Constitution includes the possibility of adding entirely new terms, and the 

same conclusion applies to amendments or changes to any contract or agreement.” We agree with 

Pruett that this comparison is inapt. The construction and interpretation of a contract between 

private parties is not reasonably analogous under the circumstances to amending the United States 

Constitution under Article V.
No. 2022AP887

21

Second District Court of Appeals of Ohio upheld the lower court’s decision ordering 

the case to arbitration after it determined that “while the 2015 agreement lacked an 

arbitration clause, Rudolph did agree that ‘[e]xcept as prohibited by applicable law,’

[the credit union] could ‘change the terms of this Agreement and the other Account 

Documents at any time.’” Id. at 646. The court was not persuaded by Rudolph’s 

argument that a “new” term is not a “change” of terms. Id.

¶36 Citing decisions from other jurisdictions, the court noted that the 

credit union’s 2015 agreement did not contain language limiting the specific types 

of changes that could be made and noted that there was no legal requirement that 

the contract state that a party may add new terms rather than simply change its terms. 

Id. at 647. Accordingly, the court concluded that because “the 2015 agreement ... 

did discuss enforcement and dispute resolution, ... the change was not completely 

unanticipated” and the plaintiff “could have anticipated that [the credit union] might 

later change the agreement to add a different avenue of dispute resolution” because 

the agreement “contained a section specifying where disputes were to be filed.” Id.

at 647, 649. 

¶37 Accordingly, WCU not only presents the semantic argument noted 

above, but it also claims that alternative dispute resolution was contemplated in its 

Agreement prior to the Arbitration Clause. WCU’s Agreement contains a 

“Governing Law” provision, which states that the laws of Wisconsin govern the 

Agreement and further states that “you agree that any legal action regarding this 
No. 2022AP887

22

Agreement shall be brought in the county in which the Credit Union is located.”10 

Citing to Rudolph, WCU argues that “[b]ecause there is a section specifying where 

disputes must be filed, Pruett should have anticipated that [WCU] would change the 

Agreement to include an arbitration agreement so that legal actions would be 

resolved in arbitration rather than in a civil court in a particular county.”

¶38 This issue was also addressed by the court in Canteen v. Charlotte 

Metro Credit Union (Canteen II), 881 S.E.2d 753 (N.C. Ct. App. 2022). As noted 

previously, see supra note 8, after the parties’ briefing in this case was complete, 

the North Carolina Court of Appeals reversed the lower court’s decision in Canteen. 

The basis for the court’s reversal was that the agreement in that case contained a 

“Governing Law” provision, which is substantially identical to the governing law 

provision in this case and which provided:

This Agreement is governed by ... the laws ... and 

regulations of the state in which the credit union’s main 

office is located .... As permitted by applicable law, you 

agree that any legal action regarding this Agreement shall be 

brought in the county in which the credit union is located.

Canteen II, 881 S.E.2d at 755. The court noted distinctions in the case law where 

there was no mention of the method or forum for dispute resolutions. Id. at 756. 

Ultimately, the court concluded that

 

10

 Pruett notes that before the circuit court, WCU argued only the state law language—that 

the laws of Wisconsin govern the Agreement—as a basis for why alternative dispute resolution was 

previously contemplated. Now, Pruett asserts, WCU argues for the first time on appeal “that 

additional language in the 2018 Agreement that ‘you agree that any legal action regarding this 

Agreement shall be brought in the county in which the Credit Union is located,’ somehow made 

alternative dispute resolution a ‘term of this Agreement.’” See State Farm Mut. Auto. Ins. Co. v. 

Hunt, 2014 WI App 115, ¶32, 358 Wis. 2d 379, 856 N.W.2d 633 (“Arguments raised for the first 

time on appeal are generally deemed forfeited.” (citation omitted)); State v. Rogers, 196 Wis. 2d

817, 827, 539 N.W.2d 897 (Ct. App. 1995) (“We will not, however, blindside trial courts with 

reversals based on theories which did not originate in their forum.”). As we are affirming the circuit 

court, we will not address the forfeiture issue further.
No. 2022AP887

23

the Agreement here did contain a ‘Governing Law’ 

provision, which outlined the appropriate choice of law and 

forum for settling disputes. Plaintiff was therefore on notice 

that [the credit union] could change this provision to allow 

for disputes to be settled, not in the court where [the credit 

union] was located, but rather in another forum, including 

before an arbitrator.

Id.

¶39 We do not find the Canteen II majority’s reasoning persuasive. In 

this case, we conclude that nothing in the Agreement allowed WCU to add either of 

the new provisions requiring arbitration of disputes—if requested by WCU or a 

member—or waiving class action lawsuits. Pursuant to the plain language of the 

contract, the Agreement may be changed or modified where a term was previously 

addressed in the Agreement, but WCU may not add entirely new terms not 

contemplated by the parties. Accordingly, we do not agree with the Canteen II

court’s ultimate conclusion that the new term was a change—rather than an 

addition—to the agreement, nor do we agree with the outcome in that case.

¶40 As that legal framework applies here, there is no question that the 

contract provides that the laws of the State of Wisconsin apply to the Agreement; 

however, that statement does not provide for a particular forum to resolve disputes. 

Further, there is no question that under the Agreement any legal action shall be 

brought in the county in which the credit union is located. But, again, the Arbitration 

Clause does not change or modify either of those requirements. For example, the 

Agreement was not modified to apply Illinois law or provide that matters could be 

heard in all counties of this state, which would encompass modifications or changes 

to the original Agreement.

¶41 Instead, the Arbitration Clause adds substantive limitations to the 

manner in which a legal action may be heard and the type of claim that can be filed. 
No. 2022AP887

24

The Arbitration Clause introduces additions to the contract limiting the rights of the 

parties on issues that were not contemplated in the original Agreement—arbitration 

and class actions—rather than amending existing terms. See RESTATEMENT 

(SECOND) OF CONTRACTS § 211 cmt. f (AM. L. INST. 1981) (“Although customers 

typically adhere to standardized agreements and are bound by them without even 

appearing to know the standard terms in detail, they are not bound to unknown terms 

which are beyond the range of reasonable expectation.”). As Pruett argues, “[a]

customer who agreed to a term involving the location of the court where he could 

file suit would not reasonably understand that doing so would permit WCU to later 

unilaterally remove the right to go to court at all.” See Sears, 593 S.E.2d at 434 

(citing Badie, 79 Cal. Rptr. 2d at 289) (“Nothing in the original agreement would 

have alerted [a party] that by allowing Sears to ‘change any term or part’ of the 

agreement, ‘[the party] might someday be deemed to have agreed to give up the 

right to a jury trial or to any judicial forum whatsoever.”). WCU’s suggestion that 

this reading of the contract is “absurd” has no basis in law given, as Pruett notes, 

that this “construction is the same one reached by the courts in Badie, Maestle, 

Sears, and Sevier, and it uses the plain meanings of the words WCU chose.”11

¶42 Additionally, we find the dissent’s reasoning in Canteen II to be 

particularly persuasive. The dissent explained that “the Agreement allowed [the 

credit union] to ‘change the terms of this Agreement[,]’ and stated [the credit union] 

would notify customers of ‘any change in terms,’ but did not put customers on notice 

 

11

 Even if an argument could be made that the change-in-terms provision in the Agreement 

was ambiguous, that ambiguity would be construed against WCU. See Tufail v. Midwest Hosp., 

LLC, 2013 WI 62, ¶27, 348 Wis. 2d 631, 833 N.W.2d 586 (“A contract provision is ambiguous if 

it is fairly susceptible of more than one construction.” (citation omitted)); Maryland Arms Ltd. 

P’ship v. Connell, 2010 WI 64, ¶44, 326 Wis. 2d 300, 786 N.W.2d 15 (“The principle that 

ambiguities are construed against the drafter is a ‘deeply rooted doctrine’ of contract 

interpretation.” (citation omitted)).
No. 2022AP887

25

that it would add additional, uncontemplated terms.” Canteen II, 881 S.E.2d at 758 

(Arrowood, J., dissenting) (second alteration in original). Importantly, the dissent 

explained:

[N]othing in the Agreement allowed [the credit union] to add 

new provisions to the Agreement and make those new 

additions apply retroactively to protect their past actions. 

The majority’s opinion improperly interprets the Agreement 

to allow for this occurrence and sanctions such behavior by 

allowing a financial institution to protect itself from actions 

for which it is already being sued for in other litigation.

Id. (Arrowood, J., dissenting). The dissent noted that “[t]his view is consistent with 

the previous holdings of the [c]ourt,” citing the court’s own prior decision in Sears

where the court concluded that “allowing Sears to ‘unilaterally insert’ a ‘wholly new 

term’ would ‘ignore the requirement of good faith implied in all contracts of 

adhesion[,]’ be contrary to ‘black letter contract law[,]’ and ‘render the contract 

illusory.’” Canteen II, 881 S.E.2d at 758 (Arrowood, J., dissenting) (alterations in 

original; quoting Sears, 593 S.E.2d at 432).

¶43 Here, by adding the Arbitration Clause to the Agreement and making 

the added provisions retroactive—an act that was also of “particular concern” to the 

circuit court—WCU is attempting to protect itself from actions for which it could 

be liable under the original agreement.12 The Arbitration Clause also limits a 

member’s ability to protect him- or herself—by allowing WCU to force 

arbitration—and the member’s ability to protect other members—by removing the 

option for class action lawsuits.

 

12

 Importantly, Pruett argues that “[t]he purported new agreement also tacitly 

acknowledged that WCU’s fee practices had violated its existing contract; the new agreement 

expressly added terms allowing WCU to charge the very fees that [Pruett] has alleged were 

improper under the then existing agreement.” See supra note 4.
No. 2022AP887

26

¶44 In Wisconsin, “every contract carries with it a duty of good faith and 

fair dealing,” Kreckel v. Walbridge Aldinger Co., 2006 WI App 168, ¶20, 295 

Wis. 2d 649, 721 N.W.2d 508, meaning “that a party [must] perform its obligations 

and exercise its discretion under the contract in good faith,” Acheron Med. Supply, 

LLC v. Cook Med. Inc., 958 F.3d 637, 645 (7th Cir. 2020). As other courts have 

recognized, this requirement is not satisfied “when discretion is used to recapture 

opportunities forgone upon contracting.” See Sears, 593 S.E.2d at 432; Sevier, 990 

F.3d at 480-81; Badie, 79 Cal. Rptr. 2d at 284. Instead, we agree that “[a] party 

may exercise a discretionary power ‘for any purpose within the reasonable 

contemplation of the parties at the time of formation—to capture opportunities that 

were preserved upon entering the contract, interpreted objectively.’” Sears, 593 

S.E.2d at 432 (citation omitted).

¶45 We conclude that WCU did not act in good faith when it attempted to 

add a new term to the original Agreement seeking to retroactively deprive another 

party of a legal right.13 WCU’s contractual authority to “change the terms of this 

Agreement” did not authorize it to unilaterally add the Arbitration Clause absent 

evidence that the Arbitration Clause was the type of change contemplated by the 

parties at the time of the original Agreement. For the reasons discussed above, we 

are not convinced that anything reasonably related to the Arbitration Clause was 

previously contemplated. Thus, we agree with the Sevier court’s analysis that 

allowing WCU to add an uncontemplated term via the change-of-terms provision

would “place the burden on the [consumers] to ... object to a company’s unilaterally 

 

13

 WCU argues that it did not violate the duty of good faith and fair dealing because “there 

is no inherent duty of good faith with respect to contract formation.” See Hauer v. Union State 

Bank of Wautoma, 192 Wis. 2d 576, 596, 532 N.W.2d 456 (Ct. App. 1995). As we consider this 

issue with regard to the change-of-terms provision, we are not suggesting that WCU failed to act 

in good faith with regard to contract formation. We will address this argument no further.
No. 2022AP887

27

adopted arbitration policy or risk being found to have agreed to it. This is not how 

contracts are formed.” See Sevier, 990 F.3d at 477-78 (citation omitted). Under the

facts here, we cannot “assume ... that notice alone, without some affirmative 

evidence of [Pruett’s] consent, could bind [Pruett] to a significant change regarding 

matters that were not addressed in the original contract at all,” especially where the 

later-added Arbitration Clause sought to deprive Pruett of the right to a jury trial 

and to select a judicial forum for dispute resolution.14 See id. at 479-81 (citing 

Badie, 79 Cal. Rptr. 2d at 273).

¶46 Even if we construed the Agreement’s reference to the county in 

which legal action shall be brought to qualify as a “term” evidencing that the parties 

contemplated the addition set forth in the Arbitration Clause, we conclude that 

WCU’s failure to act in good faith precludes that finding under the circumstances 

here. WCU’s addition of the Arbitration Clause appears to have been undertaken 

to “‘recapture’ a foregone opportunity,” see Sevier, 990 F.3d at 481 (citation 

omitted), and protect WCU retroactively from alleged wrongdoing. Thus, WCU 

was not authorized by the terms of the Agreement to unilaterally add the Arbitration 

Clause, and something more than silence—i.e., affirmative assent—was required to 

demonstrate that Pruett agreed to the new terms. See Midwest Neurosciences 

Assocs., 384 Wis. 2d 669, ¶¶43-44 (“Arbitration is strictly ‘a matter of consent,’ and 

thus ‘is a way to resolve those disputes—but only those disputes—that the parties 

have agreed to submit to arbitration.’” (citation omitted)). Absent Pruett’s 

affirmative assent, WCU failed to meet its burden to prove that an agreement to 

 

14

 To the extent it could be argued that the Sevier court’s reasoning hinged on the 

unavailability of an opt-out provision, as we explain further below, the opt-out provision provided 

by WCU was inoperable. Therefore, it does not factor into our analysis here.
No. 2022AP887

28

arbitrate was formed under the change-of-terms provision that would cover the 

dispute in this case.

III. WCU Failed to Meet its Burden to Prove that Pruett Clearly Manifested 

Assent to Arbitration. 

¶47 Separate from the change-of-terms provision, WCU argues—

presumably in the alternative—that the Arbitration Clause was a proposed contract 

modification that it invited its members to accept and that it provided members with 

the opportunity to opt out of being bound to the modified terms. In Wisconsin, the 

existence of an agreement to modify a contract is “established in the same way as 

any other contract.” Kohlenberg v. American Plumbing Supply Co., 82 Wis. 2d 

384, 393, 263 N.W.2d 496 (1978). “Modification must be made by the contracting 

parties or someone duly authorized to modify, and one party to a contract cannot 

alter its terms without the assent of the other parties; the minds of the parties must 

meet as to the proposed modification.” Nelsen v. Farmers Mut. Auto. Ins. Co., 4 

Wis. 2d 36, 55, 90 N.W.2d 123 (1958) (citation omitted).

 While the parties to a contract may modify it by a 

subsequent contract which is shown by their acts, the acts 

which are relied upon to modify a prior contract must be 

unequivocal in their character. Acts which are ambiguous in 

their character, and which are consistent either with the 

continued existence of the original contract, or with a 

modification thereof, are not sufficient to establish a 

modification.

Id. at 56 (citation omitted).

¶48 According to WCU, “[a]n assent or acceptance of a contract offer can 

be manifested by deed as well as by word.” See Hoffman v. Ralston Purina Co., 

86 Wis. 2d 445, 454, 273 N.W.2d 214 (1979). Here, WCU argues that Pruett’s 

“silence and inaction operate as an acceptance” because “previous dealings” make 

it “reasonable that the offeree should notify the offeror if he [or she] does not intend 
No. 2022AP887

29

to accept.” Id. at 457 (citation omitted); see also RESTATEMENT (SECOND) OF 

CONTRACTS § 69 & cmt. d (AM. L. INST. 1981) (“[T]he offeree’s silence is 

acceptance, regardless of his [or her] actual intent, unless both parties understand 

that no acceptance is intended.”). WCU further explains that “[t]he Seventh Circuit 

has held contracts offered on a take-it-or-leave-it basis are valid agreements for the 

applicability of the” Federal Arbitration Act and that the Seventh Circuit, applying 

Wisconsin law, has also held that continued use of a product or service constitutes 

acceptance of the terms of an agreement, including an arbitration provision. See

Tickanen v. Harris & Harris, Ltd., 461 F. Supp. 2d 863, 867 (E.D. Wis. 2006); 

Delonge v. Time Warner Cable Bus. LLC, No. 13-CV-0988, 2014 WL 3890766 at 

*2 (E.D. Wis. Aug. 6, 2014); see also ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 

1452 (7th Cir. 1996).

¶49 WCU claims that it “notified Pruett that to reject the offer, he had a 

‘duty to speak’ by informing [WCU] of his intent to opt out. The Notice advised 

Pruett that his silence and the continued use of his account would demonstrate assent 

to the arbitration provision.” Therefore, argues WCU, “Pruett’s actions can only 

reasonably be construed as acceptance of the Agreement as he was given a clear 

offer to arbitrate, a reasonable opportunity to reject that offer, and instruction that 

silence and continued use of his account reflected acceptance of the terms.”

¶50 It is undisputed that Pruett did not attempt to opt out of the Arbitration 

Clause, and he continued to use his WCU account after receiving Notice.15 While 

we acknowledge that, in certain circumstances, failure to opt out of an arbitration 

 

15

 There remains a dispute regarding whether Pruett received the Notice that was sent to 

him by mail. Pruett denies receiving it, but WCU presented evidence that the Notice was mailed 

to him. See supra note 5. For the purpose of this decision, we will assume, without deciding, that 

Pruett received the Notice sent to him by WCU.
No. 2022AP887

30

provision can constitute acceptance, under the circumstance in this case, WCU’s 

purported offer was not sufficiently clear to reasonably convey what was required 

of Pruett to demonstrate his assent to, or rejection of, the modified terms. We agree 

with Pruett and the circuit court that the deadline given by WCU to opt out of the 

Arbitration Clause was unclear. In particular, the Arbitration Clause, drafted by 

WCU, provided that Pruett could opt out of the clause by sending “written notice 

that you want to opt out of this provision of your [a]ccount Agreement within 60 

days of account opening or within 60 days of receiving this notice, whichever is 

sooner.” (Emphasis added.) It is undisputed that Pruett opened his account in 1991 

and that the Notice of the Arbitration Clause was sent in 2021. Accordingly, the 

circuit court reasoned:

A reasonable person would understand that 2021 is “later” 

than 1991, not “sooner.” Thus, a person could reasonably 

conclude, based on the plain language chosen by WCU, that 

[members] had 60 days from account opening, which is the 

“sooner” date, to opt out. Yet doing so was impossible 

because when [Pruett] opened his account in 1991 the 

Arbitration Clause did not even exist.

The court found “that ‘sooner’ plainly means the earlier date.”

¶51 WCU disagrees with the circuit court’s interpretation, calling it 

“absurd” and asserting that it creates an unreasonable result, and WCU provides its 

own interpretation of the language. However, other courts have reached the same 

result as the circuit court based on similar language. See Duling v. Mid Am. Credit 

Union, 530 P.3d 737, 749-50 (Kan. Ct. App. 2022); Canteen, No. 21-CVS-6056, 

2021 WL 7967397 at *9-10. Thus, it is clear that the language “whichever is 

sooner” could reasonably be interpreted differently than argued by WCU, i.e., the 

language is ambiguous. See Tufail, 348 Wis. 2d 631, ¶27.
No. 2022AP887

31

¶52 Contrary to WCU’s assertion, the language in the Notice that “[t]he 

Arbitration and Class Action Waiver Agreement provision is effective within 60 

days of this notice ... unless you opt out” does not resolve the confusion. We still 

must consider the documents together, and the Notice does not specifically clarify 

the opt-out deadlines. Therefore, WCU’s proposed contract modification remains 

unclear, and any ambiguity must be construed against WCU as the contract’s 

drafter. See Maryland Arms Ltd. P’ship v. Connell, 2010 WI 64, ¶44, 326 Wis. 2d 

300, 786 N.W.2d 15 (“The principle that ambiguities are construed against the 

drafter is a ‘deeply rooted doctrine’ of contract interpretation.” (citation omitted)).

¶53 However, we need not consider the proper interpretation of the 

“whichever is sooner” language in the opt-out provision. The fact that the opt-out 

provision was ambiguous and must therefore be construed against WCU supports 

our conclusion that WCU failed to demonstrate that Pruett assented to its offer to 

add the Arbitration Clause to its Agreement by Pruett’s failure to opt out and by his 

continued use of his account after receiving the Notice. It is reasonable to believe 

Pruett may have thought it futile to opt out or that the opt-out provision did not apply 

to him based on one interpretation of the opt-out provision’s language. As Pruett 

argues, we cannot presume “Pruett assented by not doing something that was 

impossible, i.e., by not sending in an opt out [notice] when the deadline given to do 

so was already in the past.”

¶54 We do not suggest that WCU could never enter into an arbitration 

agreement with its members, but the cases on which WCU relies—Tickanen,

Delonge, ProCD, Inc.—are all distinguishable. Here, Pruett could not opt out 

because the language of the opt-out provision made that impossible. Further, even 

if Pruett stopped using his account or closed it in an attempt to opt out, his efforts 

would be unsuccessful. According to the Notice and WCU, the only way for Pruett
No. 2022AP887

32

to reject the Arbitration Clause was to opt out in writing, not close the account. Even 

then, Pruett would still be responsible for the alleged improper charges and fees that 

accrued prior to the Arbitration Clause being added to the Agreement due to the 

Arbitration Clause becoming effective immediately and its retroactive application.

CONCLUSION

¶55 In conclusion, WCU has failed to meet its burden to demonstrate an

agreement to arbitrate. To the extent WCU argues it was authorized to unilaterally 

add the Arbitration Clause to its member Agreement pursuant to the 

change-of-terms provision, we conclude that the Arbitration Clause was not the type 

of change contemplated by that provision at the time of the original contract. 

Accordingly, the addition of the Arbitration Clause under the change-of-terms 

provision—i.e., without requiring Pruett to assent—was unreasonable based on the 

plain language of the provision and was a violation of the duty of good faith and fair 

dealing. To the extent WCU argues that the Arbitration Clause was not a unilateral 

addition but was instead an offer to modify the contract, we conclude that WCU did 

not demonstrate Pruett’s consent to arbitrate by his failure to opt out and by 

continuing to use his account. The terms of the opt-out provision were ambiguous, 

and Pruett’s failure to opt out under the facts of this case did not constitute his assent 

to the amended terms. Accordingly, the Arbitration Clause is not enforceable 

against Pruett.

By the Court.—Order affirmed.